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Tax relief for Missouri medical marijuana businesses vetoed by Gov. Parson

by Jason Hancock, The Missouri Independent | July 9, 2021 at 9:20 p.m. | Updated July 9, 2021 at 9:23 p.m.
FILE - In this March 22, 2019 file photo, shows marijuana buds being sorted into a prescription jar at Compassionate Care Foundation's medical marijuana dispensary in Egg Harbor Township, N.J. Voters in four states could embrace broad legal marijuana sales on Election Day, setting the stage for a watershed year for the industry that could snowball into neighboring states as well as reshape policy on Capitol Hill. The Nov. 3, 2020, contests will take place in markedly different regions of the country, New Jersey, Arizona, South Dakota and Montana and approval of the proposals would highlight how public acceptance of cannabis is cutting across geography, demographics and the nation's deep political divide. (AP Photo/Julio Cortez, File)

Missouri Gov. Mike Parson vetoed legislation Friday that would have lifted a prohibition on licensed medical marijuana companies deducting business expenses on their taxes.

In his letter vetoing the measure, Parson didn't mention the medical marijuana provisions. He said his decision to reject the bill came down to a section lawmakers included that would have provided tax relief for businesses impacted by city-wide or county-wide public health restrictions.

Parson said those provisions would have created "significant unintended consequences that could greatly harm localities."

In vetoing the bill, however, the medical marijuana provision was also struck down.

Missourians voted to legalize medical marijuana in 2018. But under federal law, growing, transporting or selling marijuana remains a crime.

Because of this dynamic, marijuana companies differ from every other legal business in the state because they can't deduct ordinary and necessary business expenses on their tax returns.

While federal law remains unchanged, the legislation approved nearly unanimously in both the House and Senate would have changed that for state taxes.

David Smith, a certified public accountant from St. Louis County who works with numerous medical marijuana companies, said during a Senate hearing earlier this year that Missouri's existing law could mean an effective tax rate for those businesses of 70 percent or higher.

"Some companies may even be subject to income taxes while operating at a loss," Smith said.

Andrew Mullins, executive director of MoCannTrade, said it was "both common sense and smart public policy to put medical cannabis businesses on a level playing field with all others that pay state business taxes."

"While disappointed in the veto, we remain encouraged by the overwhelming bipartisan support for a measure of basic tax fairness that received near-unanimous votes in both the state House and Senate," Mullins said in a statement to The Missouri Independent. "As our state's newest industry continues to create thousands of new jobs and generate tens of millions in new spending each month, we look forward to again passing this policy change and seeing it signed into law."

Another casualty of the veto was a provision providing sales tax exemptions for certain cancer treatment devices. Parson wrote in his veto letter that he supports this tax deduction and hopes lawmakers will pass it again next year.

The Missouri Independent is a nonprofit, nonpartisan news organization covering state government and its impact on Missourians.

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