An act TO CREATE A SALES AND USE TAX EXEMPTION FOR 10 CERTAIN SALES TO A CULTIVATION FACILITY, the official text

Stricken language would be deleted from and underlined language would be added to present law.

1 State of Arkansas                  A Bill
2 95th General Assembly

3 Regular Session, 2025                                           SENATE BILL 419

4

5 By: Senator G. Leding

6

7

8                            For An Act To Be Entitled

9   AN ACT TO CREATE A SALES AND USE TAX EXEMPTION FOR

10  CERTAIN SALES TO A CULTIVATION FACILITY; AND FOR

11  OTHER PURPOSES.

12

13

14                                   Subtitle

15                       TO CREATE A SALES AND USE TAX EXEMPTION

16                       FOR CERTAIN SALES TO A CULTIVATION

17                       FACILITY.

18

19 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:

20

21  SECTION 1. Arkansas Code Title 26, Chapter 52, Subchapter 4, is

22 amended to add an additional section to read as follows:

23  26-52-457. Cultivation facility.

24  (a) As used in this section:

25  (1) "Cultivation facility" means the same as defined in Arkansas

26 Constitution, Amendment 98, � 2;

27  (2)(A) "Finished goods packaging" means product packaging for

28 usable marijuana that:

29                         (i) Is received by a qualifying patient;

30                         (ii) Is child resistant or contains a child-

31 resistant container; and

32                         (iii) Has product information that is directly

33 printed on the packaging of the finished product or has an attached label or

34 leaflet that contains product information.

35                       (B) "Finished goods packaging" includes without limitation

36 a label attached to the product packaging;

    *CEB014*                                                 03/10/2025 3:28:11 PM CEB014
                                                                             SB419

1              (3) "Medical use" means the same as defined in Arkansas

2 Constitution, Amendment 98, � 2;

3              (4) "Qualifying patient" means the same as defined in Arkansas

4 Constitution, Amendment 98, � 2;

5              (5) "Usable marijuana" means the same as defined in Arkansas

6 Constitution, Amendment 98, � 2; and

7              (6) "Utility" means electricity, liquefied petroleum gas,

8 natural gas, and water.

9   (b) The gross receipts or gross proceeds derived from the sale of the

10 following to a cultivation facility are exempt from the gross receipts tax

11 levied by this chapter and the compensating use tax levied by the Arkansas

12 Compensating Tax Act of 1949, � 26-53-101 et seq.:

13             (1) Seeds used in the cultivation and production of usable

14 marijuana;

15             (2)(A) New and used equipment, machinery, and related

16 attachments used exclusively in the cultivation and production of usable

17 marijuana.

18             (B) The exemption provided in subdivision (b)(2)(A) of

19 this section does not apply to a purchase of a repair or replacement part for

20 new or used machinery, equipment, or a related attachment;

21             (3)(A) A utility that is used exclusively in the operation of

22 the cultivation facility.

23             (B)(i) A utility subject to the exemption provided under

24 subdivision (b)(3)(A) of this section shall be separately metered from a

25 utility used for any other purpose by the taxpayer.

26                         (ii) However, the rules promulgated under subsection

27 (c) of this section may establish additional or alternate requirements for

28 the metering of utilities under this section.

29                         (iii) Before allowing the exemption of a utility

30 under this section, the Secretary of the Department of Finance and

31 Administration may require a seller of a utility to obtain a certificate from

32 the taxpayer in the form prescribed by the secretary, certifying that the

33 taxpayer is eligible for the exemption under this section;

34             (4) Consumable materials, ingredients, and chemicals used in the

35 cultivation, extraction, or manufacturing of marijuana for medical use;

36             (5) Finished goods packaging; and

                                        2               03/10/2025 3:28:11 PM CEB014
                                                                         SB419

1   (6) A device that is used to house usable marijuana that is

2 placed in finished goods packaging, including without limitation a syringe,

3 concentrate container, suppository mold, topical pump, and cartridge.

4   (c) The secretary shall promulgate rules for the proper administration

5 of this section.

6

7   SECTION 2. EFFECTIVE DATE. Section 1 of this act is effective on the

8 first day of the calendar quarter following the effective date of this act.

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

                    3  03/10/2025 3:28:11 PM CEB014