The ESOP 280E Tax Loophole Explained

On today’s TDR Cannabis Exclusive, we’re talking taxes. Specifically, we’re talking about one cannabis tax that is impacting the profitability of a lot of businesses in the space: 280E. Darren Gleeman, the Managing Partner of MBO Ventures, joins us for an exclusive interview to explain everything you need to know about the ESOP 280E Tax Loophole. 

That’s right, we did say loophole. Darren Gleeman sheds light on Employee Stock Ownership Plans (ESOPs) and their potential to help cannabis companies avoid the dreaded 280e tax code. According to the IRS, “an employee stock ownership plan (ESOP) is an IRC section 401(a) qualified defined contribution plan that is a stock bonus plan or a stock bonus/money purchase plan.” Darren walks us through the concept of ESOPs, which provide alternative ways for business owners to sell their companies.

You’ll learn the inner workings of ESOPs, their structure, and the benefits they offer to employees in helping them gain equity and ownership. There’s a tax subsidy advantage in utilizing the program, deferred capital gains, and you’ll learn more about the government incentives behind selling to employees.

Between the tax subsidies and deferred capital gains, ESOPs in the cannabis industry could lead to substantial savings. Darren Gleeman explains how they can be structured specifically for cannabis businesses and how they address some of the unique challenges experienced by many companies in the industry.  

What is the difference between public and private companies? You’ll gain insights into the differences and limitations of these ESOPs in a publicly traded cannabis company versus a private company. 

It could be a game-changing solution to some of the problems posed by 280E. Not only could it save a cannabis company money, it could entirely transform a company culture by instilling a sense of ownership by the employees itself, enhancing retention rates and motivating employees to help drive the success of the business. With ESOP adoption in mind, Gleeman shares his growth trajectory and projections for the industry.

Don’t miss this eye-opening interview as Darren Gleeman provides a deep dive into ESOPs and their potential to reshape the cannabis landscape. Join us for a discussion that could change the way you think about taxes and ownership.

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