Maine Governor Janet Mills recently signed a bill that allows cannabis businesses in the state to take tax deductions on their state returns. This move is a workaround to the federal IRS code 280E, which prohibits such deductions. The new law expands on an existing policy that provided tax relief for operators in the state's medical cannabis industry.
The legislation, known as Legislative Document 1063, makes these tax deductions available to a broader range of cannabis businesses, including registered caregivers, dispensaries, and even testing facilities. This is a significant step as Maine becomes the 17th state to offer some form of state-level tax relief to cannabis businesses, which have long been chafing under the federal tax code.
The Implications
The new law is expected to shift cannabis tax money into the state's general fund to make up for a projected $2.5 million in reduced state revenue. This is a calculated move by the state to balance the budget while providing much-needed relief to cannabis businesses.
The Bigger Picture
Maine's decision to decouple from the federal tax code could set a precedent for other states to follow. It's a strategic move that not only benefits the local cannabis industry but also challenges the federal government's stance on cannabis taxation.
