This bill amends Iowa tax law to allow medical cannabidiol manufacturers and dispensaries, licensed under chapter 124E, to deduct business expenses from their individual and corporate income taxes. Specifically, it introduces new subsections to sections 422.7 and 422.35 of the Code 2026, permitting these deductions without regard to section 280E of the Internal Revenue Code, which currently prohibits such deductions at the federal level. However, the bill stipulates that deductions are not applicable if no licensed entity incurred the expense or if the expense was incurred in violation of section 124.401.

Additionally, the bill includes a retroactive applicability provision, meaning it will take effect for tax years beginning on or after January 1, 2026. This change aims to align Iowa's tax treatment of medical cannabidiol businesses with state law, allowing them to operate more effectively within the legal framework established for their industry.

Statutes affected:
Introduced: 422.7, 124.401