Cannabis companies may be eligible for applicable state R&D tax credits (subject to IRC § 280E restrictions and additional federal and/or state law investigation) for performing qualified research activities. Note, federal R&D tax credits and other federal tax incentives are still generally prohibited to cannabis companies pursuant to IRC § 280E. Nevertheless, regarding state incentives, the following activities may be eligible for state R&D tax credits.

*However, any taxpayers considering to claim any U.S. federal and/or state tax incentive associated with cannabis products and/or services should seek further professional tax accounting and legal consultation prior to making any tax benefit claim.

  • Performing technical research on cannabis usage for biofuels, textiles and other materials 

  • Performing technical research into hybrid strains for medical therapeutic application

  • Developing new and/or improved efficiency scientific protocols during growing and harvesting 

  • Developing new and/or enhanced strains of cannabis via genetic and cross breeding techniques 

  • Developing new irrigation/hydroponic systems

  • Developing new and/or improved automated systems for indoor growth 

  • Developing new and/or improved concentrates 

  • Designing new and/or improved cultivation techniques 

  • Integrating new and/or improved engineering processes to enhance instrument accuracy regarding strain composition

  • Developing new and/or improved products for consumption (edible, absorption, etc.) 

  • Designing new and/or enhanced oil products and extraction techniques 

  • Designing new and/or improved smoking/vaping/dabbing technology 

  • Developing new and/or improved protocols to prevent mold or product waste

  • Developing new and/or improved technologies for delivery (e.g. mobile applications and product ordering) of cannabis-derived substances 

  • Develop new and/or improved software analytical tools for strand identification  

  • Testing new manufacturing equipment and/ processes to improve harvest yield and cycle

  • Testing of new and/or improved filtration systems for air and water to enhance product consistency, reliability, quality, etc.

  • Evaluating new or improved technologies in air purification, heating or lighting 

  • Evaluating new and/ or improved uses of LED lighting in growing indoors facilities through a scientific process of experimentation

  • Experimenting with new and/or improved topical products and skin absorption procedures

  • Experimenting with new and/or improved lighting, fertilizers, plant spacing, and other variables to increase yield or production

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