Connecticut governor approves cannabis expense deductions
The governor of Connecticut, Ned Lamont, has recently signed legislation that allows licensed cannabis businesses to receive state-level tax relief.
Previously, licensed cannabis businesses were prohibited from making federal deductions under Section 280E of the Internal Revenue, which states that businesses are forbidden from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances, as defined by the Controlled Substances ACc.
Enacted for fiscal year (FY) 2024, cannabis firms are allowed to deduct expenses beyond the cost of goods sold. This is expected to provide around $4.7 million in industry relief in FY 2024 and increase to $6.2 million in the 2025 fiscal year.