Cracks in 280E: Why Cannabis CPAs Must Prepare for a Constitutional Shift
Explore the constitutional and accounting challenges of IRC section 280E, and discover how CPAs can support cannabis clients through refund claims, financial disclosures, and strategic tax planning.
Format
Webcast
Date
Jan 12, 2026
NASBA Field of Study
Accounting
Level
Basic
CPE Credits
1
Instructor
Melissa Diaz
Availability
3 months
Product Number
WC5147899
IRC section 280E has long burdened cannabis operators with tax liabilities far exceeding their actual income — denying deductions for ordinary business expenses and taxing gross receipts instead.
In this webcast, Melissa K. Diaz, CPA, and Cannabis Tax Attorney James Mann examine the constitutional and accounting flaws of section 280E and explores a new legal challenge that could reshape cannabis taxation for state-legal businesses.
Through the combined lens of GAAP principles and constitutional law, they explain:
- Why taxing gross receipts may violate the Sixteenth Amendment
- Why the Commerce Clause may no longer justify federal enforcement
- Practical strategies for CPAs to support clients during this uncertain period
Strategies include:
- Refund claims
- ASC 740-10 disclosures
- Documentation of uncertain tax positions
This resource is especially relevant for accountants working with cannabis clients, offering:
- Clarity on emerging legal theories
- Actionable steps to mitigate risk and prepare for potential change
Key Topics
- Understanding why 280E may be unconstitutional under the Sixteenth Amendment
- Evaluating refund claim strategies using IRS Form 8275 and IRC §6662
- Applying ASC 740-10 (formerly FIN 48) to disclose uncertain tax positions
- Monitoring litigation such as Canna Provisions v. Garland for strategic planning
- Preparing for retroactive financial impacts if 280E is overturned
Learning Outcomes
- Identify the core provisions of IRC section 280E and its impact on cannabis operators’ taxable income.
- Recognize the constitutional argument against taxing gross receipts under the Sixteenth Amendment.
- Indicate how GAAP principles conflict with the application of section 280E in cannabis accounting.
- Distinguish the legal challenge presented in Canna Provisions v. Garland and its implications for federal tax enforcement.
- Select the concept of “reasonable basis” to support refund claims and avoid accuracy-related penalties under IRC section 6662.
- Distinguish when and how to disclose uncertain tax positions under ASC 740-10 (formerly FIN 48).
- Identify the role of the Commerce Clause in limiting federal authority over state-legal cannabis businesses.
- Recall the strategic steps CPAs can take to prepare clients for potential changes to section 280E enforcement.
Who Will Benefit
- Established and budding cannabis industry experts
- Industry finance professionals, controllers, and financial executives
- CPAs, CGMAs, tax practitioners, and auditors
- Farm owners, managers, and staff
- Attorneys and tax advisers
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