Justin Botillier Partner at Calyx CPA LLC explains the nuances around IRC 280E & 471(c) and how these tax codes effect all businesses in the recreational cannabis business. Section 280E of the Internal Revenue Code forbids businesses from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances. Recently there have been developments in IRC Section 471 that came out of the Tax Cuts and Jobs Act of 2017. IRC 471(c) Exemptions for Certain Small Businesses gives a great amount of latitude in applying costs to inventory far beyond what was previously possible; this can make a huge difference on tax liabilities due.