What 280E means for your marketing budget
Every other retailer in America deducts their advertising as an ordinary business expense. You can't. Under IRC Section 280E, a business trafficking in a Schedule I substance cannot deduct ordinary operating expenses — and marketing is squarely on the non-deductible side of that line.
Your advertising isn't tax deductible. Here's what that actually changes.
Spends on advertising
A normal retailer: $1.00
You: $1.00
Tax deduction generated
A normal retailer: $0.21
You: $0.00
What it really costs them
A normal retailer: $0.79
You: $1.00
Over a year, a $24,000 campaign costs a normal business about $18,960 after tax. It costs you $24,000. And that sits on top of effective federal tax rates that can run far above comparable businesses.
Why most marketing pitches ignore this
Because most agencies don't know it. That's how you end up in a meeting where someone presents 400,000 impressions, while you're doing different math entirely: what this costs in hard, after-tax dollars, and what it has to bring back before it's worth doing.
What it should change about how you buy marketing
- Ask what a campaign has to bring back, not how far it reached
- Make measurement non-negotiable
- Start small and scale what works
- Ask what happens if it doesn't work
Buy marketing like 280E exists.
Book a call or see the pricing before you spend another after-tax dollar.