Connect with us

Business

Opinion: Not paying federal taxes is a foolish form of marijuana financing

Published

on

Image of a businessperson looking at past due, final notices
Image of James Mann
James Mann

Close readers of cannabis company financial statements have realized that many marijuana enterprises are financing themselves through nonpayment of federal taxes.

Caught in the perfect storm of collapsing margins, oppressive taxes and vanishing access to debt and equity capital, they are buying time by not making estimated tax payments in hopes of a brighter future.

Some observers try to put a positive spin on nonpayment as “cheap financing,” claiming that the interest charged on federal unpaid taxes is lower than interest that would be charged on other kinds of debt.

This is folly, of course: Interest rates on underpayments when added to penalties that might apply result in costly financing, especially for large corporations that could be subject to higher underpayment interest rates (and underpayment interest isn’t deductible).

‘Grim reality’

Image of John Yaeger
John Yaeger

More to the point, it’s a bargain with the devil because, when the IRS begins collection procedures, the marijuana taxpayer will have no choice but to pay the amount owed sooner or later.

While it might be true that recent IRS settlements with cannabis businesses have included compromises of the total amount due on the basis that the company would go under if it had to pay the full amount, underpayers are betting the farm on a risky proposition.

And underpayment for a single year of liability doesn’t solve the problem – more tax is due the next year, the year after that and so on.

The grim reality is that cannabis companies that are not making estimated tax payments are insolvent or on their way there in short order.

Ordinarily, businesses in that position would negotiate with creditors and, if needed, try to reorganize in a federal bankruptcy proceeding.

But marijuana businesses can’t go bankrupt – federal bankruptcy courts will not hear petitions from federally illegal enterprises.

Instead of bankruptcy, cannabis companies that can’t pay their bills can be put into receivership under state law.

Two lessons

Having participated in several cannabis receivership proceedings, two lessons are apparent:

1. Most receivers need better advice in dealing with the licensing and other regulatory issues faced by cannabis enterprises.

On at least one occasion, a California receiver sold a marijuana store separately from its license to operate, thus ruining the value of the business and eliminating any chance of winding up the receivership.

Other common mistakes include believing that a receiver, who most likely has never operated a marijuana company, can properly operate a cannabis operation without the need for additional capital.

2. Receivers are not being correctly guided with respect to the complex tax and accounting issues that are raised by operating a cannabis business.

One of the first tasks of a receiver should be to ascertain the tax liability of the cannabis company.

The tax due is often unclear because of incorrectly prepared returns for both current and open (still subject to audit) years as well as overzealous and mistaken enforcement of Section 280E by the IRS.

When combined with the unavailability of clear tax rules (there are special helpful tax code provisions that can’t be used outside of federal bankruptcy), state-level cannabis receiverships are often unpredictable and unfair.

Pay up, negotiate

As difficult as it is, struggling cannabis companies should both pay their taxes and avoid receivership by negotiating with creditors.

For cannabis companies that have not yet taken the foolish nonpayment approach, there are alternatives, but they are complicated and require excellent books and records as well as sophisticated and aggressive advisers.

The real answer, of course, is to reform the tax code by getting rid of Section 280E; even people engaged in every other form of illegal activity get ordinary tax deductions.

Why should criminals engaged in the illicit marijuana market, for example, get tax breaks that people operating state-legal cannabis businesses don’t?

Unfortunately, such tax reform is unlikely to occur any time soon, and until then, marijuana operators need to avoid wishful thinking and make intelligent decisions.

James Mann, a cannabis tax lawyer at New York-headquartered Lucosky Brookman, argued the Harborside case in the 9th Circuit. 

John Yaeger, a principal of the San Diego-based public accounting firm Pham Yaeger, has a number of prominent cannabis enterprises as clients.

Source: https://mjbizdaily.com/not-paying-federal-taxes-is-a-foolish-form-of-cannabis-financing/

Business

Jio’s 1,600-Satellite LEO Constellation Gets Technical Green Light

Published

on

By

Reliance Jio has crossed a significant milestone in its space connectivity ambitions after its proposal to deploy a Low Earth Orbit (LEO) satellite constellation of around 1,600 satellites received a positive technical assessment from the Indian National Space Promotion and Authorisation Centre (IN-SPACe).

The evaluation, conducted jointly by IN-SPACe, the Indian Space Research Organisation (ISRO), and the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications, reportedly concluded that Jio’s proposed system meets the required technical standards and is comparable to leading global satellite broadband networks.

India’s Indigenous LEO Satellite Vision

Under the proposal, Reliance Jio plans to deploy between 1,600 and 1,650 satellites in Low Earth Orbit at an altitude of around 650 kilometres.

The planned constellation is expected to provide high-speed satellite connectivity across India, with approximately 32 satellites visible from any location at a given time. The company aims to roll out the network within the next two to three years, subject to regulatory approvals.

According to industry estimates, the satellite system could deliver 4.5 to 5 terabits per second (Tbps) of total data capacity, making it one of the largest satellite broadband projects proposed in India.

The project is expected to require an investment of $10–15 billion (approximately ₹95,000 crore to ₹1.42 lakh crore), reflecting the scale of infrastructure needed for satellite manufacturing, launches, ground stations, and user terminals.

