Missouri lawmakers approve tax relief for cannabis companies
Even as a majority of states have legalized recreational or medical marijuana and spurred a growing cannabis industry, there are still a number of legal obstacles preventing those companies from reaching their full potential.
Among them: the ability to deduct normal business expenses from their taxes, like every other company does.
At least one state is doing something to fix this problem. Missouri lawmakers are working to allow marijuana companies to deduct normal business costs from their state taxes:
The bill approved by lawmakers simply allows medical marijuana businesses authorized under the Missouri Constitution to claim an income tax deduction in an amount equal to any expenditures otherwise allowable as a federal income tax deduction.
By making this change, lawmakers “put medical cannabis businesses on a level playing field with all other small businesses across the state when it comes to taxes,” said Andrew Mullins, executive director of the Missouri Medical Cannabis Trade Association.
David Smith, a certified public accountant from St. Louis County who works with numerous medical marijuana companies, said existing law could mean an effective tax rate for those businesses of 70 percent or higher.
That’s a punishing tax rate for any business. It also acts as a powerful disincentive to create a business in the first place, or for existing cannabis companies to expand their payrolls and capital investment. Good on Missouri for trying to do the right and sensible thing on taxes, and on keeping the marijuana federalism experiment alive and thriving.