A measure that easily passed a key Senate committee on Thursday would decouple state and federal tax rules for licensed cannabis businesses in New Jersey so they could use tax deductions for business expenses in the same way other businesses can.
Currently, New Jersey’s business tax code is aligned with that of the federal government, which still considers marijuana to be an illegal substance.
That means cannabis businesses are prohibited from deducting business expenses from their state and federal tax returns, potentially making them less profitable. Meanwhile, the state is trying to grow the new cannabis industry, which is projected to generate millions of dollars in tax revenue for the annual budget.
While state lawmakers can’t do anything about the federal tax code, sponsors say they can rewrite New Jersey’s code to level the playing field, something that could boost the prospects of smaller cannabis businesses and those operated by women and minorities, since they may find it harder to overcome such regulatory obstacles than bigger firms.
“New Jersey’s cannabis industry is still in its infancy, and we need to act early to provide equal opportunity for all businesses to succeed,” said Sen. Shirley Turner (R-Mercer).