California offers tax credits for marijuana business expenses

October 15, 2022

By JOSH FRIEDMAN

Beginning next year, the state of California will allow cannabis business owners to receive tax credits for company expenses.

Federal law prohibits tax deductions for marijuana business expenses because cannabis sales remain illegal federally. Many states are now responding by indicating they will allow deductions for cannabis expenses that are not deductible under federal law.

At the end of June, Gov. Gavin Newsom signed into law AB 195, a broad cannabis tax relief bill. As part of the new law, California will allow two new tax credits for cannabis businesses for the tax years 2023 through 2027.

One of the credits is for “high-road” employers who meet certain employment requirements.

The other credit is for cannabis “equity” licensees. Business owners will be able to claim the credits against corporate franchise and income taxes or personal income taxes.

To qualify as a high-road cannabis employer, business owners must provide full-time employees salaries, group health insurance and retirement or pension benefits. Expenses that qualify for the high-road employer credit are: employment expenditures for full-time employees who are paid between 150 percent and 350 percent of the minimum wage; workforce development for employees; and safety-related equipment, training and services.

The high-road credit amounts to 25 percent of the qualified expenditure in the tax year up to $250,000. Taxpayers can carry forward the credit for up to eight years if it exceeds the amount of tax due for the year. The total amount of high-road credits given to all taxpayers for all tax years of the program may not exceed $20 million.

Marijuana business owners harmed by cannabis criminalization can qualify for a licensee fee waiver under the state’s cannabis equity program. Those business owners will also be able to claim a cannabis equity licensee tax credit of $10,000.


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Jorge Estrada

Gambling, drugs and next it will be a human trafficking expenses to provide safety mitigation. Today the outrage on illegal immigration isn’t a big issue unless you cross the New York border.


GreatGuy

Manufacture and distribution of cannabis is a legitimate business, and Newsom is totally right in calling for tax laws to reflect that. Why should cannabis businesses be treated any differently? Cannabis should be removed from federal schedule, one, and when this happens, this issue will be moot. Once again, Newsom is doing the right thing. He is courageous and bold.

Cannabis is not a crime. Getting high should be every persons right. Anyone who wants to grow or partake in cannabis should have that freedom. Anti-cannabis laws made America worse, not better.


matthwy58

So much for legal pot benefiting the community in some small way, your Governer is going to give part of the tax revenue back to spite the Federal Government. Great thinking that will show them.


NorthCountyGuy

Tax credits for MJ is totally ridiculous. MJ should be taxed the same as cigarettes.


commonsenseguy

Just another step and avenue to the destruction of our society. First, we legalize a drug that is adding to the existing alcohol issues that many already struggle with. The state originally per their own guidance, tax this new created problem very high to help pay for the added problem this addictive garbage will cause.

During the presentation and roll out at the various city and county meetings a few years back, the state idiots in Sacramento conceded that passing this deadly drug would cause additional cost to law enforcement agencies, fire departments, EMT/Paramedics, hospitals, phycological issue, and many more. The black market for this crap has exploded. Not mention the Mexican Cartels and their presence in this state. Hence their reason for the high tax on this skunk weed.

Now, once again in their narrow-mindedness rush for revenue from the start, show the complete insanity and hypocrisy in the ignorance of all of this. What a joke. Lives are being ruined, and now we’re giving tax breaks to the purveyors of destruction to individuals and families, many that are young and will damaged for life. Stupid is as stupid does. Mindless guidance through greed.