With Senate Bill 654 signed into law earlier this summer, and with House Bill 1994 to follow shortly, Pennsylvania cannabis companies will no longer be forced to limit their deductions to cost of goods sold as they are federally. Starting with their 2024 tax returns, business owners will be able to deduct ordinary and necessary expenses they were denied on their federal tax return under Section 280E of the tax code.
The Pennsylvania House Committee on Appropriations predicts $2.1 million in tax deductions each for fiscal years 2025 and 2026. Cannabis business owners who are struggling with price compression due to oversupply and a state track-and-trace system that is having problems will surely welcome the savings.
Until now, Pennsylvania had followed states such as Alaska, Arizona, and Nevada, which have legalized cannabis but still follow federal law regarding 280E. Cannabis business owners and their advisers should now begin preparing for year-end.
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Pennsylvania Cannabis Businesses Will Have More Chances to Save
