The U.S. cannabis industry is benefiting from long-desired tax relief now that an increasing number of states – 20 so far – have approved laws that exempt, or “decouple,” businesses from Section 280E of the federal tax code.
This spring, legislators in Connecticut, Illinois, New Jersey and New York passed legislation that will allow cannabis companies to deduct business expenses from their state income taxes, despite those companies remaining illegal under federal law.
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The savings could be in the millions for some larger operators, depending on the state’s corporate tax rate.
The state-level exemption does not affect the federal taxes owed by marijuana companies, however, and businesses will still not be allowed to deduct expenses toward those federal income taxes.
Section 280E of the IRS tax code prohibits marijuana businesses from taking traditional business deductions because the plant is listed as a Schedule 1 drug under the
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