TECHNOLOGY AND TA X
TECHNOLOGY, TAX PLANNING,
AND THE MARIJUANA INDUSTRY
BY: MARC E. SEYBURN
AS THE marijuana industry is quickly
growing, it is attracting a lot of new
businesses, many of which do not want to
be subjected to (i) licensing requirements
in their state of operations; or (ii) the
consequences of being classified as
trafficking a Schedule I or II controlled
substance within the meaning of the
Controlled Substances Act (title II of Pub.
L. 91-513, October 29, 1970, 84 Stat. 1242,
as amended).
One example that I learned of that
was particularly interesting to me is
a smart container that provides many
unique features. The company—which is
called The TechCase—is selling its smart
containers subject to a shared licensing
arrangement where the cases would
be used to securely transport valuable
goods with data tracking, auto manifest,
GPS, and other features, which are ideal
features for transporting marijuana.
This product creates many savings
opportunities for what should be set up
as a separate trade or business to meet
the objectives recited above.
When you start breaking a business
down and trying to create separate
businesses, it is not as easy as simply
stating there is a new business. Internal
Revenue Code (IRC) §446 provides that a
taxpayer engaged in more than one trade
or business can use different methods of
accounting for each trade or business in
computing taxable income, as long as
the chosen method for each trade or
business provides a clear reflection of
income, and the trades or businesses
must be separate and distinct. This
area of the law provides great insight
into the same issue that has faced many
marijuana businesses as it relates to how
to break a trade or business into multiple
trades or businesses. This is a facts-and-
circumstances analysis that requires you
to work with your professionals. As we
have seen in several tax court cases that
have analyzed whether a single entity
Marc E. Seyburn
Marc E. Seyburn has been developing his professional skills for over 20 years, which
has allowed him to cultivate his unique talents as a creative thinker in legal, tax
and financial planning. Throughout his career he has gained valuable experience
in all phases of transactional work, utilizing his unique skill set from capital raise
through startup in a wide variety of industries. His primary technical expertise is in
structural planning, partnership taxation, estate planning, jet acquisition structuring,
cash flow modeling, and analyzing and structuring investment opportunities.
In February 2010, Marc opened his current practice with the goal of taking advantage of
up-to-date technology, as well as leveraging a new business plan that promotes increased
efficiencies and flexibility in its fee arrangements. The sky is the limit for opportunities.
seyburnlawpllc.com
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has more than one business (CHAMPS,
Collins, Oliver, etc.), the taxpayer must
have good facts to get a good result.
Thus, despite not having much in the way
of direct authority for marijuana business
tax planning, we do know there are other
areas of the tax law, such as IRC §446,
that have been around longer and can
provide valuable insight into the planning
process to create the best facts possible
for your new business.
Since there is no shortage of innovative
smart people, the possibilities are
endless. Professionals and clients should
be reviewing all available technology and
integrating where possible into their
client’s business model or to create a
new or separate business that meets the
objectives set forth above. Don’t rush to
get open if you haven’t done your planning.
Your savings will be immeasurable.