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.
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Performing technical research on cannabis usage for biofuels, textiles and other materials
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Performing technical research into hybrid strains for medical therapeutic application
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Developing new and/or improved efficiency scientific protocols during growing and harvesting
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Developing new and/or enhanced strains of cannabis via genetic and cross breeding techniques
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Developing new irrigation/hydroponic systems
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Developing new and/or improved automated systems for indoor growth
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Developing new and/or improved concentrates
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Designing new and/or improved cultivation techniques
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Integrating new and/or improved engineering processes to enhance instrument accuracy regarding strain composition
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Developing new and/or improved products for consumption (edible, absorption, etc.)
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Designing new and/or enhanced oil products and extraction techniques
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Designing new and/or improved smoking/vaping/dabbing technology
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Developing new and/or improved protocols to prevent mold or product waste
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Developing new and/or improved technologies for delivery (e.g. mobile applications and product ordering) of cannabis-derived substances
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Develop new and/or improved software analytical tools for strand identification
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Testing new manufacturing equipment and/ processes to improve harvest yield and cycle
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Testing of new and/or improved filtration systems for air and water to enhance product consistency, reliability, quality, etc.
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Evaluating new or improved technologies in air purification, heating or lighting
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Evaluating new and/ or improved uses of LED lighting in growing indoors facilities through a scientific process of experimentation
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Experimenting with new and/or improved topical products and skin absorption procedures
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Experimenting with new and/or improved lighting, fertilizers, plant spacing, and other variables to increase yield or production