House Study Bill 683 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act relating to medical cannabidiol by providing deductions 1 from the individual and corporate income taxes for 2 expenses incurred by medical cannabidiol manufacturers 3 and dispensaries, and including retroactive applicability 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5498YC (1) 90 jm/jh

H.F. _____ Section 1. Section 422.7, Code 2024, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 44. Subtract, to the extent included, 3 the amount of business expense for a medical cannabidiol 4 manufacturer or a medical cannabidiol dispensary licensed 5 pursuant to chapter 124E without regard to section 280E of the 6 Internal Revenue Code. 7 Sec. 2. Section 422.35, Code 2024, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 14. Subtract, to the extent included, 10 the amount of business expense for a medical cannabidiol 11 manufacturer or a medical cannabidiol dispensary licensed 12 pursuant to chapter 124E without regard to section 280E of the 13 Internal Revenue Code. 14 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies 15 retroactively to January 1, 2021, 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 Under federal law, a medical cannabidiol manufacturer and 21 a medical cannabidiol dispensary are prohibited from taking 22 business expense deductions by section 280E of the Internal 23 Revenue Code. Currently, Iowa computes individual net 24 income and corporate taxable income based upon federal income 25 calculations, and therefore Iowa currently prohibits a medical 26 cannabidiol manufacturer and a medical cannabidiol dispensary 27 from taking business expense deductions as well because the 28 deductions are not allowed at the federal level. 29 This bill allows a medical cannabidiol manufacturer and 30 a medical cannabidiol dispensary licensed pursuant to Code 31 chapter 124E to deduct business expenses for purposes of the 32 Iowa individual income tax or corporate income tax. 33 The bill applies retroactively to tax years beginning on or 34 after January 1, 2021. 35 -1- LSB 5498YC (1) 90 jm/jh 1/ 1