U.S. Court of Federal Claims Rules Cannabis Dispensary Ineligible for Employee Retention Credit (IRC §280E)

The U.S. Court of Federal Claims ruled that a marijuana dispensary was ineligible to claim the refundable portion of the Employee Retention Credit (ERC) due to the prohibition in IRC §280E. Taxpayer, a cannabis dispensary operator, claimed that it is entitled to the refundable portion of the ERC for the first two quarters of 2021, arguing it was eligible despite §280E’s bar on deductions and credits for businesses engaged in trafficking in controlled substances. The court rejected Taxpayer’s arguments that the refundable portion of the ERC was not a “credit” under §280E and that policy considerations should allow it to ...