Aiming to help New Jersey’s adult-use cannabis industry continue to grow and thrive, Assemblywoman Annette Quijano sponsored a measure that would make it possible for cannabis businesses to deduct certain expenses on State tax returns by decoupling them from federal rules prohibiting deductions and credits for cannabis businesses. The legislation was signed into law by Governor Murphy on Monday. The Assemblywoman originally introduced the bill in 2020 and reintroduced it in 2022.
Under the law (formerly bill A3946) a cannabis business subject to the corporation business tax will be allowed to deduct from income all ordinary and necessary business expenses incurred in operating a licensed cannabis business. The deduction will also be allowed when calculating S corporation income and will continue to be allowed for other forms of business income under the gross income tax regardless of total gross receipts.
Upon the bill becoming law, Assemblywoman Quijano (D-Union) issued the following statement:
“I applaud Governor Murphy for signing this legislation to ensure small businesses can thrive in our state’s adult-use cannabis industry. This new law will enable us to better support dispensaries in New Jersey by making sure they can take advantage of the tax deductions and credits that make running a business more affordable. I am confident this measure will fuel economic growth in the sector and help us make good on our commitment to prioritize equity in the cannabis industry.”