Majority of CPAs Surveyed Say Steps Needed to Help This Industry Thrive
Having a commercial cannabis industry in New Jersey will help the state’s economy, according to 66 percent of the 924 certified public accountants (CPAs) surveyed in August by the New Jersey Society of Certified Public Accountants (NJCPA). The majority (68 percent) of respondents either “strongly agree” or “somewhat agree” that New Jersey lawmakers need to take steps to mitigate the impact of federal regulations on the industry, such as the inability to deduct business expenses.
Survey respondents were asked to consider the impact of legalizing adult-use cannabis on the economy as voters in New Jersey will see the issue on the ballot in November. Governor Murphy has long supported a commercial cannabis industry as a viable revenue source and job creator for New Jersey. Legalization would also impact criminal justice reform, which Governor Murphy favors. All retail sales of cannabis in this market would be subject to the state’s sales tax.
“A commercial cannabis industry is replete with many challenges for business owners, but thankfully CPAs are at the forefront of helping businesses navigate federal tax and banking regulations,” said Melissa A. Dardani, CPA, the leader of the NJCPA Cannabis Interest Group, who has conversed with lawmakers about the importance of the issue.
The NJCPA has sponsored legislation that would “decouple” New Jersey from Internal Revenue Code Section 280E, which forbids companies engaged in illegal drug activities from deducting businesses expenses. 280E already has a negative impact on New Jersey companies working in the medicinal market and will similarly hurt businesses that will be involved in the adult-use market. Decoupling would eliminate this burden for state tax purposes and allow cannabis businesses to have access to the same tax benefits as all other New Jersey businesses. It’s particularly important for small businesses that will enter the market because they won’t be able to compete with large out-of-state cannabis companies that have more capital.
“This is clearly a hot button for our members, who feel strongly about the importance of revenue growth in the state. As trusted advisors, CPAs are well versed in a variety of industries, including cannabis, and stand ready to assist business owners. If someone is unsure of how they can operate in this market, they would be wise to reach out to a CPA,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at the NJCPA.