Vermont Cannabis & Hemp Industries
IRC § 280E Analysis / R&D Tax Credit Eligibility
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Does Section 280E Apply to state individual income tax?
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Yes. Vermont 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.
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Does Section 280E apply to state corporate income tax?
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Yes. Vermont conforms to the Internal Revenue Code. The starting point is Federal taxable income. There is no provision that states Section 280E does not apply.
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Are State R&D Tax Credits Potentially Eligible for "Plant Touching" (e.g. producers, cultivators, manufacturers, retailers) Cannabis Companies?
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No, subject to further 280E restrictions.
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Are State R&D Tax Credits Potentially Eligible for Industrial Hemp Companies & "Non-Plant Touching" Separate Trade or Businesses (e.g. testing laboratories)?
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Yes, subject to further 280E analysis regarding company activities, structure, and applicable state laws.
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State Law Background
(1) Hemp State Law Authority & Background
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Vt. Stat Ann. tit. 6 § 561 to 566 (2016)
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Allows for commercial hemp production overseen by the Vermont secretary of agriculture, food and markets.
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Requires the registration form advise applicants that hemp is still listed and regulated as cannabis under the federal Controlled Substances Act.
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(2) Medical Marijuana State Law Authority & Background
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Statutory Language (year) - SB 76 (2004) SB 7 (2007) SB 17 (2011)
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H.511 (2018)
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Patient Registry or ID cards - Yes
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Allows Dispensaries - Yes
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Specifies Conditions - Yes
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Recognizes Patients from other states - No
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State Allows for Retail Sales/Adult Use - H.511 approved by legislature, signed by governor 1/22/18. Effective July 1, 2018. Does NOT provide for legal production or sales. Governor's Marijuana Advisory Commission suggested regulation structure below. Allows adults 21 years or older to possess up to one ounce of marijuana. Selling marijuana in Vermont remains illegal. Allows adults to grow two mature plants. Public consumption of marijuana is also not allowed. Governor's Marijuana Advisory Commission Final Report- December, 2018
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Are sales of medical marijuana subject to sales tax?
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No. Purchases of medical marijuana are exempt from sales and use tax under the prescription drug statutory definition.
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For reference: Vermont Department of Taxes Fact Sheet
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Is medical marijuana subject to an excise tax?
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No.
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(3) Recreational Marijuana State Law Authority & Background
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Legislation: H.511 — Approved Jan. 22, 2018
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Law: An Act Related to Eliminating Penalties for Possession of Limited Amounts of Marijuana by Adults 21 Years of Age or Older (Effective: July 1, 2018)
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State Website: State of Vermont Marijuana Commission
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Retail sales are not yet allowed (pending effective date)
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Vermont Medical Marijuana Laws: Medical cannabis patients are not subject to the limits of the adult-use law and may possess up to two mature plants, seven immature plants, and 2 oz of usable marijuana.
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Possession and Cultivation Limits: Age: 21+
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Usable Marijuana: up to 1 oz
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Plants: up to 6 plants per household (no more than 2 mature), and all marijuana produced from the plants
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Hash & Concentrates: 5 g
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Are sales of recreational marijuana subject to sales tax?
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The Governor has appointed a panel to determine how the state will tax recreational marijuana.
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Is recreational marijuana subject to an excise tax?
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The Governor has appointed a panel to determine how the state will tax recreational marijuana.
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(4) Does the State impose a Stamp Tax or Controlled Substances Tax?
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No.