A bill for an act relating to medical cannabidiol by providing deductions from the individual and corporate income taxes for expenses incurred by medical cannabidiol manufacturers and dispensaries, and including retroactive applicability provisions.

HB 687 allows Iowa tax deductions for business expenses incurred by licensed medical cannabidiol (CBD) manufacturers and dispensaries, bypassing the federal restriction under Section 280E of the Internal Revenue Code. This applies to expenses paid by entities operating under Iowa’s Chapter 124E licensing rules, excluding expenses not incurred by licensed entities or those violating Chapter 124.401. The bill retroactively applies to tax years beginning January 1, 2026, changing Iowa’s tax code to align with state-specific CBD business needs. It directly affects licensed CBD businesses by potentially reducing their state income tax liability.