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More states reduce 280E tax burden on cannabis industry

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The U.S. cannabis industry is benefiting from long-desired tax relief now that an increasing number of states – 20 so far – have approved laws that exempt, or “decouple,” businesses from Section 280E of the federal tax code.

This spring, legislators in Connecticut, Illinois, New Jersey and New York passed legislation that will allow cannabis companies to deduct business expenses from their state income taxes, despite those companies remaining illegal under federal law.

The savings could be in the millions for some larger operators, depending on the state’s corporate tax rate.

The state-level exemption does not affect the federal taxes owed by marijuana companies, however, and businesses will still not be allowed to deduct expenses toward those federal income taxes.

Section 280E of the IRS tax code prohibits marijuana businesses from taking traditional business deductions because the plant is listed as a Schedule 1 drug under the federal Controlled Substances Act.

According to the Marijuana Policy Project (MPP), a Washington DC-based advocacy group, 16 states where adult-use cannabis is legal have now passed some type of legislation that decouples companies from 280E.

By contrast, Alaska, Arizona, Maine, Nevada and Washington state haven’t exempted the adult-use cannabis industry from 280E, and Rhode Island’s efforts appear to have stalled in a legislative committee, according to Karen O’Keefe, director of state policies at MPP.

Medical marijuana operators in Arkansas, Hawaii, Louisiana, Maine and Washington DC are also exempt from 280E under state tax law.

O’Keefe told MJBizDaily that when states first started implementing licensed marijuana programs, the industry was perceived as a potential cash cow for tax revenue.

But for the first time ever in 2022, states brought in less total tax revenue than they did the previous year, she said.

“There’s been a wake-up call in the last couple of years,” she said, “as it’s become clear in California and some other states that because of the myriad of issues that are largely due to federal prohibition, and in some cases overtaxation and overregulation, that it can actually be really challenging for cannabis businesses – even well-capitalized ones – to be profitable at all.”

Realizing that tax rates were unsustainable and that tax revenue could be reduced even further if companies close, legislators are passing exemptions that allow the sector to operate and deduct business expenses just like any other industry.

Benefits vary from state to state

Corporate tax rates are different in each state.

So depending on where companies are operating, they’ll see different benefits from state exemptions from 280E, Matthew Bergman, a Chicago-based certified public accountant and senior partner at accounting and consulting firm CJBS, told MJBizDaily.

In Nevada, for example, there is no corporate tax.

But in Illinois, which decoupled from 280E in May, the corporate tax rate is 9.5% across the board.

“So if you were now allowed to operate under normal circumstances, you could be saving like a third of your tax burden,” he said.

Joshua Hamlet, an associate in tax at New York-based law firm Akerman, warned in an interview with MJBizDaily that states decoupling from 280E present complicated bookkeeping issues because not all states will apply the same rules.

New Jersey, for example, will allow deductions for both corporate business tax and gross income tax. But other states might not allow deductions for both.

Aaron Miles, the chief investment officer at Chicago-based marijuana multistate operator Verano Holdings, told MJBizDaily he welcomes the shift at the state level.

But he said t’s small businesses and social equity licensees that will benefit the most from tax relief.

Verano has been able to leverage its cash flow for growth, Miles said.

But the chances of success for smaller players without access to banking and capital are hurt even further by overtaxation, he noted.

Ballooning federal tax bills

With operations in 13 states, Verano is also paying a high price in both state and federal income taxes, particularly because of 280E.

But part of the MSO’s strategy is to pay its state income taxes on time but pay its federal income taxes late because the penalty for doing so is at a lower cost than borrowing money.

Miles said the first credit facility he did with Verano came with a 15.25% interest rate – far more expensive than it would have been in other industries.

“When you defer your taxes and you can keep that balance within 12 to 18 months, the penalties and fees that actually accrue are less than what we’d be able to borrow,” he noted.

This year, Verano will pay roughly $100 million in taxes and will not continue to defer, but the company will be carrying a balance of $250 million in taxes owed.

“While you have this kind of glaring income tax payable line item,” Miles said, in reality we’re saving money by going down this path.”

If the prime lending rate – currently at 8.25% – came down, the strategy could change, he added.

But the bigger change industry watchers are hoping for is at the federal level.

The cannabis industry paid an estimated $1.8 billion more in federal taxes than non-cannabis businesses in 2022, according to an analysis by Oregon-based Whitney Economics.

That number is expected to grow to $2.1 billion this year.

Industry insiders and investors are closely watching for any sign of progress from President Joe Biden’s administration, which announced it would review and possibly deschedule or reschedule marijuana.

“We certainly think that cannabis should just be descheduled,” O’Keefe said.

“But if he is going to reschedule, it’s very important that he does it to (Schedule) 3 or lower – not 1 or 2 – because if it was just rescheduled to 2, it wouldn’t fix 280E.”

Source: https://mjbizdaily.com/more-states-reduce-280e-tax-burden-on-marijuana-industry/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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