New Jersey CPAs Call For Tax Change After Voters Approve Cannabis Measure
They think it should include the ability to deduct business expenses
After New Jersey voters approved a ballot measure to legalize recreational marijuana this week, the New Jersey Society of CPAs is calling on state lawmakers and regulators to pass legislation and rules to allow cannabis merchants to deduct business expenses.
Voters in the Garden State approved a constitutional amendment to legalize recreational use of cannabis. However, the NJCPA said lawmakers still have to pass legislation to enable recreational cannabis sales and then the state’s Cannabis Regulatory Commission needs to draft a regulatory framework. They think that should include the ability to deduct business expenses, or else the society warns that large, established players, many coming from out of state, will dominate the new market.
Cannabis businesses currently don’t have access to the business expensing tax break even though it’s available to all other New Jersey businesses, the NJCPA pointed out. This is because New Jersey “piggybacks” onto Section 280E of the Tax Code, which prohibits any company that’s illegally engaged in drug trafficking from deducting business expenses. While cannabis remains illegal on a federal level, the NJCPA acknowledged this makes sense for federal taxes, but not in New Jersey where it’s now legal.
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