The demand for the development and production of both medical and recreational cannabis has increased across the United States since the legalization of cannabis began to pass in states. Because of this, many cannabis companies must produce products the market is demanding. These research and development efforts can be rewarded with tax credits and our tax team at National Tax Group is here to help.
“R&D tax credits are available to businesses in any industry that performs qualifying research activities, including the cannabis industry,” said Lee Ferry, President of National Tax Group. “In order to benefit from R&D, all research activities performed by qualifying companies must be thoroughly documented. Our team of tax-saving experts can help companies with this needed documentation.”
The most common activities that cannabis companies perform are cannabis strain identification and plant breeding/creation which requires extensive research and resources. Strain variation is important in the cannabis industry because it allows for purified and strengthened strains, combination of strains that have desired or needed traits, or enhance specific characteristics such as higher yields, aromas, potency or other added benefits.
The practice of successfully breeding these plants is very technical, especially on a commercial scale, and requires significant attention to detail. Part of this process includes rigorous testing to identify strain genetics in both male and female plants for the best breeding, continued crossing breeding to create homozygous cannabis plants (a plant that consistently produces the same seed with the same genetic makeup,) and making sure the environment these plants thrive in is maintained and controlled for the best growth.
This practice not only takes a lot of time and precision but also requires companies to purchase and provide a lot of human resources. The cost of labor, lab equipment, tests, and other items needed to give these plants the ideal growing conditions can add up; qualifying companies for significant research and development tax credits. These are dollar-for-dollar credits that offset the cost companies put into creating cannabis strains.
For more information regarding National Tax Group and how they may be able to help you with research and development tax credits, please call 561.257.3436. Like National Tax Group on Facebook at https://www.facebook.com/NationalTaxGroup and on LinkedIn at https://www.linkedin.com/company/2511229.
About National Tax Group
National Tax Group is a full-service group of tax professionals who provide high-quality tax solutions associated with 179D, 45L, cost segregation and research & development for businesses. Having worked in multiple areas of taxation, National Tax Group implements methodologies that are recognized by the government and have experience in complex tax incentive programs that have made them valuable partners to all of their clients. Their ability to seamlessly collaborate with every business has made them a rapidly growing firm capable of handling complex challenges.