Mnuchin Says No To Weed For Opportunity Zone Investing

Cannabis

It seems that one of the lingering questions regarding opportunity zones has been answered, eliminating a possible avenue of investment.

In a hearing of the Senate's Appropriations Committee, Treasury Secretary Steven Mnuchin "advised against" the use of qualified opportunity funds to invest in cannabis businesses, Bloomberg Tax reports. Mnuchin said the cannabis industry doesn't align with the spirit of the legislation that created opportunity zones.

The law in question, the Tax Cuts and Jobs Act of 2017, banned the use of opportunity funds to invest in what the U.S. Tax Code defines as "sin businesses": liquor stores, casinos, racetracks, golf clubs, tanning salons and massage parlors, among others. Because cannabis is still illegal under federal law, there was no provision for its inclusion on the list.

Mnuchin and Sen. James Lankford of Oklahoma agreed that cannabis should be excluded from opportunity zone tax benefits even in states where it has been legalized for medical or recreational use, Bloomberg Tax reports.

Some had held out hope that changing attitudes surrounding cannabis could allow for its inclusion in opportunity zone investing. Though no official declaration has been made, Mnuchin's testimony likely squashed those hopes.

Even without the potential tax benefits of opportunity zone investing, cannabis remains a strong growth industry that has become intriguing to investors willing to bear the headache of reconciling contradictory state and federal laws.

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