Clearing the Air About Marijuana in Qualified Opportunity Zones

35 Tax Management Real Estate Journal No. 4 (2019)

3 Pages Posted: 15 Apr 2019 Last revised: 7 May 2019

Date Written: April 3, 2019


The law formerly known as the Tax Cuts and Jobs Act of 2017 created qualified opportunity zones (QOZs), which are low-income census tracts in which certain investments by qualified opportunity funds (QOFs) are provided tax benefits. The investments generally cannot include any golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises (some practitioners refer to such businesses as ‘‘sin businesses,’’ but this article uses the non-judgmental and less anti-golf term of ‘‘excluded business.’’)

Some commentators have stirred the pot by questioning the extent that QOFs can be involved in marijuana businesses. While the QOZ rules have their hazy areas, the excluded businesses should not include marijuana activities.

However, section 280E may disallow deductions for taxpayers that buy and sell marijuana. QOFs should ensure that they deal with marijuana in a different capacity, such as in a real estate rental business, in order to ensure that their deductions do not go up in smoke.

Keywords: qualified opportunity zone, qualified opportunity fund, marijuana, cannabis, farming, sin business, section 280E

Suggested Citation

Zhang, Libin, Clearing the Air About Marijuana in Qualified Opportunity Zones (April 3, 2019). 35 Tax Management Real Estate Journal No. 4 (2019). Available at SSRN:

Libin Zhang (Contact Author)

Fried Frank ( email )

One New York Plaza
New York, NY NY 10004
United States

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