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Maine Cannabis & Hemp Industries 

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IRC § 280E Analysis / R&D Tax Credit Eligibility

• Does Section 280E Apply to state individual income tax?

  • Yes, currently Section 280E applies. Maine conforms to the Internal Revenue Code. The starting point is Federal Adjusted Gross Income. Currently, there is no provision that states Section 280E does not apply. However, the legislature has considered enacting a provision that would allow deductions that are otherwise disallowed by Section 280.

• Does Section 280E apply to state corporate income tax?

  • Yes, currently Section 280E applies. Maine conforms to the Internal Revenue Code. The starting point is Federal taxable income. Currently, there is no provision that states Section 280E does not apply. However, the legislature has considered enacting a provision that would allow deductions that are otherwise disallowed by Section 280E.

• Are State R&D Tax Credits Potentially Eligible for "Plant Touching" (e.g. producers, cultivators, manufacturers, retailers) Cannabis Companies?

  • No, subject to 280E restrictions. 

  • However, the legislature has considered enacting a provision that would allow deductions that are otherwise disallowed by Section 280E.

• Are State R&D Tax Credits Potentially Eligible for Industrial Hemp Companies & "Non-Plant Touching" Separate Trade or Businesses (e.g. testing laboratories)?

  • Yes​, subject to further 280E analysis regarding company activities, structure, and applicable state laws.

• See Maine R&D Credit Summary​

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State Law Background

(1) Hemp State Law Authority & Background​ 

• Me. Rev. Stat. Ann. tit. 7 § 2231 (2016)

  • Allows hemp growing for commercial purposes.

  • Establishes a license for seed distributors

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(2) Medical Marijuana State Law Authority & Background 

• Statutory Language (year) - Question 2 (1999)  LD 611 (2002)  Question 5 (2009)   LD 1811 (2010) LD 1296 (2011)

  • Patient Registry or ID cards - Yes

  • Allows Dispensaries - Yes

  • Specifies Conditions - Yes

  • Recognizes Patients from other states - Yes, but not for dispensary purchases

  • State Allows for Retail Sales/Adult Use - Question 1 (2016) page 4 Chapter 409 (2018)

• Are sales of medical marijuana subject to sales tax?

  • Yes (normal rate).

  • For reference: Maine Revenue Services Bulletin

• Is medical marijuana subject to an excise tax?

  • Currently, no excise tax.

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(3) Recreational Marijuana State Law Authority & Background​​​

• Ballot Measure: Question 1 — Approved Dec. 17, 2016 (after recount of Nov. 8, 2016 election results was abandoned) by 50.26% of voters

• Law: The Marijuana Legalization Act

  • Effective: Jan. 30, 2017 (grow and possess)

  • [Editor’s Note: On May 2, 2018, the Maine House (109-39) and Senate (28-6) voted to override Gov. Paul LePage’s veto of LD 1719 (Chapter 409 Public Law). The Department of Adminstration and Financial Services is required to present regulatory rules for legal sale and production of marijuana to the legislature in January 2019; marijuana retail shops are expected to open no sooner than Spring 2019. The bill lowers the recreational marijuana possession limits from 6 mature plants to 3 mature plants.]

  • Maine Medical Marijuana Laws: Medical cannabis patients are not subject to the limits of the recreational law and may possess up to 2.5 oz marijuana and 6 plants.

  • Possession and Cultivation Limits: Age: 21+

  • Usable Marijuana: up to 2.5 oz

  • Plants: up to 3 flowering plants, 12 immature plants, unlimited seedlings, and all marijuana produced from the plants

  • Hash & Concentrates: up to 5 g

• Are sales of recreational marijuana subject to sales tax?

  • Yes (increased rate). The sales tax is 10% on the value of adult use marijuana and adult use marijuana products. See 36 MRSA § 1811.

• Is recreational marijuana subject to an excise tax?

  • Yes. Beginning on the first day of the calendar month in which adult use marijuana may be sold in Maine by a cultivation facility, Maine imposes the following excise tax: (1) Excise tax on marijuana flower and mature marijuana plants. A cultivation facility licensee shall pay an excise tax of $335 per pound of marijuana flower or mature marijuana plants sold to other licensees in the State; (2) Excise tax on marijuana trim. A cultivation facility licensee shall pay an excise tax of $94 per pound of marijuana trim sold to other licensees in the State; (3) Excise tax on immature marijuana plants and seedlings. A cultivation facility licensee shall pay an excise tax of $1.50 per immature marijuana plant or seedling sold to other licensees in the State; (4) Excise tax on marijuana seeds. A cultivation facility licensee shall pay an excise tax of $0.30 per marijuana seed sold to other licensees in the State. See 28-B MRSA § 1001.

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(4) Does the State impose a Stamp Tax or Controlled Substances Tax?

• No.