A bill that permits certain tax deductions for the sale, production or distribution of cannabis products has been sent to the New York Governor.
Currently, under Section 280E of the internal revenue code (IRC), cannabis businsses are unable to make tax deductions.
Senate Bill S7508, sponsored by Luis R. Sepúlveda, saw a floor vote of 43 for and 18 against.
It aims to amend the Administrative Code of the City of New York to enable cannabis businesses to make deductions for business expenses “incurred by taxpayers authorized by the Cannabis Law to engage in the sale, distribution, or production of adult-use cannabis products or medical cannabis, for purposes of the unincorporated business tax, the general corporation tax, and the corporate tax of 2015, commonly referred to as the business corporation tax.”
The bill reads: “Section one of the bill would add a new paragraph to subdivision (c) of section 11-506 of the Administrative Code of the City of New York to allow a deduction under the UBT in an amount equal to any federal deduction disallowed by section 280E of the internal revenue code.”
Christopher Ellis Jr., Director, State Legislative Affairs, Office of the Mayor of New York City, explained his reason for supporting the bill, stating that: “This modification to income is appropriate because, while the expenses of cannabis-related business cannot be deducted for federal purposes, New York law permits and encourages these businesses akin to any other legitimate business occurring in the State.
“The City’s business taxes should similarly encourage these business activities.”