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Frequently Asked Questions

Listed below are some of the most frequently asked questions our team receives about R&D tax credits

Can any hemp/CBD business take advantage of the federal R&D tax credit?

The government defines industrial hemp and hemp-derived products, as "the plant Cannabis sativa L. and as any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 percent on a dry weight basis." This definition also removed hemp from the Controlled Substances Act, which means that cannabis plants and derivatives that contain no more than 0.3% THC are no longer controlled substances under federal law.

In general, hemp plants contain more CBD, and cannabis plants contain more THC. The current federal law states that CBD products sourced from cannabis plants, even those with no (0%) THC, are illegal and therefore not eligible for the R&D tax credit. This is solely due to the plant (hemp vs cannabis) from which the product originated. Only CBD products sourced from the hemp plant are eligible for R&D tax credits.

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