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The governor of New Jersey has signed a bill into law that will allow licensed marijuana businesses to deduct certain expenses on their state tax returns<\/a>\u2014a partial remedy as the industry continues to be blocked from making federal deductions under Internal Revenue Service (IRS) code known as 280E.<\/p>\n Gov. Phil Murphy (D) signed off on the legislation from Assemblymember Annette Quijano (D) on Monday, without a formal ceremony. This comes about three months after the legislature approved the measure with amendments.<\/p>\n While many state tax policies simply mirror federal law, the legislation says that, for the purposes of the New Jersey\u2019s tax code, a licensed cannabis business\u2019s gross income \u201cshall be determined without regard to section 280E of the [federal] Internal Revenue Code.\u201d<\/p>\n When it comes to federal tax policy, those businesses will still be subject to the IRS 280E code, which precludes entities that illegally sell Schedule I or II drugs from making key tax deductions in their federal filings. But under the New Jersey law, the licensed cannabis industry will at least see some state-level relief.<\/p>\n The\u00a0legislation<\/a> Murphy signed<\/a> \u201cshall apply to taxable years beginning on or after January 1 following enactment,\u201d it says.<\/p>\n \u201cThe continued implementation of 280E placed severe financial constraints on cannabis operators, big and small, by prohibiting them from deducting common business expenses from their taxes,\u201d the New Jersey Cannabis Trade Association said. \u201cNow, New Jersey\u2019s licensed cannabis operators will be treated like any other legal enterprise operating in New Jersey, a sense of normalcy that our industry will cherish.\u201d<\/p>\n pic.twitter.com\/pdFeKlaltX<\/a><\/p>\n \u2014 New Jersey Cannabis Trade Association (@njcannabistrade) May 8, 2023<\/a><\/p>\n<\/blockquote>\n\n A fiscal analysis released last year found that the\u00a0bill<\/a>\u00a0would likely have mixed economic impacts.<\/p>\n On the one side, the decoupling from federal 280E policy is expected to \u201cresult in an indeterminate annual loss of revenue\u201d for the state because marijuana businesses would be eligible for relief from taxes that they currently pay.<\/p>\n On the other side, the Office of Legislative Services (OLS) said that \u201cproviding access to these deductions and credits may also help generate more economic activity by cannabis businesses,\u201d and so \u201cthe State and local governments that tax cannabis businesses might indirectly realize an indeterminate amount of additional annual revenue.\u201d<\/p>\n \u2014 New Jersey isn\u2019t the only state that\u2019s working to address the unique financial challenges that the cannabis industry faces under federal prohibition.<\/p>\n Lawmakers in Iowa<\/a>, New York<\/a>, Pennsylvania<\/a> and Virginia<\/a> have similarly pursued tax relief for each of their state\u2019s marijuana markets, for example.<\/p>\n At the congressional level, Rep. Earl Blumenauer (D-OR) reintroduced a bill last month that would amend the IRS code<\/a> to allow state-legal marijuana businesses to finally take federal tax deductions that are available to companies in other industries.<\/p>\n He told Marijuana Moment that he\u2019s \u201cabsolutely convinced when we are able to fully deduct their business expenses that there actually will be more revenue collected<\/a> because people will comply fully with the law.\u201d<\/p>\n For the time being, the marijuana industry continues to face tax policy challenges under the umbrella of prohibition. And as\u00a0the Congressional Research Service (CRS) noted<\/a>\u00a0in a 2021 report, IRS \u201chas offered little tax guidance about the application of Section 280E.\u201d<\/p>\n IRS did\u00a0provide some guidance in an update in 2020<\/a>, explaining that while cannabis businesses can\u2019t take standard deductions, 280E does not \u201cprohibit a participant in the marijuana industry from reducing its gross receipts by its properly calculated cost of goods sold to determine its gross income.\u201d<\/p>\n The IRS update seemed to be\u00a0responsive to a Treasury Department internal watchdog report<\/a>\u00a0that was released in 2020. The department\u2019s 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 \u201cdevelop and publicize guidance specific to the marijuana industry.\u201d<\/p>\n Bipartisan and bicameral lawmakers have been working for years to pass legislation that would treat the cannabis sector like other legitimate enterprises, namely through the Secure and Fair Enforcement (SAFE) Banking Act, which was recently refiled in both chambers and will be discussed at a Senate committee hearing<\/a> on Thursday.<\/p>\n Senators Push For Marijuana Industry Access To Federal Small Business Loans And Services<\/a><\/p>\n<\/blockquote>\n\n The post New Jersey Governor Signs Bill To Let Marijuana Businesses Claim State Tax Deductions As Partial 280E Workaround<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n
The governor of New Jersey has signed a bill into law that will allow licensed marijuana businesses to deduct certain expenses on their state tax returns\u2014a partial remedy as the industry continues to be blocked from making federal deductions under Internal Revenue Service (IRS) code known as 280E. Gov. PhilContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":458,"featured_media":64780,"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\/64779"}],"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\/458"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=64779"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/64779\/revisions"}],"predecessor-version":[{"id":64781,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/64779\/revisions\/64781"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/64780"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=64779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=64779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=64779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nRead More: New Jersey Governor Signs Bill To Let Marijuana Businesses Claim State Tax Deductions As Partial 280E Workaround<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"