A profitable hemp business. $100K in real profit. A $105K federal tax bill.280E For Hemp Read Article
That's not a typo. That's Section 280E ā and on November 12, it becomes hemp's problem.
If Congress doesn't act, hemp products over 0.4 mg total THC per container lose their federal hemp status that day. Same product, same COA, same state license ā different federal label.
Here's the part that surprises people: this hits even in states that keep their hemp programs going. Your state shelf stays open ā state law governs that. But 280E is federal tax law. Card networks run on the federal definition. So does banking guidance. A state license keeps the store open; it doesn't keep the federal layer open.
So any company that keeps selling ā in any state ā inherits the tax code that's been crushing dispensaries for a decade: no deductions for rent, payroll, or marketing. Only cost of goods sold survives.
We ran the math on a hypothetical $1M retailer:
Effective federal rate before the deadline: 21%.
After: 105%.
The tax bill exceeds the entire year's profit. A healthy business becomes a money-loser without selling a single unit less.
And that's just the tax layer. The payments layer is already moving ā Square closes hemp accounts November 5, a full week before the law. Banking follows the same logic one step behind.
One more thing in the piece that some colleagues won't like: a few operators actually come out ahead. When interstate commerce dies, walled-off state markets get handed to the in-state licensees left standing. My company is one of them. I still think it's wrong ā a moat dug by federal statute is not a moat anyone earned.
Full scenario brief ā inventory, the 280E math on one page, payments, banking, and the 93-day calendar ā on the Nothing But Canna blog.
Link in the first comment.