Cannabis growers to be taxed at 20%

JERSEY’S cannabis-growing industry will be taxed at 20%, following a vote in the States Assembly.

Revenue from cannabis companies in the Island would have been subject to the standard 0% rate of corporate income tax, but this will change to the higher rate from next year.
Revenue from cannabis companies in the Island would have been subject to the standard 0% rate of corporate income tax, but this will change to the higher rate from next year.

Under previous rules, any revenue from cannabis companies in the Island would have been subject to the standard 0% rate of corporate income tax, but this will change to the higher rate from next year.

States Members voted overwhelmingly – by 37 to four – to approve the new approach.

The taxation of companies in the industry was ‘one of the measures that has been forecast to help balance budgets by 2024’, according to the proposal, which was lodged by Treasury Minister Susie Pinel. Taxing the growing and processing of cannabis forms part of a strategy to raise around £10 million in the proposed Government Plan, alongside other measures.

But the proposal added: ‘It is not yet possible to forecast how much tax will be raised from these measures because the industry is in its early stages and forecasts would be speculative.’

Addressing States Members, Deputy Pinel called her proposition a ‘simple set of regulations’ that should come as ‘no surprise to Members’. She also suggested that the industry could provide a ‘new use for redundant glasshouses’, while Environment Minister John Young also said that cannabis growing would be a ‘good use of former glasshouse sites’ and that having a tax framework for the industry was a ‘sensible way forward’.

Deputy Pinel said she wanted to reassure politicians that it was a ‘highly regulated’ industry and that the benefits were three-fold: supporting the government’s rural economy strategy, developing ‘a high-value ancillary business sector encouraging inward investment’, and the generation of revenue through taxes.

However, a Scrutiny panel said there was a risk to taxing the emerging sector at a 20% rate, adding that any profits ‘may be minimal for several years’ because of high initial investment costs.

The Economic and International Affairs Scrutiny Panel published a report before yesterday’s debate, warning that, unlike in Guernsey, companies engaged in more than one type of activity could find their income from other business activity, such as standard farming, taxed at the same higher rate.

Speaking during the sitting, panel chairman Deputy David Johnson said there was little data on the ‘immediate impact’ of taxing the cannabis-growing industry.

He said: ‘It is a speculative proposition, or hope, that we are going to receive high amounts of income in the near future.’

But Deputy Johnson added that his panel was ‘happy to support the proposition’.

Constable Karen Shenton-Stone said: ‘This 20% seems to have been plucked out of the air.’

Mrs Shenton-Stone also raised concerns that the evolving industry would be a ‘blight on the countryside’. And she added that as the produce would be exported, it would contribute no GST to the Island.

Economic Development Minister Lyndon Farnham said no promises had been made about ‘massive returns’ from the fledgling industry, but he said there was ‘great potential here’. He explained that while companies would be restoring redundant glasshouses ‘to their former glory’, they ‘must not allow over-industrialisation’, and denied there would be damage to the countryside.

Constables Mike Jackson, Sadie Le Sueur-Rennard and Karen Shenton-Stone and Deputy Kevin Lewis voted against the proposition.

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