House Study Bill 709 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON HEIN) A BILL FOR An Act providing deductions from the individual and corporate 1 income taxes for expenses incurred by medical cannabidiol 2 manufacturers, and including effective date and retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6354YC (2) 88 jm/jh

H.F. _____ Section 1. Section 422.7, Code 2020, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 59. Subtract, to the extent included, 3 the amount of business expense for a medical cannabidiol 4 manufacturer licensed pursuant to chapter 124E without regard 5 to section 280E of the Internal Revenue Code. 6 Sec. 2. Section 422.35, Code 2020, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 26. Subtract, to the extent included, 9 the amount of business expense for a medical cannabidiol 10 manufacturer licensed pursuant to chapter 124E without regard 11 to section 280E of the Internal Revenue Code. 12 Sec. 3. EFFECTIVE DATE. This Act, being deemed of immediate 13 importance, takes effect upon enactment. 14 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 15 retroactively to January 1, 2020, for tax years beginning on 16 or after that date. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill provides deductions from the individual and 21 corporate income taxes for business expenses incurred by 22 medical cannabidiol manufacturers. 23 Under federal law, a medical cannabidiol manufacturer is 24 prohibited from taking business expense deductions by section 25 280E of the Internal Revenue Code. Currently, Iowa computes 26 individual net income and corporate taxable income based upon 27 federal income calculations, and therefore Iowa currently 28 prohibits a medical cannabidiol manufacturer from taking 29 business expense deductions as well because the deductions are 30 not allowed at the federal level. 31 The bill allows a medical cannabidiol manufacturer licensed 32 pursuant to Code chapter 124E to deduct business expenses for 33 purposes of the Iowa individual income tax or corporate income 34 tax. 35 -1- LSB 6354YC (2) 88 jm/jh 1/ 2

H.F. _____ The bill takes effect upon enactment and applies 1 retroactively to tax years beginning on or after January 1, 2 2020. 3 -2- LSB 6354YC (2) 88 jm/jh 2/ 2