To reap the beneﬁts of the wide variety of cannabinoids, they must ﬁrst be extracted from the cannabis and hemp plants. Companies can employ various extraction methods depending on the desired end product, concentration, and other considerations. However, preserving the quality and purity of the cannabinoid is crucial, regardless of the method used. Therefore, cannabinoid extraction companies invest signiﬁcant resources into research and development (R&D) to optimize these processes. Companies—whether they are reﬁning existing extraction methods or pioneering new ones—can realize signiﬁcant tax savings through the R&D Tax Credit.
The R&D Tax Credit is an activities-based credit. Employee wages, raw materials and supplies, and third-party contractor costs associated with R&D activities are considered qualiﬁed research expenses (QREs). Companies can receive refunds of up to 22% of total QREs through federal and state tax credits, depending on the state in which your business operates.
Use our Hemp Tax Calculator to estimate your potential beneﬁt, and partner with HempTax to claim your beneﬁts with no up-front costs. Contact one of our experts today.