A Florida Republican Senator has introduced a measure to allow medical marijuana businesses licensed to claim state tax deductions, which they are not allowed to claim at the federal level due to an Internal Revenue Service code (IRS), known as 280E.
The legislation was filed last week by Sen. Ana Maria Rodriguez, (R). It would make Florida one of a growing list of states who have been working to achieve tax parity in the cannabis industry, which continues to face steep financial obstacles under federal prohibition.
The bill text states that Rodriguez’s proposal amends Florida’s tax code to allow medical cannabis operators claim state-level deductions “in an amount equal to a federal tax deduction which is not allowed because marijuana is classified as a controlled substance by federal law.”
The measure was filed while the State Supreme Court is deciding a case which will determine whether or not voters will be able to see an adult-use cannabis legalization initiative next year on their ballot. The court heard the case after Florida Attorney General Ashley Moody’s (R) challenge.
The senator’s tax bill as it is currently written would, however, only extend state-level relief for medical cannabis businesses.
As congressional efforts to reform marijuana policy continue to stagnate, several states have taken recent steps similar to these.
The governor of New York signed a bill last month that would give tax relief to New York City cannabis businesses who are also blocked from making federal deductions by the IRS 280E prohibition. The budget bill passed last year included provisions that allowed state-level cannabis businesses to deduct their tax. However, the new reform addresses New York City’s tax policy.
In October, Pennsylvania’s House passed a tax reform bill containing language that provides state-level relief for medical marijuana businesses. Republicans, who normally support tax cuts, have criticized the reform as a Democratic giveaway of money to the cannabis industry.
The Governor of Maine, in August, signed a bill to separate the state tax policy from federal policy for cannabis business.
In June, the governor of Illinois signed a budget bill that included provisions that would allow licensed marijuana businesses to take state taxes they are currently prohibited from using under the IRS code.
The governor of Connecticut signed a budget bill that included provisions for state-level tax relief for licensed marijuana businesses. This was a workaround to the federal 280E regulations.
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 fix 280E. Iowa, Virginia, and other lawmakers have also sought tax relief to benefit their respective marijuana markets.
In May, Rep. Earl Blumenauer of Oregon (D) introduced at the federal level. This bill would amend IRS code in order to allow marijuana businesses that are legal in their state to take advantage of the federal tax deductions available to other companies.
He told Marijuana Moment he is “absolutely certain that when we can fully deduct the business expenses of people that actually there will be more revenue collected , because they will comply with the law fully.”
The marijuana industry is still facing tax policy challenges as a result of the prohibition. The Congressional Research Service (CRS), in a report from 2021, noted that IRS “has provided little tax guidance regarding the application of Section 280E.”
In a 2020 update, the IRS provided some guidance. It explained that, while cannabis businesses cannot take standard deductions for their gross receipts, 280E doesn’t “prevent a participant in marijuana industry from deducting its gross revenue by its correctly calculated cost of goods to determine its gross profit.”
The IRS update appeared to be in response to a Treasury Department Internal Watchdog Report released in 2020. IRS was criticized by the department’s inspector for tax administration for not adequately advising taxpayers in marijuana businesses about federal tax laws. It also directed the agency “to develop and publicize specific guidance for the marijuana industry.”
The 280E issue could be solved if the Drug Enforcement Administration accepts the U.S. Department of Health and Human Services’ (HHS) recommendation and moves the marijuana from Schedule I into Schedule III of Controlled Substances Act.
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In Florida, a survey conducted recently found that almost seven out of ten voters registered support the marijuana legalization measure. This initiative may be on the ballot next year if the Supreme Court of Florida rules in favor of Moody’s Office and the Smart & Safe Florida Campaign.
The official’s main argument was that the ballot measure was affirmatively misleading. She said that voters wouldn’t be able understand the summary, that marijuana would still remain illegal federally even if Florida legalized.
The campaign and its supporters maintain that the court should respect the intent behind the citizen initiative process, and allow voters to decide the issue after they have submitted nearly one million signatures that have been verified by the state.
Moody used the same argument against a legalization measure for 2022, and the Supreme Court invalidated it.
The Florida legislature and Gov. Rick Scott’s office have hired economic analysts to study the impact of legalizing marijuana in 2024. Ron DeSantis estimates that if the marijuana legalization initiative in 2024 is passed by voters, it would generate new sales tax revenues between $195.6 and $431.3 millions annually.
DeSantis is a GOP presidential candidate for 2024 who recently said that he would not decriminalize marijuana at the federal level if elected.
DeSantis has signed a bill which went into effect this summer. added restrictions on medical marijuana advertising and manufacture. This includes prohibiting products or messages promoting “recreational cannabis use” while also adding stricter eligibility requirements for industry workers.
In July , he signed legislation prohibiting the sale of any consumable products — including cannabis “chewing-gum” — to people under 21. This was an extension of a previous prohibition against young people being allowed to buy smokable h.
In June, the Governor approved a bill that explicitly prohibited sober living homes from allowing their residents to possess or to use medical marijuana. This is true even if a patient has been certified by a physician to use cannabis legally therapeutically according to state law. Nevertheless, all other pharmaceuticals prescribed by a doctor may be allowed.
A new survey shows that 70 percent of top Capitol Hill staff doubt any Marijuana reform will pass this Congress, banking or otherwise.
Photo by Mike Latimer.
The original post Florida GOP senator files medical marijuana industry tax relief bill as federal 280E workaround first appeared on Marijuana Moment.
