“Passage of Modification 3 clarified the problem and regular enterprise deductions can be allowed for marijuana associated companies.”
By Rebecca Rivas, Missouri Unbiased
Marijuana corporations will be capable to deduct enterprise bills on their state taxes for the primary time this yr, a Missouri Division of Income spokeswoman confirmed to The Unbiased.
Missourians voted to legalize medical marijuana in 2018. However beneath federal legislation, rising, transporting or promoting marijuana stays against the law.
Due to this dynamic, marijuana corporations have differed from each different authorized enterprise within the state as a result of they weren’t allowed to deduct peculiar and vital enterprise bills, corresponding to advertising or furnishings prices, on each their state and federal tax returns.
Sen. Denny Hoskins, R-Warrensburg, pre-filed a bill in December to get that modified, no less than on the state stage. And Republicans have been attempting to make the change for the final three years.
Nonetheless, Hoskins advised The Unbiased Friday that passage of Modification 3, the constitutional modification legalizing marijuana that voters permitted in November, will make the deductions attainable.
“After additional discussions with [the Department of Revenue], they imagine the passage of Modification 3 clarified the problem and regular enterprise deductions can be allowed for marijuana associated companies, so no additional laws is important,” Hoskins stated by way of textual content message.
In 2021, state lawmakers permitted Hoskins’ invoice as an modification to a wide-ranging invoice. However Gov. Mike Parson (R) vetoed the laws over an unrelated provision—a piece lawmakers included that will have supplied tax reduction for companies impacted by city-wide or county-wide public well being restrictions.
In his letter vetoing the measure, Parson didn’t point out the medical marijuana provisions.
Final yr, a invoice that included the provision handed out of the Senate however stalled within the Home.
Adolphus Pruitt, president of the St. Louis Metropolis NAACP chapter, stated the change will particularly profit small companies within the marijuana business throughout their first years of operation.
“In these early years, companies have to do their finest to interrupt even or attempt to make a return on their funding and be worthwhile,” Pruitt stated. “So those that have the power to have these enterprise bills deducted to extend their backside line—identical to it’s for some other enterprise—is essential.”
Hoskins, who’s an accountant, advised legislators final yr that marijuana corporations had been paying the next general tax price on their earned earnings. In 2021, the efficient tax price for companies was about 20 p.c, he stated.
“You could possibly even have an efficient tax price of over 70 p.c, not with the ability to deduct these bills,” Hoskins stated throughout a Senate committee listening to final spring, “since you’re taxed on gross revenue, not on peculiar enterprise earnings like different companies.”
In December, Missourians purchased $40.25 million value of medical marijuana, breaking the beforehand month-to-month gross sales report. In whole, Missouri has now bought $605.31 million value of medical marijuana since gross sales started in October 2020. In 2022 alone, Missouri bought greater than $390 million.