CT's Angel Investor Tax Credit Could Be Key to Financing Cannabis Businesses

Financing a cannabis business is no easy task, especially since traditional banks have largely shunned the industry due to the fact the federal government still considers cannabis an illegal drug. That means many cannabis businesses that form in the state in the coming years to cater to the new recreational market will have to rely on private investors to get off the ground.

Connecticut’s new adult-use law allows investors in cannabis companies to access the state’s angel investor tax credit. Partner Robert Lickwar, who leads the Connecticut cannabis practice, discussed how prospective cannabis investors can take advantage of the tax credit program and the impact it may have on the market during a Q&A with Hartford Business Journal.

To start, Lickwar said the cannabis business "must apply for and receive approval from Connecticut Innovations Inc. in order to receive credit-eligible investments." Once approved, the angel investor tax credit program provides a personal income tax credit to angel investors that make qualifying cash investments in Connecticut businesses.

"The credit percentage is 40% of the amount invested, with a minimum investment of $25,000," Lickwar said. "The credit maximum per investor is $500,000, and it can reduce personal income tax liability to zero. Unused credits can be carried forward, but are not transferable."

Read the full article published by Hartford Business Journal.