IRC 280E Is Crushing Cannabis Profits—This New Book Shows How to Make It Irrelevant

For cannabis founders, IRC Section 280E has been an almost unbeatable opponent. The federal tax code provision, originally designed to keep drug traffickers from deducting business expenses, forces legal cannabis companies to hand over as much as 70 percent of profits to the IRS. Even a strong year can feel like a slow bleed.

Now, Darren Gleeman—Managing Partner of MBO Ventures and the driving force behind every completed Employee Stock Ownership Plan (ESOP) deal in U.S. cannabis—says there’s a proven, IRS-compliant way to fight back. His new book, The Cannabis ESOP Architect: The Ultimate Guide for Cannabis Founders Looking to Exit Smarter, lays out the blueprint for selling your business tax-free, preserving its culture, and making 280E a thing of the past.

“Every cannabis founder I speak to is asking the same thing: How do I keep going when the IRS is taking nearly everything?” Gleeman says. “The ESOP structure turns IRC 280E into a non-issue—not by bending the rules, but by changing the game entirely.”

The ESOP model allows founders to sell their company to employees while paying no federal or state income tax, a strategy already executed in eight cannabis transactions with another dozen in the works for 2025–2026. Unlike traditional M&A or private equity deals—which often undervalue companies and strip away a founder’s long-term upside—Gleeman’s method protects margins, keeps leadership involved, and rewards the workforce that built the brand.

The Cannabis ESOP Architect walks readers through:

  • How to legally eliminate federal and state income taxes
  • Why ESOP-owned cannabis companies are immune to 280E
  • Ways to retain future upside through warrant structures
  • Why this approach consistently outperforms private equity exits

Gleeman’s track record includes structuring the industry’s first 100% employee-owned cannabis company, Theory Wellness, and he’s confident the model will define the next wave of smart cannabis exits.

The book is available now on Amazon in Kindle and paperback. For cannabis founders staring down the barrel of 280E, it might just be the most valuable read of the year.

Learn more at mboventures.com.