Illinois Lawmakers Approve Bill To Allow Cannabis Businesses To Claim State Tax Deductions
Illinois lawmakers recently made a significant stride in marijuana legislation by approving a budget bill that grants licensed marijuana businesses the ability to utilize state tax deductions. This decision addresses the longstanding predicament faced by cannabis enterprises that currently prohibits them from using state tax deductions at a federal level due to the Internal Revenue Service (IRS) code 280E.
The budget bill also contains provisions that allocate funding to a cannabis development fund and extend the deadline for conditional licensees to secure a physical storefront. Currently, the industry is prohibited from claiming certain deductions offered to other conventional markets, resulting in a considerably higher effective tax rate for cannabis businesses. The aim is to disassociate these businesses from such tax restrictions.
A provision will be added to the state’s current tax code and will be amended to include a provision enabling deductions for cannabis businesses, equivalent to the deductions previously disallowed under Section 280E of the Internal Revenue Code, starting from the current tax year.
In line with lawmakers from various states, Illinois is embracing a similar path by enacting regulations that treat the marijuana industry as a conventional market, thus offering the option of tax relief.
For example, lawmakers in Iowa, New York, Pennsylvania, and Virginia have similarly pursued tax relief for each of their state’s cannabis markets.
As the cannabis industry continues to face tax policy challenges under the umbrella of prohibition, bipartisan and bicameral lawmakers have been working for years to pass legislation that would treat the cannabis sector like other legitimate enterprises. Illinois lawmakers’ decision to approve a budget bill granting licensed marijuana businesses access to state tax deductions marks a pivotal moment for the state’s cannabis industry. By addressing the disparity created by IRS code 280E, Illinois is progressing toward fostering a fair and vibrant business environment for marijuana enterprises.
For more information, please contact:
For more information, please contact:
Mark V. Stricker, CPA
Director
(224) 603-6070