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Maine Governor Janet Mills has approved legislation to provide tax relief to players in the state’s marijuana industry. The bill will partially bypass the Internal Revenue Service, which prohibits cannabis businesses from making federal tax deductions through IRS code 280E, and grant licensed cannabis businesses access to state tax deductions.
The law expands on previous legislation that already provided licensed medical cannabis operators with tax relief and will allow players in the industry to make tax deductions for business expenses associated with running a manufacturing facility or registered dispensary, or carrying out trade as a registered caregiver.
A statement from the Maine Office of Cannabis Policy (OCP) noted that the legislation would allow licensed cannabis operators to make business expense deductions on their tax returns such as the medical cannabis industry and other conventional sectors.
Marijuana operators in the state will undoubtedly be pleased with the news as cannabis businesses in most states have consistently complained about their large tax burden. Cannabis-related taxes and fees in America’s state-legal cannabis industry are so high that a significant portion of consumers are turning to the illicit market where products are significantly cheaper.
Introduced by Senator Teresa Pierce, the cannabis tax bill would give businesses in the sector the chance to recoup some of the costs through state tax deductions, potentially allowing them to pass on some of their savings to their customers and reduce product prices. According to the bill, the state of Maine would recover the funds it will use for the tax deductions by taking part of the tax revenue earned from medical cannabis sales.
Pierce explains that while businesses that can write off their business costs have an average tax rate of 40% of gross income, businesses without access to tax deductions often pay up to 70% of their gross income as tax. She called the difference in tax code unfair and appalling while testifying before a joint committee and said that it forced business owners to experience losses in order to hire and maintain their workers, offer benefits and reinvest in the business.
This makes it extremely difficult for small operators with limited access to capital to operate in the industry and encourages the development of monopolies by large, multistate companies. Given that Maine’s medical cannabis industry already had access to these tax deductions, Pierce said that it was only fair to extend access to the recreational cannabis industry as well.
This tax relief can allow companies to scale their operations, such as by acquiring more cultivation equipment from manufacturers such as Advanced Container Technologies Inc. (OTC: ACTX), in order to serve more customers.
NOTE TO INVESTORS: The latest news and updates relating to Advanced Container Technologies Inc. (OTC: ACTX) are available in the company’s newsroom at https://cnw.fm/ACTX
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