Welcome to Cultivate... Spring Mountain - 3615 Spring Mountain Rd Monday-Sunday: 8:00 AM-3:00 AM Durango - 7105 N. Durango Dr. #120 Monday-Sunday: 8:00 AM-12:00 AM
Welcome to Cultivate... Spring Mountain - 3615 Spring Mountain Rd Monday-Sunday: 8:00 AM-3:00 AM Durango - 7105 N. Durango Dr. #120 Monday-Sunday: 8:00 AM-12:00 AM
cultivate logo

New York Governor Signs Marijuana Tax Cut Bills, Providing Local 280E Relief For NYC Businesses


New York’s governor has signed legislation that to provide tax relief to New York City marijuana businesses that are currently blocked from making federal deductions under an Internal Revenue Service (IRS) code known as 280E.

About five months after the Senate and Assembly approved the proposal, and less than a week after both chambers formally transmitted their identical bills to Gov. Kathy Hochul (D), she signed them into law on Friday.

While Hochul signed a separate budget bill last year that included provisions allow state-level cannabis business tax deductions—a partial remedy to the ongoing federal issue—New York City has its own tax laws that weren’t affected by that change. The new measure is meant to fill that policy gap.

“This bill would allow a deduction for business expenses, incurred by taxpayers authorized by the Cannabis Law to engage in the sale, distribution, or production of adult-use cannabis products or medical cannabis, for purposes of the unincorporated business tax (UBT), the general corporation tax (GCT), and the corporate tax of 2015, commonly referred to as the business corporation tax (BCT),” a summary says.

A section of the city’s tax code would be amended to add sections allowing the deductions “in an amount equal to any federal deduction disallowed by section 280E of the internal revenue code.”

“This modification to income is appropriate because, while the expenses of cannabis-related business cannot be deducted for federal purposes, New York law permits and encourages these businesses akin to any other legitimate business occurring in the State,” a memo attached to the bill says. “The City’s business taxes should similarly encourage these business activities.”

It also notes that the reform legislation has the support of New York City Mayor Eric Adams (D).

Lawmakers in several states have pursued the tax workaround as congressional marijuana reform legislation continues to stall, leaving state-licensed cannabis businesses with significantly higher federal effective tax rates under prohibition.

Last month, for example, the Pennsylvania House approved a large-scale tax reform bill that contains language to provide state-level relief to medical marijuana businesses. The reform has drawn the ire of Republican members—who normally champion tax cuts—as a Democratic giveaway to the cannabis industry.

In August, the governor of Maine signed legislation to decouple the state tax from the federal policy for cannabis businesses.

The governor of Illinois also signed a budget bill in June that includes provisions that will allow licensed marijuana businesses to take state tax deductions that they’re currently prohibited from utilizing under the IRS code.

That same month, the governor of Connecticut also signed budget legislation that includes provisions to provide state-level tax relief to licensed marijuana businesses as a federal 280E workaround for the industry.

Also, the governor of New Jersey signed legislation in May to allow licensed marijuana businesses to deduct certain expenses on their state tax returns as a partial IRS 280E fix. Lawmakers in Iowa and Virginia have similarly pursued tax relief for each of their state’s marijuana markets.

At the congressional level, Rep. Earl Blumenauer (D-OR) reintroduced a bill in May that would amend the IRS code to allow state-legal marijuana businesses to finally take federal tax deductions that are available to companies in other industries.

He told Marijuana Moment that he’s “absolutely convinced when we are able to fully deduct their business expenses that there actually will be more revenue collected because people will comply fully with the law.”

For the time being, the marijuana industry continues to face tax policy challenges under the umbrella of prohibition. And as the Congressional Research Service (CRS) noted in a 2021 report, IRS “has offered little tax guidance about the application of Section 280E.”

IRS did provide some guidance in an update in 2020, explaining that while cannabis businesses can’t take standard deductions, 280E does not “prohibit a participant in the marijuana industry from reducing its gross receipts by its properly calculated cost of goods sold to determine its gross income.”

The IRS update seemed to be responsive to a Treasury Department internal watchdog report that was released in 2020. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”


Kyle Jaeger via (https://www.marijuanamoment.net/new-york-governor-signs-marijuana-tax-cut-bills-providing-local-280e-relief-for-nyc-businesses/)

Keep out of reach of children. For use only by adults 21 years of age and older.

Recent Articles

Back to Blog
Massachusetts Officials Expected To End Two-Driver Rule For Marijuana Deliveries This Month Massachusetts Officials Expected To End Two-Driver Rule For Marijuana Deliveries This Month

Oct.10.2024

This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons license. “We’ve been talking about...

Read More
Marijuana Components Show ‘Promising Potential As Anticancer Agents,’ Study Finds, Though Mechanisms Of Action Are Still A Mystery Marijuana Components Show ‘Promising Potential As Anticancer Agents,’ Study Finds, Though Mechanisms Of Action Are Still A Mystery

Oct.7.2024

A new scientific review on cannabis and cancer concludes that a variety of cannabinoids—including delta-9 THC, CBD and cannabigerol (CBG)—”show...

Read More
Delaware Officials Receive More Than 1,200 Applications For Marijuana Business Licenses, ‘Substantially’ More Than Expected Ahead Of Market Launch Delaware Officials Receive More Than 1,200 Applications For Marijuana Business Licenses, ‘Substantially’ More Than Expected Ahead Of Market Launch

Oct.4.2024

Photo courtesy of Mike Latimer. Delaware officials say they have received more than 1,200 applications for marijuana business licenses ahead...

Read More

Shop by location

Spring Mountain

3615 Spring Mountain Rd Las Vegas, NV 89102

North Durango

7105 N. Durango Dr. #120 Las Vegas, Nevada 89149

Events

Join us for exciting dispensary events featuring exclusive offers, live entertainment, and special promotions!

Join our events

Sign up Download App Collect RewardsSign up

Las Vegas, NV

North Las Vegas, NV

Spring Valley, NV

Paradise, NV

Corn Creek, NV