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A New York Senate bill introduced on Friday would allow licensed cannabis companies to deduct certain business expenses on their state tax returns, a move the bill\u2019s sponsor says \u201cwill create a more equitable taxation system and allow more local, small businesses to participate in the cannabis market.\u201d<\/p>\n
The proposal represents not only a change to existing state law but also a break from federal tax policy, which through IRS Code Section 280E\u00a0prohibits cannabis businesses from claiming deductions available to most other companies on their federal tax returns. Industry advocates have complained the federal and state rules treat cannabis businesses unfairly, impacting retailers and small businesses the hardest.<\/p>\n
Because cannabis businesses can\u2019t write off inventory or other operating expenses, 280E currently means that some cannabis businesses pay effective tax rates of up to 80 percent, according to industry groups<\/a> and accounting firms<\/a>.<\/p>\n I am excited to introduce this new legislation to create a more equitable taxation system. Senate Bill S.7518 will amend the state tax law to allow cannabis enterprises licensed by New York State to deduct ordinary and necessary business expenses. https:\/\/t.co\/sGg5QQHx26<\/a> pic.twitter.com\/Em5uiqO6PG<\/a><\/p>\n \u2014 Senator Jeremy Cooney (@SenatorCooney) December 10, 2021<\/a><\/p>\n<\/blockquote>\n\n The New York legislation, S.7518, would decouple the state tax code from the federal policy, amending state law to state that \u201cthe provisions of 280E\u2026shall 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.\u201d<\/p>\n \u201cThis bill will provide tax equity to the emerging cannabis industry by allowing licensed cannabis businesses to make ordinary and necessary deductions on their New York state taxes,\u201d says a memo from bill<\/a> sponsor Sen. Jeremy Cooney (D). \u201cAdditionally, it ensures the adult-use cannabis market will not be dominated solely by large multi-state operators who can afford to pay the higher effective tax rate.\u201d<\/p>\n In New York, the effective tax rate on cannabis businesses \u201cwould be approximately double what any other business has to pay,\u201d the sponsor memo says. \u201cIf this goes unchanged, people will be unable or unwilling to leave the legacy market for a licensed business.\u201d<\/p>\n \u201cNew York cannot realize the goals set in the MRTA for social and economic equity if the cost of doing business prevents the equity candidates from actually participating.\u201d<\/p>\n<\/blockquote>\n Cooney wrote on Twitter that New York\u2019s new cannabis legalization law \u201cwas crafted with a focus on equity at all stages,\u201d adding that the state \u201cmust ensure that this focus includes licensing and taxation of these new businesses.\u201d<\/p>\n \u2014 The senator has introduced two other proposed reforms to the new cannabis system this year. In July, he sponsored a bill to create a temporary licensing category to allow farmers to begin cultivating and selling cannabis ahead of the formal rollout of the adult-use program<\/a>. That measure has been referred to the Senate Rules Committee.<\/p>\n Last month, Cooney filed separate legislation to amend the state\u2019s cannabis law so transgender and nonbinary people can qualify as social equity applicants<\/a>. The proposal is meant to resolve what its justification section calls an \u201cunintended consequence\u201d of the current law, which currently gives priority to women-owned businesses as well as other marginalized groups but does not include transgender or nonbinary people\u2014a situation that would force some applicants to choose \u201cbetween their gender identity and receiving priority for a license,\u201d the bill says.<\/p>\n New York lawmakers have been proactive in seeking to improve the state\u2019s adult-use marijuana law since the reform was approved earlier this year<\/a> and as regulators continue to develop rules for the program.<\/p>\n In addition to proposals introduced by Cooney, Sen. Michelle Hinchey (D) last month filed a bill that would prioritize hemp-based packaging aimed at improving sustainability. The legislation would require the state\u2019s Cannabis Control Board to \u201cdevelop strategic plans detailing the primary use of industrial hemp for packaging and labeling requirements to be used prior to the retail sale of any cannabis or cannabis product to a cannabis consumer.\u201d It would also establish a \u201cSustainable Cannabis Packaging Incubator Program\u201d to provide financial incentives for businesses to create \u201ccompostable and biodegradable cannabis packaging materials.