Missouri marijuana businesses can deduct expenses on state tax returns

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For the first time, legal marijuana businesses operating in Missouri will be able to deduct business expenses when they file state tax returns in 2023.

The Missouri Independent news outlet confirmed the updated policy with the state Department of Revenue.

The change was included in the constitutional amendment – which was narrowly passed by voters in November – that legalized adult-use marijuana in Missouri, state Sen. Denny Hoskins told the Independent.

The move is significant considering that Section 280E of the federal tax code prohibits marijuana businesses, which are federally illegal, from deducting operating expenses on state and federal income taxes.

There was an attempt in 2021 to update Missouri’s tax laws to help the industry.

But Gov. Mike Parson vetoed such legislation because of a clause that gave tax breaks to companies under city and county public health restrictions.