AndreTaxCo, PLLC

New York 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. New York 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.

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

  • Yes. New York conforms to the Internal Revenue Code. The starting point is Federal taxable income. There is no provision that states Section 280E does not apply.

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

  • No​, subject to further 280E restrictions. 

• 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 New York R&D Credit Summary​

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State Law Background

(1) Hemp State Law Authority & Background​ 

• N.Y. Agriculture and Markets Law § 505 to 508 (McKinney 2016)

  • Allows the growth of hemp as part of an agricultural pilot program by the Department of Agriculture and Markets and/or an institution of higher education.

  • The commissioner of agriculture and markets may authorize no more than 10 sites for growing hemp as part of a pilot program.

  • The commissioner may develop regulations to authorize the acquisition and possession of industrial hemp seeds.

  • 1 NYCRR 159.2 allows authorized growers to possess, grow and cultivate seeds and hemp plants.

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(2) Medical Marijuana State Law Authority & Background

• Statutory Language (year) - A6357 (2014) Signed by governor 7/5/14

  • Patient Registry or ID cards - Yes

  • Allows Dispensaries - Ingested doses may not contain more than 10 mg of THC, product may not be combusted (smoked).

  • Specifies Conditions - Yes

  • Recognizes Patients from other states - No

  • State Allows for Retail Sales/Adult Use – N/A

• Are sales of medical marijuana subject to sales tax?

  • No. For reference: New York Department of Taxation and Finance Tax Requirements

• Is medical marijuana subject to an excise tax?

  • Yes. New York imposes an Excise Tax on Medical Marijuana, which is a 7% tax on the gross receipts from medical marijuana sold or furnished by a registered organization to a certified patient or designated caregiver. The tax is imposed on the registered organization.

  • For reference: New York Excise Tax on Medical Marijuana

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(3) Recreational Marijuana State Law Authority & Background​​​ - N/A​

• Are sales of recreational marijuana subject to sales tax?

  • N/A.

• Is recreational marijuana subject to an excise tax?

  • N/A.

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

• No.