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S.F. No. 265 - Subtraction for medical cannabis manufacturers (as proposed to be amended by A-1 amendment)
Author: Senator Roger C. Chamberlain
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: March 6, 2018


As proposed to be amended, this bill establishes a subtraction for purposes of calculating Minnesota individual income, corporate franchise, and alternative minimum tax for business expenses incurred by medical cannabis manufacturers. Business expenses, such as wages and rent, are generally deductible at the federal level for purposes of calculating federal taxable income, and Minnesota incorporates these deductions in calculating Minnesota taxable income. Federal law, however, prohibits the deduction for expenses incurred in a trade or business consisting of trafficking in controlled substances that are prohibited by federal law. Cannabis is a controlled substance. Thus, the deduction does not flow through to Minnesota taxable income. This bill would allow a subtraction for the federally disallowed expenses.

Section 1 allows the subtraction for the individual income tax; section 2 allows the subtraction for the corporate franchise tax; and section 3 allows the subtraction for purposes of calculating alternative minimum tax.

Effective beginning in tax year 2018.   

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