Since 1970, marijuana has been classified as a Schedule I substance under the federal Controlled Substances Act in addition to other drugs like cocaine, heroin, and LSD. The cultivation or possession of marijuana is a federal crime unless used for federally approved research.
Despite these federal laws, various states have begun to legalize the use of marijuana of certain types and in certain ways. As a result, it is increasingly likely that people in New York who engage in estate planning will have some type of cannabis related assets. There will also be an increase in the number of other complex estate planning issues regarding cannabis. As a result, this article examines some of the most important issues that are likely to arise concerning estate planning and marijuana.
The Current Status of Marijuana in New York State
The recreational use of marijuana is still illegal in the state of New York. In 2014, however, Governor Cuomo and the New York state legislature created the Compassionate Care Act, which provides medical marijuana to qualified applicants. The state’s Department of Health oversees the usage of medical marijuana.
The future of marijuana in New York remains uncertain. However these matters resolve, though, will have a substantial effect on the estate plans of many people in New York state.
Assets Related to Cannabis
The distribution of assets related to cannabis have been treated differently by federal and state courts. In New York, estate planning involving marijuana has the potential to result in particularly strict penalties for an estate owner as well any beneficiaries.
Even though the usage of medical marijuana has made cannabis much more common in New York state, there is a tendency by courts to reuse to recognize cannabis as a valid business asset. As a result, a beneficiary might end facing criminal penalties for possession of cannabis related assets. In some situations, courts have even refused to administer an estate if it contains cannabis related assets.
Taxes on Estate with Cannabis Assets
Despite New York’s new medical marijuana laws, the Internal Revenue Service can still require payment of estate tax on any transferable business assets that are related to a cannabis based business. Even if a company was created for the purposes of being a medical marijuana dispensary, the company is still required to report taxes in accordance with federal law and as a result there are still federal tax related issues to consider.
To learn the exact degree to which cannabis related assets might have affected taxes on your estate, it often becomes critical to obtain the assistance of an experienced estate planning attorney.
Speak with an Experienced Estate Planning Lawyer
While it remains uncertain exactly what cannabis laws will end up being created in New York, it is important to understand that cannabis related issues can significantly disrupt an estate plan. If you or a loved one has questions or concerns about estate planning, you should not hesitate to speak with a knowledgeable attorney. Contact Ettinger Estate Planning today to schedule an initial free consultation.