The Governor of Connecticut signed a budget bill that included provisions that provide state-level relief for licensed marijuana businesses who are currently not allowed to make federal deductions due to an Internal Revenue Service code (known as 280E).
Gov. Ned Lamont, (D), approved the package Monday. He praised the overall tax reduction and highlighted how much money is expected to be saved by the cannabis industry with the new policies.
The Governor’s Office stated that giving marijuana businesses the state level 280E workaround will translate into an industry relief of $4.7 million for the fiscal year 2024, and $6.2 million for the fiscal year 2025.
The Office of Fiscal Analysis of the Legislature has a separate and more comprehensive analysis that shows these savings increasing to $9.6 in 2026; $11.4 in 2027; and $13.5 in 2028.
WATCH LIVE: Bill signing ceremony for the biennial state budget, which contains several tax relief measures including the largest income tax cut in Connecticut history.https://t.co/Nk8RMpZquO
— Governor Ned Lamont 12 June 2023
The newly passed budget also includes provisions for cannabis social equality, substance abuse prevention and regulation. It also repeals the tax credit given to marijuana “angel” investors who support new cannabis businesses, a policy change that was proposed by Governor earlier this year.
The Office of Fiscal Analysis reports that the state would save $12.5 millions in fiscal 2024 by eliminating the angel investor credit. The state is expected to save $15 millions in every subsequent year until 2028.
In a press statement, Lamont stated that he was “glad to sign” a bill which would provide tax relief for our residents. By working together, we make Connecticut stronger and adopt policies that benefit those who live here. “I thank both the Democratic and Republican legislative leaders for the work they did on this biennial Budget.”
The new law allows licensed cannabis businesses to deduct expenses “that would otherwise be eligible for a federal deduction…but are not allowed under Section 280E because marijuana is a controlled drug under federal Controlled Substance Act.”
The 280E fix is in line with the legislation that several states have sought to pass to help state marijuana markets which are subjected under federal prohibition, to significantly higher tax rates.
Illinois legislators , for example, sent a budget to the governor last month which included language allowing cannabis businesses licensed by the state to claim tax deductions. This is something that’s prohibited at the federal level due to IRS
The governor of New Jersey also signed legislation to allow licensed marijuana business to deduct some expenses on their state taxes as a partial IRS 280E Workaround. Iowa lawmakers, New York legislators, Pennsylvania lawmakers, and Virginia legislators have all pursued similar tax relief measures for their respective marijuana markets.
Last week, the New York Senate approved a bill to fix the 280E tax code for New York City’s cannabis companies on a local level. The statewide reform had already been implemented and did not affect the city’s
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In Connecticut, legislators have sent a separate marijuana omnibus law to the Governor that includes a number of changes, such as the establishment of offsite event permits for cannabis retailers, the restriction of intoxicating hemp products, and the
The bill would also establish a definition of edible cannabis products, and modify the rules of the lottery system in the state for licensing marijuana businesses.
Connecticut’s House of Representatives passed a bill in the last month that would expand on the state’s legalization of marijuana and expungements laws, by requiring courts reduce sentences or dismiss charges with respect to a wider variety of
Last month, the House passed a bill that would decriminalize possessing psilocybin mushroom.
The Senate did not take up either of these bills before the end of last week’s legislative session.
Lamont also announced that in January, the state had cleared almost 43,000 records of marijuana-related convictions. In 2021 , he passed legalization legislation which empowered the state government in order to facilitate mass cannabis convictions relief.
In January , the state launched a website that gives residents information on the status of their cannabis records. It also provides guidance to those who have older convictions for cannabis that were not automatically erased by the courts.
Lamont is optimistic about the adult-use market launched by at the start of the year. He believes it will reduce illicit sales.
He joked about his concern for the cannabis industry’s rollout, which was finding a spot in the line at a dispensary. He wasn’t serious but the Governor previously did not rule out the idea participating in the legal market.
Connecticut sales of recreational marijuana reached a new high in May. Purchases in the adult market exceeded those for medical cannabis, the state’s data shows.
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The first time that Marijuana Moment published the article Connecticut Marijuana Industry Gets Tax Breaks by Governor, was on Marijuana Moment .
