420 with CNW — NJ Senate Committee OKs Bills Allowing Cannabis Companies to Deduct Expenses on Tax Returns
Cannabis businesses in New Jersey may soon be able to enjoy tax benefits that have been available to companies in other industries for decades. Thanks to cannabis’ federal status as a controlled drug, licensed marijuana businesses cannot access tax benefits, including deductions, despite paying billions of dollars in taxes.
The New Jersey Senate Budget Appropriations Committee recently approved two bills that would finally make it possible for cannabis businesses to deduct some expenses on their state tax returns. The companion measures came from the Assembly and the Committee’s chamber before the committee made them identical and advanced them. The pair of bills, which are merely a stopgap measure as IRS Tax code 280E still blocks cannabis businesses across the country from making federal deductions, were passed in a unanimous vote.
Licensed marijuana businesses in New Jersey will at least be able to deduct some expenses from their tax returns under the two companion bills. The version of the bill introduced by Assemblymember Annette Quijano was amended in committee before advancing past the full chamber in October. During the amendments, committee members agreed to eliminate a provision that would have locked out cannabis businesses with gross receipts of more than $15 million of the state tax deductions. On the other hand, the Senate version of the state tax deduction bill was amended to include these Assembly provisions.
Even if the companion bills are enacted, however, cannabis businesses still won’t be able to file for tax deductions in their federal tax filings due to federal law.
According to a 2022 fiscal analysis, the economic impact of these legislations will likely be mixed. For starters, states may end up losing an “indeterminate annual loss of revenue” as cannabis businesses would have relief from some of the tax they currently pay to the state. On the other hand, this is good news for businesses that will have the opportunity to reduce their annual tax obligations and increase their revenue.
According to the Office of Legislative Services (OLS), gaining access to these tax deductions and credits may allow cannabis businesses to “generate more economic activity.” This could indirectly result in an “indeterminate amount of additional annual revenue” for local and state governments, the OLS noted.
Aside from New Jersey, several other states are working to alleviate the unique financial pressures that challenge the cannabis industry due to federal prohibition. Cannabis regulators in Iowa have revealed that they will ask the legislature to take up reform on the matter while a House committee in Pennsylvania advanced legislation to allow cannabis businesses to make certain tax deductions for expenses last year.
As states lose patience over federal inaction on matters of enacting cannabis regulatory reforms, sector actors such as Flora Growth Corp. (NASDAQ: FLGC) could increasingly see state-level reforms aimed at supporting the industry overcome some of the hurdles they face.
NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
Cannabis businesses in New Jersey may soon be able to enjoy tax benefits that have been available to companies in other industries for decades. Thanks to cannabis’ federal status as a controlled drug, licensed marijuana businesses cannot access tax benefits, including deductions, despite paying billions of dollars in taxes.
The New Jersey Senate Budget Appropriations Committee recently approved two bills that would finally make it possible for cannabis businesses to deduct some expenses on their state tax returns. The companion measures came from the Assembly and the Committee’s chamber before the committee made them identical and advanced them. The pair of bills, which are merely a stopgap measure as IRS Tax code 280E still blocks cannabis businesses across the country from making federal deductions, were passed in a unanimous vote.
Licensed marijuana businesses in New Jersey will at least be able to deduct some expenses from their tax returns under the two companion bills. The version of the bill introduced by Assemblymember Annette Quijano was amended in committee before advancing past the full chamber in October. During the amendments, committee members agreed to eliminate a provision that would have locked out cannabis businesses with gross receipts of more than $15 million of the state tax deductions. On the other hand, the Senate version of the state tax deduction bill was amended to include these Assembly provisions.
Even if the companion bills are enacted, however, cannabis businesses still won’t be able to file for tax deductions in their federal tax filings due to federal law.
According to a 2022 fiscal analysis, the economic impact of these legislations will likely be mixed. For starters, states may end up losing an “indeterminate annual loss of revenue” as cannabis businesses would have relief from some of the tax they currently pay to the state. On the other hand, this is good news for businesses that will have the opportunity to reduce their annual tax obligations and increase their revenue.
According to the Office of Legislative Services (OLS), gaining access to these tax deductions and credits may allow cannabis businesses to “generate more economic activity.” This could indirectly result in an “indeterminate amount of additional annual revenue” for local and state governments, the OLS noted.
Aside from New Jersey, several other states are working to alleviate the unique financial pressures that challenge the cannabis industry due to federal prohibition. Cannabis regulators in Iowa have revealed that they will ask the legislature to take up reform on the matter while a House committee in Pennsylvania advanced legislation to allow cannabis businesses to make certain tax deductions for expenses last year.
As states lose patience over federal inaction on matters of enacting cannabis regulatory reforms, sector actors such as Flora Growth Corp. (NASDAQ: FLGC) could increasingly see state-level reforms aimed at supporting the industry overcome some of the hurdles they face.
NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
