For those who might have skipped a few classes in high school, a quick recap here: in 1773, a group of colonists dumped 342 chests of tea into the Boston Harbor in what would become one of the most famous tax protests in American history.
This week—some 250 years later—senior leaders at multistate cannabis company MariMed re-enacted that revolt, boarding the 67-foot Liberty Star schooner in period-perfect costumes and reading grievances off an antique-style scroll.
But the modern uprising—a Boston THC party, if you will—did not throw ganja into the Massachusetts Bay, opting instead for sustainable wooden boxes with the word “weed” stamped on them. (They were quickly fished out of the water).
While the stunt leaned into showmanship and sleight of hand, it had a serious purpose, much like its 18th century predecessor.
MariMed is calling attention to Section 280E of the Internal Revenue Service code—dubbed a contemporary version of taxation without representation—which prohibits cannabis companies from deducting ordinary business expenses.
Cannabis is classified as a Schedule 1 controlled substance, on par with heroin, and the IRS technically considers its purveyors drug traffickers who aren’t allowed to write off basic business costs such as marketing, salaries, rent, legal fees and insurance.
The result of 280E is higher taxation than any other business category, “which hurts profitability and means higher prices for consumers,” Howard Schacter, chief communications officer at MariMed, told Adweek before boarding the tall ship.
“We’re paying homage to our patriot ancestors, protesting a tax that singularly burdens the cannabis industry,” Schacter said. “We’re saying enough is enough.”
Sky-high taxes
According to research by Whitney Economics, the cannabis industry paid an estimated $1.8 billion more in federal taxes than non-weed companies in 2022. The number is expected to climb to $2.1 billion this year, per MJBizDaily.
280E is not only unfair, it’s untenable, causing some dispensaries to close their doors and brands to shutter because they can’t turn a profit, according to industry leaders. The rule makes it more difficult for legal operators to compete with the illicit market, which pays no taxes and offers cheaper products as a result.
MariMed, based in Massachusetts, wanted to take an industry-leader position in highlighting an issue that hasn’t yet gained much traction outside the cannabis space. It continues to be a hot-button topic within weed circles, though, as the industry has struggled in recent times from a variety of ills, including stalled sales in mature markets, product oversupply, price compression and illicit competition.
Splashy statement
On the federal regulatory level, the industry has held out hope for rescheduling or de-scheduling cannabis, as President Joe Biden has championed, which could wipe out the 280E problem.
But so far, there’s been little progress in Washington, even with support from lawmakers in both political parties. “State-legal cannabis businesses are denied equal treatment under 280E,” according to Oregon Congressman Earl Blumenauer, who has called the rule “grotesquely unfair treatment” while urging colleagues to reform the tax code.
In the meantime, 20 states now allow cannabis companies to deduct routine expenses like equipment, licensing fees and travel from their state taxes. That saves the industry some cash, but does nothing about the IRS problem.
MariMed’s leadership team—about 20 executives including CEO and president Jon Levine, COO Tim Shaw and CFO Susan Villare—decided the time was right to make a splashy statement and latched onto the anniversary of the original Boston Tea Party.
An immediate goal: boosting education and awareness, with the company’s website acting as a resource, and asking the public to get involved, urging their elected representatives to reform the code.
A history of stunts
Understanding the mechanics of a good stunt was key to pulling off the “Boston 280E THC Party,” and MariMed has a successful track record with its throwback “world’s largest” pot brownie. The Bubby’s Baked product, weighing in at 850 pounds with 20,000 milligrams of premium THC, became a viral sensation in 2021.
The team used the same lens to view Wednesday’s stunt, Schacter said, knowing that eye-grabbing visuals and a strong storyline could draw mainstream news coverage and social media chatter. Those, in turn, could amplify the issue far beyond any paid media, which is tightly restricted in cannabis.
The stunt could raise MariMed’s profile, both locally and nationally, a not entirely unintended consequence.
“We’ll do whatever we can to help broaden access to this miracle plant and make it more affordable,” Schacter said. “It’s about the whole industry, but if we get applauded for the stunt, we’ll take it.”
