Weeding the News – April 7, 2025

Volume 1, Issue 10

The Newsletter’s Aim

Weeding the News – a breakdown of the month’s cannabis news, important events, and top-notch accounting tips – aims to entertain and inform you as we watch the cannabis industry transform before us.

The information contained in Weeding the News issues is provided for informational purposes only and should not be construed as tax or legal advice.

What’s on the Docket

Florida veterans are looking at free medical marijuana cards. Federal lawmakers announce stance on cannabis legislation. A Swiss study is showing promising results for recreational cannabis, and Michigan has put the kibosh on the police’s ability to search drivers’ cars on the pretext of smelling cannabis. And we hear from the owner of a cannabis delivery app that services the U.S. and Jamaica.

Cannabis in Los Angeles and Beyond

In California cannabis industry news, Gold Flora, a popular Southern California-based cannabis company with 16 dispensaries statewide, is looking to sell its assets through a receivership. Read more on the LA Times.

In Ohio, a House committee has amended a bill (HB 160), which would entail more stringent criminal penalties, curtail equity programs, and restrict legal products, among other changes to cannabis products. Read more on Marijuana Moment.

Meanwhile, Ohio’s state budget plan failed to include a proposed tax hike on cannabis. Possibly staving off increased prices on cannabis products in the state. Read more on the Green Market Report.

Another Midwest state, Indiana, is also facing turbulence as lawmakers are pondering a bill that would make all cannabis advertising illegal (an issue other states are also contending with, e.g., Mississippi). Read more on Ganjapreneur.

U.S. Congress voting on cannabis regulation

Delaware residents have seen their hopes of adult use of cannabis hit a snag as the FBI has rejected a revised application for a service code that would require background checks by way of fingerprint scans. Read more on Cannabis Business Times.

Felicia Reid, the acting executive director of New York State’s Office of Cannabis Management, believes cannabis sales could reach $1.5 billion this year. Reid points to several positive markers. Read more on MjBizDaily.

Virginia lawmakers have shot down some of Gov. Glenn Youngkin’s proposed changes to a current medical marijuana bill, restricting cannabis delivery, while upholding his veto of recreational marijuana sales. Read more on Marijuana Moment.

In Florida, the House Health Professions & Programs Subcommittee has approved House Bill 555 that would make medical marijuana cards free for veterans. Read more on the Marijuana Herald.

In White House news, an administration official has stated that “no action” is planned regarding cannabis policy. Read more on Ganjapreneur.

Abroad

A Swiss study on recreational cannabis is showing promising results for participants’ mental health, including lowering instances of depression and anxiety and reducing addictive tendencies. Further, the study suggests these benefits did not come with increased cannabis usage. Read more on Leafie.

France, a country that has notoriously strict cannabis laws, has made some headway in allowing medical cannabis, as three separate documents have been submitted to the EU for approval, with their passing seen as a mere “formality.” Read more on Business of Cannabis.

Got Tax?

Tax Tips

April 15th is the due date for individual and C corporation tax returns without extension. There are two requirements: filing the return and paying the tax.

If an extension is needed, it is only an extension for Filing the tax return, not for Paying the tax. If the exact tax is not known by April 15, estimate the tax and pay by the 15th.

Some amount must be paid in order to validate the extension. If nothing is paid when the tax return is filed, it may be treated as past due because the extension was not valid.

April 15th is also the due date for making a first-quarter, 2025 estimated payment.

It is recommended that a payment be made for each tax period: extension for 2024 or payment for 2024 and a separate payment for Quarter 1, 2025.

collage of tax-related cannabis items and cash with cannabis plants

Upcoming Events

Representatives from Cannabis CPA Tax will be attending these events.
Say hi… we’d love to chat.

KushStock 2025

Los Angeles, CA, April 19, 2025
Back at home in Los Angeles this year, the long-running musical festival has returned!
Hosted at The Beehive, general admission tickets are free, and parking is plentiful.

More Upcoming Events

NCIA Stakeholder Summit Series

Sacramento, CA, Apr 10
Denver, CO, Apr 29
A venue for members and others to discuss policy and regulatory developments at the state and federal levels.

Washington, D.C., May 13-15
Further, the NCIA will be hosting its 13th Annual Cannabis Industry Lobby Days, a premier advocacy event, as well as its stakeholder summit series.

