New York Governor Kathy Hochul has signed into law a bill to allow marijuana businesses in New York City to take tax deductions they would otherwise be able to take if they were federally legal.
Four days after it was sent to her desk, Governor Hochul has signed Senate Bill 7508 into law. Filed by Senator Luis Sepulveda, the measure passed the Senate 43 to 18, and the full Assembly 116 to 29.
The new law alters the Administrative Code of the City of New York to allow marijuana businesses to take deductions for an amount equal to the deductions that are disallowed under Section 280E of the Internal Revenue Code for the taxable year. Section 280E explicitly disallows businesses that are illegal under federal law, even if they’re legal under state law, from taking standard tax deductions.
The text of SB 7508 states that “For businesses authorized pursuant to the cannabis law to engage in the sale, production, or distribution of (A) adult-use cannabis products, as defined in article twenty-C of the tax law, or (B) medical cannabis, as defined in section three of the cannabis law, the amount of any federal deduction disallowed pursuant to section two hundred eighty-E of the internal revenue code related to the sale, production, or distribution of such adult-use cannabis products or such medical cannabis not used as the basis for any other tax deduction, exemption, or credit and not otherwise required to be added back by subdivision (b) of this section in computing entire net income.”
Christopher Ellis Jr., Director of State Legislative Affairs at the mayor’s office says that this modification “is appropriate because, while the expenses of cannabis-related business cannot be deducted for federal purposes, New York law permits and encourages these businesses akin to any other legitimate business occurring in the State. The City’s business taxes should similarly encourage these business activities.”
The full text of SB 7508 can be found by clicking here.