Iowa lawmakers want to strip tax out of medical marijuana sales

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The state wants to make it easier for residents to access medical marijuana

Medical marijuana products already appear to be beneficial enough to tax the market, according to several regulators. The Iowa Legislature is receiving several calls from the Medical Cannabidiol Board seeking to exempt medical cannabis products from sales tax. In addition, it asks lawmakers to change their business licensing procedure for dispensaries related to the industry.

Other states across the country have already opted to reduce costs to business owners and patients by reforming state medical marijuana tax systems. According to Board members late last week, Iowa may want to follow in those same footsteps.

In order to get to such a point, it would require exempting medical CBD products from state sales taxes. It would also make several modifications to how the Hawkeye State’s tax code categorizes the sale of controlled substances.

As is well known, the federal Controlled Substances Act places marijuana as a Schedule I drug. As such, businesses that sell products related to the plant are penalized by disallowing the deduction of “ordinary and necessary business expenses.” It is important to note that this state’s tax code has no clear provisions indicating that 28E does not apply.

“[It] essentially just decouples, you know, Iowa’s tax code from the federal code for these purposes,” Owen Parker, Bureau Chief for the Board, said. “They’re still going to get that hit from 280E, you know, that I mentioned at the federal level, but at the state level, that burden could be reduced.”