In the last two months, New York introduced 2 pieces of cannabis legalization that could affect New York’s cannabis industry significantly. The first is NY Bill S7517A, which expands the meaning of social and financial equity applicants under the Marijuana Regulation and Taxation Act (MRTA) to consist of gender equality. The 2nd is Senate Bill S7518 to allow tax deductions for business cannabis activities. Let’s go through them both in detail:
Expanding the Definition of Economic and Social Equity NY Applicant
This bill expands the list of qualifying economic and Social Equity NY candidates to consist of “transgender, gender non-conforming and non-binary individuals.” The expense defines “transgender, gender non-binary and non-conforming individuals” as “anybody who has a gender identity or expression differs from the gender assigned to that person at birth.”
Senator Cooney has consistently explained the importance of broadening certified economic and social candidates to include transgender, gender non-conforming, and non-binary individuals. The justification for the legislation describes why:
” Every New Yorker should have the right to show and determine their gender as they choose. An unintended effect of [the MRTA] would force particular people from choosing between their gender identity and getting top priority for a license. The social equity element of the MRTA is indicated to boost historically marginalized groups through economic changes in the cannabis industry and this expense enhances that effort.”
Permitting Tax Deductions for Commercial Cannabis Activities
The language of this bill is pretty easy: the prohibition on deducting expenses in connection with the prohibited sale of drugs shall not apply to a licensee under the MRTA. The bill expressly lists each of the license types and integrates by referrals the meaning of “licensee” under the MRTA. Other cannabis-friendly states have passed comparable tax reduction laws.
The text of the proposed bill recommends the underlying govt. tax law upon which the prohibition was based: Section 280E of the Internal Revenue Code. We have composed extensively on the subject. The exception is that a cannabis service can not credit any amount or deduct paid or incurred as part of operating its service, beyond what can be captured in “costs of goods offered.”
The effect of S7518 would be significant. By allowing cannabis businesses to deduct their operating costs at the state level, the legislation would enable them to run like genuine businesses in New York. The bill’s justification area highlights two of the objectives of passing the MRTA: the promotion of social equity and a competitive business environment. As mentioned in the justification section:
The bill will “make sure that the adult-use cannabis market will not be dominated solely by multi-state operators who can manage to pay the higher effective tax rate.
Many thanks for reading this short article. I hope you find it beneficial. Stay tuned for further developments in the New York cannabis industry, legalization or otherwise.
