Companies cannot make deductions disclosing unlawful money management when to allow such deductions would hurt the national or state policy that prohibits the alleged actions. Federal law implies that Congress can enforce certain provisions that restrict deductions in connection with illegal activity or any attempts at abusing federal law. The Internal Revenue Code section 280E was explicitly created to disallow deductions or credit for any expenses in a firm that participates in trafficking in illegal narcotics that is prohibited by the Federal or State authorities. 280E is applied to the cannabis industry in a way that is very burdensome with regards to taxes. The strict policy states that no deduction or credit can be allotted for money paid or earned during the year pertaining to illicit schedule I and II drugs including cannabusinesses. States are fighting the Federal courts because Congress should not apply taxation on activities deemed legal by State law. The federal government has stayed firm on the 280E legislation arguing that the tax is for anyone trafficking a controlled substance and is surpassing the State’s authority on what is and isn’t considered legal. It’s important to note that 280E is at the heart of debate between State and Federal lawmakers and we will likely see some sort of compromise with regards to how the taxation is applied to business owners working in the cannabis industry and hopefully States will legalize cannabis without being heavily taxed.