Is Medical Marijuana Considered a Tax Write-Off?

While many states have legalized marijuana for medical and/or recreational use, it remains classified as a Schedule I drug under federal law. This classification prohibits medical marijuana patients from deducting medical cannabis expenses on their tax returns, even if the cannabis was purchased legally.

Are CBD Products Tax-Deductible?

In the United States, the answer as to whether CBD products are tax-deductible mostly depends on their intended use. Generally, CBD products purchased for personal use are not tax-deductible. However, if CBD is prescribed by a healthcare professional to treat a specific condition, it may qualify as a deductible medical expense.

The Internal Revenue Service (IRS) allows taxpayers to deduct unreimbursed medical expenses that exceed 7.5% of their adjusted gross income. If you’re considering this deduction, it’s important to keep thorough records of your medical expenses.

What Are the Tax Benefits of a Medical Cannabis Card?

Ownership of a medical cannabis card offers significant tax benefits. Two of the most prominent ones are:

Lower Sales Taxes: Many states that have legalized cannabis for medical use offer lower sales tax rates on medical cannabis purchases than recreational cannabis ones.

Exemption from Excise Taxes: Medical cannabis patients are often exempt from excise taxes that are applied to recreational cannabis products.

What Are the Other Financial Benefits of a Medical Cannabis Card?

Besides providing legal access to medical cannabis, having a medical cannabis card offers significant financial benefits. Some of the most notable ones include:

Higher Possession Limits: In some states, medical cannabis cardholders are allowed to possess more cannabis than recreational users. By purchasing marijuana in larger quantities, you can save money in the long run.

Access to Stronger Products: Medical cannabis patients often enjoy access to more potent products, which can be more cost-effective for those with chronic conditions requiring strong doses.

Lower Prescription Drug Costs: Your MMJ card may enable you to spend less money on prescription drugs thanks to the medical benefits of cannabis.

Fewer Doctor’s Visits: You may not have to visit the doctor as much if the medical cannabis you purchase with your card alleviates the symptoms of your qualifying condition(s).

Can Medical Marijuana Dispensaries Deduct Their Business Expenses?

Under Section 280E of the Internal Revenue Code, businesses engaged in the trafficking of Schedule I or II controlled substances are prohibited from deducting most ordinary business expenses. This includes common deductions such as rent, utilities, and payroll expenses that are typically available to other businesses.

Consequently, medical marijuana dispensaries in most states face higher effective tax rates compared to businesses not subject to these restrictions.

Conclusion

While the benefits of having a medical cannabis card extend beyond potential tax deductions, it’s still worth understanding what you can deduct come tax season. Unfortunately, neither medical marijuana patients nor dispensaries can currently deduct medical cannabis purchases from their tax returns due to federal law.

If you’re looking to begin your medical marijuana journey, the Sanctuary Wellness Institute can help you get started. Not only can we connect you with a medical marijuana doctor who can evaluate you for medical cannabis treatment, but we can also guide you through the process of applying for an MMJ card in your home state.

Book an appointment today to find out whether you’re eligible for a medical cannabis card.