NJCPA Supports Legislation that Provides Tax Fairness to Cannabis Businesses

Statement by Ralph Albert Thomas, CPA (DC), CGMA, CEO and Executive Director, New Jersey Society of CPAs

ROSELAND, N.J. – We are pleased to announce our support for legislation (S3240) introduced on Dec. 10 by Senator Troy Singleton (D-7) that would decouple cannabis businesses in New Jersey from Internal Revenue Code (IRC) Section 280E. New Jersey currently follows this federal rule which prohibits cannabis businesses from deducting business expenses.

The NJCPA was working to decouple from 280E even before the November ballot vote that legalized cannabis. S3240 will benefit small businesses and minority- and women-owned businesses, helping them to compete in New Jersey’s adult-use cannabis market.

Without this legislation, the market, when fully operational, could be dominated by large-scale enterprises and out-of-state businesses — exactly what lawmakers don’t want. Many other states that have legalized cannabis have also decoupled from IRC 280E.

The bill only decouples for taxpayers with less than $15 million of gross receipts that are subject to the corporation business tax. The deduction will also be allowed when calculating income from S corporations with less than $15 million of gross receipts and will continue to be allowed for other forms of business income.

For a more complete explanation of the bill, access S3240.

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The New Jersey Society of Certified Public Accountants, with more than 14,000 members, represents the interests of the accounting profession and advances the financial well-being of the people of New Jersey. The NJCPA plays a leadership role in supporting the profession by providing members with educational resources, access to shared knowledge and a continuing effort to create and expand professional opportunities.