By New Jersey Governor Phil Murphy signed into law this week giving licensed cannabis businesses a standard business tax credit, aimed at making the state’s regulated marijuana industry more viable. The bill, which separates New Jersey’s tax code from federal tax code Section 280E, was signed into law by Murphy on Monday after the state legislature passed the bill in February.
In many states that have legalized recreational or medical cannabis, tax laws follow the guidance of Federal Tax Code Section 280E, which denies most standard business tax credits for cannabis businesses. Under the rule, cannabis businesses can only deduct the cost of goods sold, and most businesses do not allow deductions for other standard business expenses such as rent, salaries and utilities.
invoice The bill, led by Democrats Annette Quijano, Clinton Calabrese, and Lynda Carter, passed the New Jersey legislature on February 27. Companion measuresA bill backed by Democratic state senators Troy Singleton and Shirley Turner also passed the state Senate by a 32-3 vote on the same day.
Under the new law, effective immediately and applicable for tax years beginning January 1, 2023, cannabis businesses will be allowed to deduct certain business expenses on state tax returns. The measure does not affect the federal tax burden that businesses must pay. Proponents of the bill say the bill will help improve diversity in the regulated cannabis industry, which faces high barriers to entry and high taxes and regulatory fees.
“We have seen, here in New Jersey and around the country, that legal cannabis businesses tend to lack diversity in their ownership base, both in terms of gender and race.” singleton said said in a statement cited by local media. “This law is intended to level the playing field for all cannabis businesses.”
“Allowing these deductions from income, considering critical business expenses, will ensure pharmacies are paying the right amount of tax,” he added.
“New Jersey’s cannabis industry is still in its early stages and we need to act early to give all businesses an equal chance to succeed,” Turner said. “Supporting dispensaries while promoting diversity in the cannabis industry is better for the local economy and also helps ensure that the profits from recreational cannabis are returned to communities that need it most. “
The bill, which would give New Jersey cannabis businesses a standard business tax exemption, called the New Jersey Cannabis Trade Association (NJCTA), a trade group that said the bill “would provide a more economically viable situation.” It is also endorsed by representatives of the regulated cannabis industry, including For our young industry and those who want to enter it. ”
“Continued enforcement of 280E prohibited cannabis businesses large and small from deducting common business expenses from taxes and imposed several financial restrictions,” the NCCTA said in a statement. “Going forward, New Jersey-licensed cannabis businesses will be treated like any other legal business operating in New Jersey. This is a sense of normalcy that our industry values. “
James Leventis, executive vice president of legal, compliance and government relations at Verano, which operates three Zen Leaf pharmacies in New Jersey, praised the passage of the new legislation, saying it “has hindered entrepreneurship and growth. It removes an important barrier,” he said. It is the top of the national cannabis industry. ”
“It’s inspiring to see New Jersey take this bold step to support one of the nation’s fastest growing industries,” Leventis wrote in an email. high times. “I hope that similar courageous actions will be taken in other states, and most importantly at the federal level, to bring about further cannabis reform. will be able to reach its full potential as a catalyst for positive economic and social progress across all states.”America”
Other states that have legalized marijuana, including New York, California, Hawaii, Michigan, Colorado and Oregon, have passed bills that separate their state tax laws from Section 280E. A similar bill is pending in Connecticut.
