AndreTaxCo, PLLC

Delaware Cannabis & Hemp Industries 

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IRC § 280E Analysis / R&D Tax Credit Eligibility

• Does Section 280E Apply to state individual income tax?

  • Yes. Delaware personal income tax conforms to the Internal Revenue Code. The starting point is Federal Adjusted Gross Income. There is no provision that states Section 280E does not apply.

• Does Section 280E apply to state corporate income tax?

  • Yes. The starting point for the Delaware corporate income tax is Federal taxable income. There is no provision that states Section 280E does not apply. 

• Are State R&D Tax Credits Potentially Eligible for "Plant Touching" (e.g. producers, cultivators, manufacturers, retailers) Cannabis Companies?

  • No, subject to 280E restrictions.  

• Are State R&D Tax Credits Potentially Eligible for Industrial Hemp Companies & "Non-Plant Touching" Separate Trade or Businesses (e.g. testing laboratories)?

  • Yes​, subject to further 280E analysis regarding company activities, structure, and applicable state laws.

• See Delaware R&D Credit Summary​

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State Law Background

(1) Hemp State Law Authority & Background​

• Del. Code Ann. tit. 3 § 2800 to 2802 (2016)

  • Establishes an industrial hemp research program overseen by the Delaware Department of Agriculture.

  • Allows the department to certify institutions of higher education to cultivate hemp for research purposes.

 

(2) Medical Marijuana State Law Authority & Background 

• Statutory Language (year) - SB 17 (2011)

  • Patient Registry or ID cards - Yes

  • Allows Dispensaries - Yes

  • Specifies Conditions - Yes

  • Recognizes Patients from other states - Yes, for DE-approved conditions.

  • State Allows for Retail Sales/Adult Use -N/A

• Are sales of medical marijuana subject to sales tax?

  • N/A. Delaware does not have a state sales tax.

• Is medical marijuana subject to an excise tax?

  • No.

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(3) Recreational Marijuana State Law Authority & Background​​​ - N/A

• Are sales of recreational marijuana subject to sales tax?

  • N/A

• Is recreational marijuana subject to an excise tax?

  • N/A

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(4) Does the State impose a Stamp Tax or Controlled Substances Tax?

• No.