IRS Marijuana Rules Overshadowed by Covid Relief, 2017 Tax Law

Guidance for a brief section of the tax code that has frustrated the state-legal cannabis industry has been pushed low on the IRS’s priority list, an agency official said.

Section 280E of the tax code generally bars businesses “trafficking” in certain controlled substances from taking deductions and credits. With some form of marijuana use legal in dozens of states—and seven more states considering legalization of recreational marijuana—accountants have urged the IRS to clarify how broad that restriction is when it comes to state-legal businesses.

But finishing guidance tied to the 2017 tax law and Covid relief has ...