Frequently Asked Questions

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

What types of activities qualify for the R&D tax credit in hemp/CBD industries?

As the hemp/CBD industry is in its relative infancy, much of what is currently being done can be considered innovative: from developing novel software applications to finding the right combination of lighting for optimal crop yield. 

For activities to qualify, they must meet the four-part test, which basically says: i) you are attempting to create or improve a new product or process; ii) the optimal way to achieve your goal is unknown (uncertainty); iii) your efforts are technological in nature (must involve the “hard” sciences); and iv) you undergo a process of experimentation to determine the best way to achieve your desired product/outcome. The following activities satisfy all four requirements, and are prime examples of claimable activities:

  • Developing new hemp/CBD strains or cross-breeding genetics
  • Experimenting with optimal LED lighting, nutrients, soil, etc. to improve efficiency of plant growth, harvest yields, and quality of plant life
  • Testing alternative grow methods (indoor vs. outdoor)
  • Streamlining and/or automating the growing process using technology (process improvements)
  • Developing and manufacturing new and improved hemp/hemp-derived CBD products (edibles, oil concentrates, drinks, vape pens, lotions, topicals, tinctures, pet products, etc.)
  • Testing alternative drying and curing methods to increase production levels
  • Experimenting with formulas for optimal products and processes
  • Designing new packaging and shelf-life methodologies
  • Developing proprietary or patented products, processes, or inventions
  • Developing technologies in the hemp supply chain such as seed-to-sale technologies, inventory management software, unique stain identifier technologies, or grow-system automation technologies
  • Designing new extraction equipment, grow systems, LED lights, filling systems, smoking devices, or grow equipment
  • Evaluating new or improved business processes to maximize efficiencies

Unsure of whether your industrial hemp/CBD projects qualify?

At HempTax, we work on a success-based fee structure enabling businesses in the industrial hemp and CBD industries to claim R&D credits/refunds without any out-of-pocket costs. We offer complete audit protection and a money-back guarantee. Partner with HempTax to claim your tax credits with no up-front costs. Contact one of our experts today.

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