North Dakota Cannabis & Hemp Industries 

IRC § 280E Analysis / R&D Tax Credit Eligibility
  • Does Section 280E Apply to state individual income tax?

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

    • NOTE: Lawmakers have considered a provision that would render Section 280E inapplicable. See House Bill No. 1430, Section 19-24-19. However, current law suggests that Section 280E is applicable.

  • 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 North Dakota R&D Credit Summary​

State Law Background

(1) Hemp State Law Authority & Background​ 

  • N.D. Cent. Code § 4-41-01 to 4-41-03 and § 4-05.1-05 (2016)

    • Allows hemp cultivation for commercial or research purposes overseen by the North Dakota agricultural commissioner.

    • Growers must use certified seeds. Licensees may import, resell and plant hemp seeds.

    • Permits the North Dakota State University-Main Research Center to conduct research on industrial hemp and hemp seeds.

(2) Medical Marijuana State Law Authority & Background

  • Statutory Language (year) - Measure 5 (2016) Final details pending

    • Patient Registry or ID cards - Yes

    • Allows Dispensaries - Yes

    • 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?

    • Although legalized, the law is not yet operational. There is no formal guidance as to whether medical marijuana sales will be subject to sales tax.

  • Is medical marijuana subject to an excise tax?

    • Although legalized, the law is not yet operational. There is no formal guidance as to whether medical marijuana sales will be subject to an excise tax.

(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.

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

  • No.

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