The Missouri Cannabis Tax Law Clause 280E is subject to change under law passed by state lawmakers
Show Me state legislature just passed bill to help with an unfair Missouri cannabis tax bill that medical cannabis companies have complained about. If the governor signs out, it will be a big step for industry and the state.
Missouri legislature passed this bill during the last legislature to lower the taxes that medical cannabis providers in the state face. The Missouri Cannabis Tax Act was “approved almost unanimously” by lawmakers, but Governor Mike Parson has yet to sign it for it to become official.
If the bill is passed, medical companies within the state will be able to deduct more business expenses to offset tax expenses. According to the wording of the bill, this would include “normal and necessary” business expenses that were prohibited in the past for those who work with cannabis.
This will help the medical industry make prints similar to those already approved and promoted in other markets and help companies struggling, especially after COVID.
This new plan will “put medical cannabis companies on par with all other small businesses across the state in terms of taxation,” said Andrew Mullins, executive director of the Missouri Medical Cannabis Trade Association.
How the new bill will change Missouri’s cannabis tax law
The bill would reverse 280E of the Missouri Tax Code, the clause that says cannabis companies cannot claim these exemptions. With the industry still newly legal, as it was only developed in 2018, companies felt the crisis during the tax season.
The current Missouri Cannabis Tax Act, as it is written, specifically states that expenses incurred while conducting “any business or business … consisting of trafficking in controlled substances” are not valid to deduct from state illegality of cannabis . Unless cannabis is actually modified from a List I substance and legalized or decriminalized by the U.S. government, the IRS can use that provision to deter companies from making exemptions.
“As a small business owner, can you imagine not being able to deduct normal business expenses from your tax returns?” Senator Denny Hoskins said during a Senate hearing. “If you couldn’t deduct these expenses, your taxes would go up significantly.”
Now, when this is the case and is legally signed by the governor, companies can claim income tax deductions equal to the expenses, even if they work with cannabis products.
“Some companies may even be subject to income taxes if they operate at a loss,” said David Smith, a chartered accountant based in St. Louis County. Smith is committed to keeping its doors open to the cannabis industry and working professionally with cannabis customers.
“The expenses could outweigh your income, especially when you’re starting out,” echoed Nicolas Rinella, executive director of Hippos Cannabis, Missouri. Made the statement at a Senate hearing earlier this year on the matter, he said that given the recent pandemic, cannabis companies are not making the money they would normally make and that they need to be treated accordingly.
Rinella says the amount of taxes currently levied on companies in the cannabis industry limits the industry’s ability to care for patients, create jobs, and invest in the communities in which we operate. We are not looking for special treatment; We just want to be treated like any other legal business. “
If successful, legal, medical cannabis companies in Missouri will find it much easier to collect taxes and be able to rebuild the industry. However, if the governor is not on board, the industry will continue to struggle as these harsh taxes are levied.