The U.S. Tax Court ruled on a 2½-year-old case in which California-based Harborside had hoped to end 280E’s hold over the marijuana industry’s profit margins.
But the Oakland company’s hopes were dashed Friday when the court upheld the tax code.
“280E continues to negatively impact the growth of the legal cannabis industry, the jobs that it has created and state/local tax revenue that have come as a result,” the company said in a statement.
“Harborside therefore remains committed to pursuing the elimination of this impediment and will continue its efforts through the courts and Congress.”
Harborside attorney Henry Wykowski, who tried the case in 2016, called the decision disappointing but said the fight’s not finished.
“I don’t see this as ‘the war is over,’” he said. “I see this as an important battle in the war.”
Wykowski stopped short of predicting an appeal, saying it will likely take several months before the case is fully resolved.
Only at that point will a decision be made on a possible appeal, he said.
First, he noted, the Tax Court judge must rule on a question of tax-related penalties for Harborside, given that several years worth of federal taxes were in question.
Wykowski also said the States Act, a bill that could see success next year in Congress and remove 280E as a cannabis industry hurdle going forward, may not prove a complete solution because it wouldn’t be retroactive for state-legal companies such as Harborside that have been paying hefty federal taxes for years under 280E.
The San Francisco-based attorney said he won’t be satisfied until he gets a victory that refunds millions of dollars he considers unjustly paid to the IRS under 280E, and he believes Friday’s ruling leaves open more than one avenue for an appeal.
“I can’t tell you what Harborside is going to do, but I’m not going to stop,” Wykowski said. “It’s not my habit to stop until I win.”