Wolters Kluwer Article: California provides tax credits for cannabis businesses

California provides two new tax credits for cannabis businesses for tax years 2023 through 2027. One is for so-called “high-road” employers who meet specified employment requirements. The other is for cannabis equity licensees.

Taxpayers may claim the credits against:

  • corporate franchise and income taxes; or
  • personal income tax.

The credits were enacted as part of a larger cannabis tax relief bill.

Who qualifies for the high-road cannabis employer credit?

California-licensed commercial cannabis retailers or microbusinesses may claim the high-road cannabis employer credit for qualified expenditures. Businesses must provide their full-time employees with all of the following:

  • employment compensation;
  • employer-provided group health insurance; and
  • employer-provided retirement or pension benefits.

What expenditures qualify for the credit?

Qualified expenditures for credit purposes are amounts paid or incurred for:

  • employment compensation for full-time employees who are paid no less than 150% but no more than 350% of the applicable minimum wage;
  • safety-related equipment, training, and services; and
  • workforce development for employees.

How much is the credit?

The credit equals 25% of the qualified expenditures in the tax year, up to $250,000. The total amount of credits allocated to all taxpayers for all tax years must not exceed $20 million.



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