AndreTaxCo, PLLC

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.