MA Votes to Decouple from Federal 280E

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On May 18, 2022, in a 153-2 vote, the Massachusetts House of Representatives approved sweeping marijuana reforms, which includes two welcomed provisions for operators!

MA House Votes to Decouple from Federal 280E Tax Code

The House voted to amend the state’s tax code to officially decouple from the federal tax code with respect to 280E. This would allow state legal cannabis operators to deduct their ordinary and necessary business expenses on their annual state income tax returns, a right they have been denied since the state first legalized medical marijuana back in 2012.

The State Senate approved its version of a similar bill back in April. Now that the House bill has been approved, both the Senate and House bills will go through the conference committee process to reconcile any differences, which will be followed with another round of votes before being sent to the Governor for signature.

AAFCPAs’ Cannabis Practice sees this as a significant step forward in normalizing the cannabis industry within the state while the country waits for meaningful cannabis reform at the federal level.

Social Equity Fund Increased

The House voted to increase the proportion of the revenue generated from the state’s 10.75% marijuana excise tax that gets allocated to a social equity fund from 15% (proposed in an earlier bill) to 20%.  This fund would be used to assist social equity applicants get their cannabis businesses off the ground.

AAFCPAs is a full-service CPA and consulting firm that serves the cannabis industry nationally. We continue to monitor ever-changing developments in federal legalization, banking reform, and state and local taxation. If you have questions, please contact: David J. Gravel, CPA at 774.512.4008, dgravel@nullaafcpa.com; David McManus, CPA, CGMA at 774.512.4013, dmcmanus@nullaafcpa.com; or your AAFCPAs Partner.


About the Authors

David Gravel

David J. Gravel, CPA, MPAc

Dave is a leader in AAFCPAs’ cannabis practice. He provides tax and consulting solutions to multi-state operators, recreational and medical retailers, cultivators, product manufacturers, and investors. He has extensive experience advising cannabis operators and license applicants on optimal entity structure, maximizing deductions in accordance with IRC Section 280E, and multi-year tax planning to ensure preferred tax results, with a focus on preserving cash and maximizing lender/investor value. He also provides guidance on avoiding pitfalls associated with …
David McManus

David McManus, CPA, CGMA

Dave leads AAFCPAs’ national Cannabis Business Practice, and has been deeply immersed in understanding the complex financial and operational nuances of the industry since 2012. His subject matter expertise was sought by the U.S. Treasury and Senate Finance Committee for guidance on critical considerations regarding the 280E transition following DEA rescheduling news. As a key advisor through the AICPA, Dave and his cannabis team provides insights to shape regulatory guidance on this issue. He provides highly …