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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

Why are industrial hemp/CBD businesses now able to claim these R&D tax credits?

The 2018 Farm Bill passed in December 2018, which removed industrial hemp and hemp-derived CBD from the Controlled Substances Act, makes these businesses federally legal and enables them to take advantage of federal deductions and credits available to all other businesses for the 2019 tax year and beyond.

Excerpt from Sec C: 

The impact of Section 280E of the Internal Revenue Code (IRC) has put cannabis companies at a disadvantage relative to non-cannabis businesses, which can deduct their ordinary and necessary business expenses and claim tax credits.

Passage of the 2018 Farm Bill resulted in hemp cultivators and hemp CBD manufacturers no longer being subject to Section 280E beginning with the 2019 tax year. Namely, any part of the cannabis plant containing less than 0.3% THC in dry weight form is called “industrial hemp” and is no longer scheduled. As such, businesses that traffic in industrial hemp or its derivatives are no longer subject to Section 280E. Cannabis companies that are not hemp businesses remain subject to Section 280E. Hemp businesses are subject to Section 280E for 2018 tax year returns.


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