Rhode Island Cannabis & Hemp Industries 

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

    • Yes. Rhode Island 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. Rhode Island 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 Rhode Island R&D Credit Summary​

State Law Background

(1) Hemp State Law Authority & Background​ 

  • R.I. Gen. Laws § 2-26-1 to 2-26-9 (2016)

    • Establishes a commercial hemp program overseen by the Department of Business Regulation.

    • Allows the Division of Agriculture in the Department of Environmental Management to assist the Department of Business Regulation in regulating hemp.

    • Growers must verify they are using certified seeds.

    • The department shall authorize institutions of higher education to grow hemp for research purposes.

(2) Medical Marijuana State Law Authority & Background

  • Statutory Language (year) - SB 791 (2007)  SB 185 (2009)

    • Patient Registry or ID cards - Yes

    • Allows Dispensaries - Yes

    • Specifies Conditions - Yes

    • Recognizes Patients from other states - Yes

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

  • Are sales of medical marijuana subject to sales tax?

  • Is medical marijuana subject to an excise tax?

    • Yes. Effective June 30, 2011, the Compassion Center Surcharge imposes a 4% monthly surcharge is on the net patient revenue received each month by every compassion center. A “compassion center” means a registered nonprofit entity that acquires, possesses, cultivates, manufactures, delivers, transfers, transports, supplies or dispenses marijuana, or related supplies and educational materials, to registered qualifying patients and their registered primary caregivers who have designated it as one of their primary caregivers. See R.I. Gen. Laws § 44-67-2(2); R.I. Gen. Laws Sec. 44-67-3; R.I. Reg. CCS 11-01.

    • For reference: Compassion Center Surcharge Regulations

(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?

  • Yes. Rhode Island imposes a Controlled Substances Tax, which provides that a dealer may not possess marijuana unless the tax has been paid as evidenced by a stamp or other official indicia. The tax rate is $3.50 per gram of marijuana. "Marijuana" for purposes of the controlled substances tax only means marijuana that is held, possessed, transported, etc. in violation of Rhode Island law, so the tax does not apply to legal sales of medical marijuana. See R.I. Gen. Laws. Sec. 44-49-1

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