Senate bill would allow business deductions for medical marijuana providers | State News
JEFFERSON CITY — A bill passed by a Missouri House committee Wednesday aims to level the playing field for medical marijuana businesses when it comes to taxes.
SB 807 would allow people operating authorized medical marijuana businesses to claim the same income tax deductions they would if they were operating any other business. Currently, these deductions are not allowed because cannabis is illegal at a federal level, which Missouri’s tax system defers to.
A similar bill made it to the governor’s desk last year before being vetoed for unrelated reasons.
“The purpose of the bill is to essentially decouple from the federal regulations and allow expenses that would normally be deductible for any other business,” said David Smith, treasurer of Missouri Medical Cannabis Trade Association.
This would put medical marijuana on even footing with other industries.
“It’s hard enough to run a small business these days, especially during the pandemic getting this off the ground, but having to pay more taxes than any other small business in your community certainly is detrimental, we think, to economic growth,” said Jack Cardetti, spokesperson for MOCann Trade Association.
The impact extends beyond the businesses themselves to the people purchasing cannabis products.
“Because, obviously, the more the businesses have to pay, the more the consumer will have to pay,” Cardetti said.
As of Jan. 7, there were 308 businesses licensed to test, cultivate, manufacture, dispense or transport medical marijuana in the state. These operators deducting business expenses from their income taxes would result in an “an unknown, but significant” cost to the state, according to a financial analysis. The analysis reported there was not enough information available to determine the precise cost.
The House committee passed a substitute that would additionally require the Department of Health and Senior Services to authorize licenses to any applicants who qualified, regardless of the current limits on licenses.
Currently, the department is allowed to issue a maximum of 60 licenses to cultivation facilities, 86 to manufacturing facilities, 10 to testing labs and 192 to dispensaries.
Smith said he wasn’t aware of the specifics of the substitute but in general, losing these caps would be a cause for concern.
“My personal take is that getting rid of the license caps is not good for the industry and not good for patients in Missouri as a whole,” Smith said.
He pointed to Oklahoma as an example of what might happen. A lack of license caps, along with other lax regulations, overwhelmed the regulatory system and diluted the market, leading to concerns of organized crime, unethical labor practices and higher competition.
“It becomes much more difficult from a regulatory environment to ensure quality of product — not only quality of product but security and safety,” Smith said. “It is and should continue to be a highly regulated industry.”
The bill will head next to the House floor.