Louisiana Cannabis & Hemp Industries
IRC § 280E Analysis / R&D Tax Credit Eligibility
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Does Section 280E Apply to state individual income tax?
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Yes. Louisiana conforms to the Internal Revenue Code. The starting point is Federal Adjusted Gross Income. There is no provision that states Section 280E does not apply.
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Does Section 280E apply to state corporate income tax?
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Yes. Louisiana generally conforms to the Internal Revenue Code. The starting point is Federal taxable income after adjustments and the deduction for Federal income taxes paid. There is no provision that states Section 280E does not apply.
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Are State R&D Tax Credits Potentially Eligible for "Plant Touching" (e.g. producers, cultivators, manufacturers, retailers) Cannabis Companies?
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No, subject to 280E restrictions.
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Are State R&D Tax Credits Potentially Eligible for Industrial Hemp Companies & "Non-Plant Touching" Separate Trade or Businesses (e.g. testing laboratories)?
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Yes, subject to further 280E analysis regarding company activities, structure, and applicable state laws.
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State Law Background
(1) Hemp State Law Authority & Background
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Louisiana HB 491 (Act No. 164)
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Authorizes industrial hemp research, cultivation, processing and transportation and recognizes industrial hemp as an agricultural commodity.
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Provides for powers and responsibilities of the Agricultural Chemistry and Seed Commission and the Department of Agriculture and Forestry to develop an industrial hemp program, including criteria for seed approval, licensing, testing and other necessary rules and regulations.
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Directs the creation and submittal of a state plan to USDA by Nov. 1, 2019.
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Exempts legally allowed industrial hemp and industrial hemp-derived CBD products from the Uniform Controlled Dangerous Substances Law.
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(2) Medical Marijuana State Law Authority & Background
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Statutory Language (year) - SB 271 (2017) (not yet in effect)
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Patient Registry or ID cards - Pending
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Allows Dispensaries - Yes
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Specifies Conditions - Yes
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Recognizes Patients from other states - No
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State Allows for Retail Sales/Adult Use – N/A
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Are sales of medical marijuana subject to sales tax?
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Yes. Physicians “recommend” medical cannabis.
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For reference: Senate Bill No. 271
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Is medical marijuana subject to an excise tax?
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No.
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(3) Recreational Marijuana State Law Authority & Background - N/A
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Are sales of recreational marijuana subject to sales tax?
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N/A.
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Is recreational marijuana subject to an excise tax?
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N/A.
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(4) Does the State impose a Stamp Tax or Controlled Substances Tax?
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Yes. Louisiana imposes a Marijuana and Controlled Dangerous Substances Tax on dealers of marijuana and controlled dangerous substances within the state. See La. Rev. Stat. Ann. Sec. 47:2601. The tax does not apply to persons who are lawfully in possession of marijuana. Id. A dealer is a person who manufactures, produces, ships, transports or imports into Louisiana, or in any manner acquires or possesses, more than 42.5 grams of marijuana. See La. Rev. Stat. Ann. Sec. 47:2602(2).
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The tax rate is $3.50 per gram or portion of a gram. The tax is payable by dealers through stamps purchased from the Secretary of Revenue, and attached by the dealer to the package of marijuana that is subject to the tax. See La. Rev. Stat. Ann. Sec. 47:2603.
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For reference: Louisiana Marijuana and Controlled Dangerous Substances Tax