Connecticut Governor Ned Lamont signed budget legislation on June 12, 2023 that allows cannabis companies state tax deductions prohibited under federal Internal Revenue Code 280E.
Until now, the “Constitution State” has followed federal law, which classifies cannabis as a Class 1 controlled substance under the Controlled Substance Act and disallows all deductions except for cost of goods sold.
Under Connecticut’s new law, licensed cannabis businesses will be able to deduct “the amount of ordinary and necessary expenses that would be eligible to be claimed [by all other businesses] as a deduction for federal income purposes.”1 This means such basic business expenses as rent and selling expenses can be deducted on cannabis companies’ state income tax returns.
Hand-in-hand with this important step forward, Connecticut has seen its first 6 months of adult-use sales reach new highs as June showed $24M in sales and the total 1st half of 2023 exceeded $122M.2
June also marked the second month in a row where adult-use sales ($12.5M) exceeded medical marijuana purchases ($11.3M). People purchased 313,510 adult-use cannabis products during the month, compared to 303,293 medical cannabis products. This follows the trend seen in other states where, after legalizing adult-use, the medical cannabis market gradually thins as the adult-use system matures and expands.
For more interesting financial cannabis content, download our New E-Book here!