NJCPA Applauds Signing of Legislation to Remove Unfair Tax Burden on Cannabis Businesses
Statement by Ralph Albert Thomas, CPA (DC), CGMA, CEO and Executive Director, New Jersey Society of Certified Public Accountants
Legislation written by the New Jersey Society of CPAs (NJCPA) Cannabis Interest Group (A3946/S340) that ends New Jersey’s unfair tax treatment of cannabis businesses was signed on Monday, May 8, by Governor Phil Murphy. It applies to tax years beginning on and after Jan. 1, 2023, and will help New Jersey cannabis companies financially. Many, especially the smaller ones, are struggling.
The new law decouples cannabis businesses from federal Internal Revenue Code Section 280E. Section 280E prohibits any company illegally engaged in drug trafficking from deducting business expenses on personal or corporate income tax returns. Deducting business expenses is critical for a company to be profitable.
Prior to the signing of this legislation, New Jersey “piggybacked” on 280E, thus taxing cannabis business owners like drug dealers, including those who operate in the medicinal space. While it may make sense for the federal government to do this, since cannabis is illegal on a federal level, it was irrational and unfair in New Jersey where it’s legal.
We applaud the initiative and efforts taken by bill sponsors Assemblywoman Annette Quijano and Senator Troy Singleton. They quickly recognized the importance of addressing this little-understood but critically important issue and tirelessly pushed for its passage. We also thank the Governor for signing the bill and for his support for it as it moved through the legislative process.
Furthermore, we appreciate the New Jersey Business & Industry Association, New Jersey State Chamber of Commerce and Commerce and Industry Association of New Jersey for their avid support of the legislation.