Benzinga Cannabis Capital Conference ‘25

Chicago, IL, June 8-10
A conference for helping cannabis entrepreneurs raise capital, seal deals, and forge partnerships.

The Situation Report

Illustration of the scales of justice balancing weed on a scale

Connecticut Law enforcement officials are backing legislation that would allow police to stop and potentially arrest motorists they suspect of smoking cannabis in their vehicles. Critics say it is another tactic in the failed war on drugs and a ploy to target marginalized groups. Read more on Police 1.

Michigan evidently feels differently than Connecticut, as the state’s Supreme Court has ruled that the smell of cannabis alone is not adequate cause for police to search a vehicle. Read more on the Detroit Free Press.

Industry Insight

Colin Fraser, owner of Upling, a cannabis delivery app

Photo of Colin Fraser

“Every movement toward justice started with a simple truth: people needed to see things differently. Think about it – how many times has someone’s view shifted simply because they saw something from a new angle? That’s what we’re doing in the cannabis industry. We’re not just handling deliveries; we’re opening doors that were once firmly closed.

“When we talk about Black history in cannabis, we’re talking about generations of unequal treatment turned into opportunities for progress. From families affected by past policies to entrepreneurs creating new possibilities today, these stories matter—they’re about real people making real change.

“As we serve our community, we’re writing a new chapter where everyone has a seat at the table. Each delivery represents another step toward an industry that works for all of us.

“This isn’t just business – it’s about building bridges and breaking barriers, one connection at a time.”

Cannabis business being conducted in a board room with cannabis Tax charts and number projected on the walls

Much-Needed FAQs

Instead of answering questions that have been asked all the time, we offer a few questions that should be asked. If asked, the questions would save you a lot of time and trouble. Trust us.

Q1: Are personal meals considered to be tax-deductible?

A: Under U.S. tax law, meals are generally considered personal expenses and are not deductible unless specific conditions are met. Daily meal deductions lack legal support in most scenarios, and we advise caution against oversimplified tax strategies.

Main Takeaways

Tax Law Framework: The Internal Revenue Code (IRC) 162(a) allows deductions for “ordinary and necessary” business expenses, but IRC 262 explicitly excludes personal expenses, including daily meals, unless proven otherwise.
Court Precedents:

1. Sutter v. Commissioner (1953) established that meal expenses must differ significantly from regular personal costs to be deductible.
2. Howard v. Commissioner (1981) allowed deductions for infrequent, commercially motivated meals.
3. Moss v. Commissioner (1985) solidified that daily meals, even with a business purpose, are inherently personal and non-deductible unless extraordinary evidence proves otherwise.

Exceptions: Unique cases, such as mandatory meal contributions for Los Angeles firefighters (Sibla v. Commissioner), were deemed deductible due to their involuntary nature.

Q2: Are credit card rewards taxable?

Main Takeaways

Frequent flyer miles and promotional points remain non-taxable under current IRS policy.
Cash back rewards are taxable for business-related purchases but not for personal use.
The IRS may revisit its policies or refine its arguments in future cases, potentially altering how such rewards are taxed.

Frequent Flyer Miles and Promotional Benefits:

1. These rewards are generally non-taxable due to administrative challenges in valuation, timing, and enforcement.
2. IRS Announcement 2002-18 explicitly states that such benefits are not pursued for taxation, though this is a policy decision rather than a legal exemption. This means the IRS could change its stance in the future.
3. Exceptions exist, such as a 2014 Tax Court case (Shankar v. Commissioner), where rewards tied to opening a bank account were deemed taxable as interest income.

Cash Back Rewards:

1. For personal purchases, cash back is treated as a reduction in the purchase price (or tax basis) and is non-taxable since personal expenses are not deductible.
2. For business purchases, cash back reduces the deductible expense, effectively making it taxable by lowering the business deduction.
3. This treatment is based on IRS Revenue Ruling 76-96, which established that rebates reduce the purchase price rather than being considered income.

Court Case: Anikeev v. Commissioner (2021):

1. This case involved taxpayers who exploited credit card rewards through systematic money-circulating schemes. While they won, it was due to procedural errors by the IRS, not because such rewards are inherently non-taxable.
2. The court clarified that rewards could be taxable if the IRS applied the correct argument, particularly regarding basis adjustments.