Governor Janet Mills (D) signed cannabis-related legislation last week enabling licensed operators to take state tax deductions.
What Happened: By signing the legislation LD 1036 sponsored by Democratic Senator Teresa Pierce, the governor gave a green light to a workaround to the Internal Revenue Service (IRS) code known as 280E, first reported Marijuana Moment.
This code states that "no deduction or credit shall be allowed in running a business that consists of trafficking a controlled substance." This means that until cannabis is removed from a federal list of controlled substances there will be no tax deductions or credits given to legal cannabis operators.
The new bill expands on the current policy, which already enables tax relief to Maine's medical marijuana operators. Under the bill, the state will use part of the tax revenue gathered from cannabis sales to cover for lost revenue resulting from the new tax deductions. These deductions will be provided for “business expenses related to carrying on a trade or business as a registered caregiver, a registered dispensary or a manufacturing facility,” as well as “a cannabis establishment or testing facility” as of January 1.
See Also: Cannabis Regulatory Update: Maine Prepares For Federal Reform, Hawaiians Urge Clemency & More
Why It Matters: The 280E tax code is one of the most challenging financial obstacles facing most marijuana operators. Another is the lack of access to banking and financial services. Anything that can be done to ease the financial burden on cannabis operators is significant for the industry.
“The medical cannabis industry in Maine is able to utilize this tax advantage,” said state Sen. Pierce. “It seems only fair and prudent that both our cannabis industries could have this opportunity.”
See Also: Maine To Allow Cannabis Advertising And Deliveries To Commercial Locations
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Photo: Courtesy of Michael Fischer via Pexels
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