"Uncertain Positions Vs. 280e Compliance: The Cost Of Doing Cannabiz"

Lance Boldrey and Richard Leiberman co-authored MICPA Connections article "Uncertain Positions Vs. 280e Compliance: The Cost Of Doing Cannabiz." The article examines the financial strain facing Michigan’s booming cannabis industry despite record sales, highlighting how oversupply, falling prices, federal tax rules and limited banking access are pushing many operators into negative cash flow. Industry professionals discuss how IRC Section 280E, which prevents cannabis businesses from deducting many ordinary business expenses, continues to create major financial challenges for retailers and growers alike.

• Lance Boldrey explains that while federal illegality is not the sole issue facing the cannabis industry, the impact of IRC Section 280E on already-thin profit margins is “foundational” to the sector’s financial struggles.
• Richard Lieberman discusses the legal and tax risks tied to uncertain tax positions aimed at avoiding 280E liabilities, noting that businesses and tax preparers face significant exposure if those positions fail under IRS scrutiny.
• Lieberman also emphasizes that CPAs and tax preparers must follow professional reporting standards and carefully evaluate whether aggressive cannabis tax positions can ethically and legally be supported.
• The article also highlights ongoing concerns surrounding limited access to commercial lending, high borrowing costs, bankruptcy restrictions and increasing debate within the cannabis industry over compliance strategies and long-term financial sustainability.