Regulatory Process Moves Forward

Following the successful technical review, the proposal is expected to move into the next phase of regulatory approvals.

The government may now assist Jio in securing orbital slots, coordinating spectrum usage, and filing applications with the International Telecommunication Union (ITU), the global body responsible for managing satellite orbit and frequency allocations.

Obtaining orbital rights remains a critical step, as Low Earth Orbit has become increasingly competitive due to the growing number of satellite broadband projects being planned worldwide.

Officials also indicated that the proposed satellite architecture has been designed to coexist with future Indian LEO constellations, allowing multiple domestic operators to share orbital resources efficiently.

Broadband, Mobile Connectivity, and Strategic Applications

Jio plans to use the satellite network to provide a range of communication services, including satellite broadband, mobile backhaul, enterprise connectivity, and direct-to-device (D2D) satellite communication, particularly in remote and underserved regions where conventional telecom infrastructure is limited.

The company also intends to establish 20 to 22 ground stations across India to support network operations.

Apart from commercial telecommunications, officials have highlighted the project’s potential strategic importance. A domestically developed satellite constellation could strengthen India’s communication infrastructure, reduce dependence on foreign satellite operators, and support national security requirements.

Reports suggest preliminary discussions are underway regarding the possibility of integrating defence-related payloads into some satellites, enabling both civilian and strategic use.

Major Step for India’s Space and Telecom Sectors

Industry analysts view the technical clearance as an important milestone in India’s expanding private space ecosystem. If Jio secures the remaining regulatory approvals and international orbital clearances, the project could become the country’s first large-scale indigenous LEO satellite broadband network.

The initiative also aligns with India’s broader efforts to expand digital connectivity while strengthening its presence in the global satellite communications market.

Continue Reading

Business

Alleged Crores Pharma Scam Mastermind Arrested from Surat

Published

on

By

After evading law enforcement for nearly 13 years, an accused linked to a large-scale pharmaceutical fraud case has been arrested by Delhi Police from Surat, Gujarat. The suspect is alleged to have orchestrated a series of financial scams involving fake identities, forged documents, and dishonoured cheques used to procure high-value pharmaceutical raw materials.

Authorities say the accused, identified as Himmat Singh Lodha, is believed to have defrauded multiple pharmaceutical companies in Delhi of goods worth approximately ₹98 lakh before disappearing and remaining underground for years.

Fake Business Deals and Dishonoured Cheques Used in Fraud

Investigators claim the accused posed as a legitimate pharmaceutical trader and placed bulk orders for expensive drug ingredients, offering post-dated cheques as payment security.

In one documented case from 2013, he allegedly obtained around 550 kilograms of Gliclazide, a diabetes-related pharmaceutical ingredient, valued at over ₹26 lakh. When suppliers attempted to encash the cheques, they were reportedly returned with the remark “account closed.”

Following the transaction, the accused allegedly vacated his office and rented residence and disappeared without settling payments. He was later declared a proclaimed offender in 2016 after repeatedly failing to appear before court proceedings. Authorities had also issued a reward for information leading to his arrest.

Multiple Identities and Repeated Fraud Pattern

Police investigations further link the accused to another cheating case dating back to 2012, where he allegedly used a fake identity, “Kailash Jain,” to obtain a large consignment of Ambroxol HCL, a pharmaceutical compound used in cough medications. The value of that consignment was estimated at around ₹72 lakh.

Officials believe the accused followed a consistent modus operandi—posing as a credible businessman, securing high-value goods on deferred payment terms, and then disappearing after delivery while shutting down business operations.

Investigators suspect that forged business records, fake company credentials, and fabricated financial histories were used to build trust with suppliers and gain access to expensive raw materials.

Multi-State Surveillance Leads to Arrest in Surat

A special Crime Branch team tracked the accused through coordinated surveillance efforts across multiple cities, including Mumbai, Ahmedabad, and Surat. After nearly a month of technical monitoring and intelligence gathering, officials located and arrested him from a residential area in Surat.

Authorities also revealed that the accused had been involved in property-related activities while staying under the radar to avoid detection.

Growing Threat of Corporate Identity Fraud

The case highlights a rising trend of organised financial fraud targeting industries that rely heavily on trust-based transactions and deferred payments. Experts note that criminals increasingly exploit gaps in corporate verification systems by using fake GST registrations, temporary offices, and forged documentation to appear legitimate.

Cybercrime and financial fraud specialists warn that such schemes are becoming more complex with the widespread availability of digital business tools, making it easier to create convincing but fraudulent corporate identities.

Experts Urge Stronger Due Diligence in High-Value Transactions

Experts, including former IPS officer and cybercrime specialist Prof. Triveni Singh, emphasize the need for stricter verification procedures in commercial dealings. He noted that relying solely on paperwork or digital business profiles can expose companies to significant financial risk.

Authorities and industry experts recommend physical verification of business operations, bank account validation, and detailed background checks before engaging in high-value or deferred-payment transactions—particularly in sectors like pharmaceuticals, where single consignments can involve transactions worth crores.

Continue Reading

Business

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

Published

on

By

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.

Continue Reading

Trending

Copyright © 2022 420 Reports Marijuana News & Information Website | Reefer News | Cannabis News