Cannabis News of Note:
NYTimes: Trump Signs Order to Ease Restrictions on Marijuana
Digital Journal: What’s in store for cannabis banking in 2026?
Bloomberg: Split Tax Court Backs IRS Denying Compromise With Marijuana Shop(paywalled article, full text below)
Cannabis Reports of Note:
CANNRA: Overview of the 2025 U.S. Congressional Appropriations Language on Hemp
Bloomberg: Split Tax Court Backs IRS Denying Compromise With Marijuana Shop
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Dec 16, 2025, 4:33 PM EST
By Tristan Navera
The IRS properly applied a Tax Code provision forbidding tax breaks when it rejected a marijuana business’s attempt to settle debts, a split Tax Court ruled.
The court upheld the rejection of an offer-in-compromise from cannabis business Mission Organic Center Inc. based on IRC Section 280E. That provision blocks tax credits and deductions from businesses that traffic in designated controlled substances, so it disallows many of the expenses Mission Organic Center claimed on its tax returns.
The complicated determination resulted in seven opinions—two concurring with the 16-judge majority, as well as three dissenting judges, who each wrote an opinion.
The court also issued a separate, unanimous memorandum opinion that the IRS abused its discretion for Mission’s 2021 tax year because it grouped that year’s dispute in with the others without addressing Mission’s separate arguments about financial record disclosure.
Collectability
After the IRS sent Mission Organic a notice of intent to levy for its $5.25 million in past-due taxes from 2016 to 2020, the company submitted an offer-in-compromise to the IRS to pay $65,000 in installments. The IRS rejected the offer because its calculations showed Mission used tax deductions forbidden to it by Section 280E that reduce its future income.
The IRS estimated that, without tax breaks, the company would generate $57.8 million in income over the next 113 months, and so rejected the offer, aiming to claim the company’s entire outstanding liability. The company petitioned the Tax Court saying the expenses were necessary for the production of its income and so the IRS rejection was an abuse of discretion.
That was the correct calculation, Judge Ronald L. Buch wrote for the majority that 280E’s legislative history shows congressional intent to disallow deductions in this instance. The collection potential was “reasonable” based on those inputs. Judge Emin Toro wrote in a concurring opinion that the US Supreme Court added support to this determination with other rulings.
Judge Elizabeth A. Copeland wrote in a concurring opinion that Mission’s opinion “violates the spirit” of an offer in compromise because of its history of non-payment of tax, which dates to 2012. Mission “has, in effect, pretended that it can take those forbidden deductions.”
Lack of Law
In separate dissenting opinions, Judges Mark V. Holmes, Rose E. Jenkins and Adam B. Landy argued the majority opinion is unsupported by law.
Landy said the majority “departs from settled tenets of administrative law and steps into the role of settlement officer” and sided with Mission. Jenkins agreed citing treasury regulations she said contradict the tax code.
Holmes said the IRS didn’t properly account for the reasoning behind its notices and sided with Mission’s “danker” reading of the statute, which requires the IRS to focus on a taxpayer’s ability to pay, not their taxable income.
A number of petitions at the US Tax Court challenge IRC Section 280E, which applies to many marijuana businesses and disallows tax credits at the federal level, even though those businesses are legal at the state level.
Joseph A. Broyles of Los Angeles represented Mission Organic Center.
The cases are Mission Organic Center Inc. v. Commissioner, T.C., No. 9456-23, 12/16/25 and Mission Organic Center Inc. v. Commissioner, T.C., No. 6938-23, 12/16/25.