The Pennsylvania House has approved a large-scale tax reform bill that contains language to provide state-level relief to medical marijuana businesses as they continue to struggle under federal financial barriers. The reform has drawn the ire of Republican members—who normally champion tax cuts—as a Democratic giveaway to the cannabis industry.
The marijuana provisions would allow state-licensed medical cannabis businesses to take state tax deductions as a partial workaround to the Internal Revenue Service (IRS) code known as 280E that prohibits such deductions at the federal level.
The House approved the tax bill in a party-live vote of 102-101 on Tuesday, sending it to the GOP-controlled Senate.
The language says that medical marijuana businesses may take an additional deduction “in the amount of the ordinary and necessary expensed paid or incurred during the taxable year” that are “ordinarily deductible for federal income tax purposes.” As such, the state tax policy would be decoupled from the federal prohibition that it has implemented on the state level.
Pennsylvania lawmakers approved similar language as an amendment to a tax bill in a House committee last year, but the legislation was ultimately laid on the table.
The new provision “will make us consistent with other
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