We would like to call your attention to an important new set of federal tax incentives that will make it significantly easier to raise capital for cannabis-related ventures depending on their location. The program is called Qualified Opportunity Zones and it is part of last year’s tax bill. The regulations implementing the program only came out a few weeks ago so funds are just now being formed to take advantage of the new program.
Opportunity Zones are census tracts with below-average income, and the governor of each state has designated up to 25% of eligible tracts as Opportunity Zones. In order to stimulate economic activity, amounts that would otherwise have been payable as capital gains taxes can be invested so payment of the tax is deferred for up to 8 years, up to 15% of the tax is forgiven, and 100% of the tax on appreciation on the investment in the zone is forgiven if the investment is held for at least 10 years.
If a cannabis-related business is located in an Opportunity Zone, its facilities and equipment are eligible for Opportunity Zone investment. These significant new incentives are attracting a great deal of investor interest.
Greenspoon Marder is currently forming Qualified Opportunity Zone investment funds, and we are happy to answer questions you may have about the program.
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