AndreTaxCo, PLLC

Maryland 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. Maryland 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. Maryland conforms to the Internal Revenue Code. The starting point 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 Maryland R&D Credit Summary​

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State Law Background

(1) Hemp State Law Authority & Background​ 

• Md. Agriculture Code Ann. § 14-101 (2016)

  • Establishes a license allowing individuals to plant, grow, harvest, possess, process, sell, or buy industrial hemp in Maryland.

  • Authorizes the Maryland Department of Agriculture or an institution of higher education to grow hemp for research purposes.

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(2) Medical Marijuana State Law Authority & Background 

• Statutory Language (year) - HB 702 (2003) SB 308 (2011) HB 180/SB 580 (2013)  HB 1101- Chapter 403 (2013) SB 923 (signed 4/14/14) HB 881- similar to SB 923

  • Patient Registry or ID cards - Yes

  • Allows Dispensaries - Yes

  • Specifies Conditions - Yes

  • Recognizes Patients from other states - No

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

• Are sales of medical marijuana subject to sales tax?

  • No.

• 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.