\u201d Participants in the program would need to make packaging that contains at least 30 percent hemp.<\/p>\n Currently, adults 21 and older in New York can possess up to three ounces of cannabis or 24 grams of concentrates, although there aren\u2019t any legal shops open for business yet. Adults can also\u00a0smoke marijuana in public anywhere tobacco can be smoked<\/a>.<\/p>\n The first licensed recreational marijuana retailers in the state\u00a0may actually be located on Indian territory<\/a>, with one tribe having officially opened applications to prospective licensees in October.<\/p>\n Because the implementation process has been drawn out, however, one GOP senator wants to give local jurisdictions another year to decide\u00a0whether they will opt out of allowing marijuana businesses<\/a>\u00a0to operate in their area\u2014a proposal that advocates say is unnecessary and would create undue complications for the industry.<\/p>\n Gov. Kathy Hochul (D), who replaced Andrew Cuomo after he resigned amid a sexual harassment scandal, has repeatedly emphasized her interest in efficiently implementing the legalization law<\/a>.<\/p>\n At a recent event, she touted the fact that\u00a0she had quickly made regulatory appointments<\/a>\u00a0that had been delayed under her predecessor. \u201cI believe there\u2019s thousands and thousands of jobs\u201d that could be created in the new industry, the governor said.<\/p>\n Meanwhile, New York\u2019s Cannabis Control Board (CCB)\u00a0held its first meeting<\/a> in October, a key step toward implementing the state\u2019s adult-use marijuana program.<\/p>\n Members of the board, who were\u00a0appointed by the governor and legislative leaders<\/a>, announced that medical marijuana dispensaries will be allowed to sell flower cannabis products to qualified patients. The $50 registration fee for patients and caregivers was also permanently waived.<\/p>\n Last month, regulators also approved rules for the state\u2019s cannabinoid hemp program<\/a>, notably clarifying that flower from the crop can be sold but delta-8 THC products are currently prohibited from being marketed.<\/p>\n Adding pressure to get the market up and running is the fact that regulators in neighboring New Jersey\u00a0recently released rules for its adult-use marijuana program<\/a>, which is being implemented after voters approved a legalization referendum last year.<\/p>\n The state comptroller recently projected that New York stands to eventually\u00a0generate $245 million in annual marijuana revenue<\/a>, which they say will help\u00a0offset losses from declining tobacco sales<\/a>.<\/p>\n For the first year of cannabis sales, the state is expected to see just $20 million in tax and fee collections. That will be part of an estimated $26.7 billion in new revenues that New York is expected to generate in fiscal year 2021-2022 under a budget that the legislature passed in April.<\/p>\n The state Department of Labor separately announced in new guidance that New York employers are no longer allowed to\u00a0drug test most workers for marijuana<\/a>.<\/p>\n Meanwhile, a New York lawmaker introduced a bill in June that would require the state to establish an institute to\u00a0research the therapeutic potential of psychedelics<\/a>.<\/p>\n IRS Official Gives Marijuana Businesses Advice On Tax Compliance<\/a><\/p>\n<\/blockquote>\n\n Photo courtesy of Philip Steffan<\/a><\/p>\n The post New York Bill Would Allow Marijuana Industry to Deduct Business Expenses On State Taxes<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n
A New York Senate bill introduced on Friday would allow licensed cannabis companies to deduct certain business expenses on their state tax returns, a move the bill\u2019s sponsor says \u201cwill create a more equitable taxation system and allow more local, small businesses to participate in the cannabis market.\u201d The proposalContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":24,"featured_media":51665,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18,81],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/51664"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=51664"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/51664\/revisions"}],"predecessor-version":[{"id":51666,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/51664\/revisions\/51666"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/51665"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=51664"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=51664"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=51664"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nRead More: New York Bill Would Allow Marijuana Industry to Deduct Business Expenses On State Taxes<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"