The governor of Rhode Island is proposing to decouple state and federal tax policy for the cannabis industry as a partial workaround to the Internal Revenue Service (IRS) code known as 280E, which bars cannabis operators from taking deductions for business expenses.
As part of his budget proposal for the 2025 fiscal year that was taken up by the House Finance Committee last week, Gov. Dan McKee (D) called for cannabis industry tax relief with specific legislative language that he wants lawmakers to adopt.
"Rhode Island would join Massachusetts and Connecticut, and at least 10 other states, in decoupling from this federal policy" that prevents tax deductions for businesses that work with Schedule I and Schedule II drugs under the Controlled Substances Act (CSA), the executive budget summary says.
The governor's office estimates that the reform would save cannabis businesses $824,642 in Fiscal Year 2025 and $1.7 million in Fiscal Year 2026. The proposed text of the legislation says that state-licensed cannabis businesses would be able to take tax deductions in "the amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under 26 U.S.C. ยง 280E."
Read more at marijuanamoment.net