A bill to allow Missouri medical cannabis companies to deduct ordinary business expenses from their state income tax returns is heading to the office of Republican Gov. Mike Parson after near unanimous legislative approval, Saint-Louis public radio reports.
The law should ease the tax burden on licensed cannabis operators, as they are not allowed to make such deductions on their federal returns due to the Schedule I status of cannabis.
The measure simply allows state-approved medical cannabis businesses to claim an income tax deduction in an amount equal to any expense that would otherwise be allowed as a federal tax deduction.
David Smith, a certified public accountant who works with medical cannabis companies, told lawmakers during a hearing that the existing law could mean effective tax rates for cannabis companies of 70% or more and ” some businesses may even be subject to income tax while operating at a loss. . “
Section 280E of the Federal Tax Code does not allow âany business or businessâ¦ that involves trafficking in controlled substancesâ to deduct normal business expenses, whether or not their business is state approved.
At a Senate hearing last year, Ncholas Rinella, CEO of Hippos Cannabis, said the level of taxation “limits the industry’s ability to serve patients, provide jobs and reinvest in communities “they serve.
The law is the first of its kind in the country, although Missouri did not legalize cannabis until 2018, far behind the majority of states that approved the reforms.
Exclusive offer from our sponsor:
Get daily news updates delivered to your inbox. Subscribe