New York Lawmakers Seek Tax Deductions For Marijuana Businesses In Budget Proposals, Despite Federal Ban

New York Lawmakers Seek Tax Deductions For Marijuana Businesses In Budget Proposals, Despite Federal Ban
MJ moment

New York legislative leaders have filed budget proposals that include language to let marijuana businesses take state tax deductions that are available to other industries despite an ongoing federal ban. Both the Assembly and Senate budget measures that are expected to pass in advance of an April 1 deadline seek to carve out an exemption that would enable cannabis businesses to make the deductions as the state prepares to launch its adult-use market. Retailers could start opening as early as this year. This is not an issue that’s unique to New York’s marijuana industry. Medical and adult-use cannabis companies across the U.S. are precluded from making certain federal tax deductions under an Internal Revenue Code section known as 280E. Under 280E, businesses whose activities consist of “trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act)” cannot make deduct most business expenses from their federal taxes or receive tax credits, even though they are still obligated to pay taxes like any other company. Because many states simply mirror federal tax policy in their own codes, the federal government’s anti-cannabis stance also blocks state-level deductions in some places. As a result, some cannabis businesses pay effective tax rates of up to 80 percent, according to industry groups and accounting firms. To help resolve the issue, New York legislators in both chambers inserted language into their respective budget proposals stating that, beginning this taxable year through January 1, 2025, “the provisions of Section 280E of the Internal Revenue Code, relating to expenditures in connection with the illegal sale of drugs, shall not apply for the purposes of this chapter to the carrying on of any trade or business that is commercial cannabis activity by a licensee.” — Marijuana Moment is already tracking more than 1,000 cannabis, psychedelics…

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Source : New York Lawmakers Seek Tax Deductions For Marijuana Businesses In Budget Proposals, Despite Federal Ban

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