Cannabinoid Product Development

The list of cannabinoid-containing products available on the market is growing at an astounding rate. From pet treats, lotions, and bath bombs, to teas, sodas, and chocolates. A considerable amount of research and development (R&D) is required to bring these products from concept to consumer, including testing, revising, and scaling up for mass production. Product developers must account for potency, purity, and taste, and consider the concentration and ideal mechanism of delivery. If you are operating in this space, there is a strong likelihood that the time and money you are investing in your new product could be eligible for 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.

Example activities that qualify:

  • Assessing cannabinoid dispersion techniques to ensure homogeneity
  • Testing various flavor profiles for palatability and consumer preference
  • Experimenting with proprietary extraction processes
  • Improving the cannabinoid extraction processes
  • Determining optimal concentration and dosing
  • Evaluating various sources (full spectrum to isolate) of cannabinoid extracts for inclusion
  • Ensuring product conforms to FDA and other regulatory agency standards

Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?

  • Analytical Chemists
  • Cultivation Specialists
  • Director of R&D
  • Distillation Managers
  • Extraction / Cultivation / Laboratory Technicians
  • Food Scientists
  • Kitchen Assistants
  • Master Extractors
  • Nutritionists
  • Product Development Personnel / Managers
  • Research Scientists

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.

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How much could I get back in R&D tax credits?

Great question! Try out our R&D Tax Credit Calculator to see the value of your R&D tax credit reward.
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