Innovation funding in the cannabis sector
By Alex Thomson, Director of Operations, The Tax Credit Company
Innovation requires investment, and businesses are not always aware of the financial assistance available in the form of Research & Development (R&D) tax relief, Capital Allowances and Grants.
No matter where your organisation sits in the supply chain, from production, refinement all the way through to producing high quality finished Hemp or Cannabis products, innovation can occur at all stages.
We recognise that whilst the sector is growing and advancements are made in its applications for industries like construction, medicine and manufacturing, the legislation and policy that allows companies to get these products to market is often slow to react, which raises issues for businesses around capital and cashflow.
An example of this can be seen with the FSA’s Novel Foods list, a counter-productive process which is hurting innovative businesses, and can be mitigated today through reliefs.
Options like R&D tax relief and grant funding have allowed cannabis companies to raise funds to either begin projects or recoup costs whilst they get their product listed.
Examples of this include:
– The development of hemp into a carbon-zero building material
– A medicinal inhaler for CBD based medicine
– Agricultural machinery that harvests cannabis crops more efficiently
These advances are just a few of many that were funded and aided by innovation services such as grants and R&D tax reliefs, allowing the business to get a new, useful product successfully out into the world.
What is R&D tax relief?
The UK thinks of itself as a global centre for R&D, which is matched by significant financial tax reliefs from the government.
The scheme is open to any company investing time and money in new products or processes that meet HMRC’s definition of R&D.
Any firm whose work seeks a “scientific or technological advance” or has resolved a “scientific or technological uncertainty” can claim. This can cover new processes, products or services, or be an improvement to an existing one. Firms can claim for either a reduction in their company’s corporation tax bill or a cash lump sum.
Don’t overlook Capital Allowances
Many businesses don’t consider their place of work as something eligible for tax relief. Capital Allowances (CAs) allow firms to offset the Corporation Tax they pay on profits against the expenses associated with a commercial property. It covers almost everything that would remain in the building if you tipped it upside down — including air conditioning, wiring, heating, lighting and security systems.
Grants unlock innovation
Innovate UK, the national innovation agency, regularly unveils new funding rounds under the Smart Grants programme and invests up to £25m in the best game-changing ideas designed for swift commercialisation.
Grants offer your business the chance to fund projects up to £2m if they’re deemed to be innovative and can benefit the wider economy.
Remember, grant funding is essentially a competition with other businesses for the available funding, so put yourself in the best position to win by working with an experienced grants team.
About TCC & Catax
All three of these funding solutions incentivise innovation but the rules surrounding them can be complicated. To get the most out of it, you need an expert on side.
Based in London and Manchester, TCC & Catax have over 13 years of experience in this industry, delivering more than £456m in claims for our clients. Our service led teams are made up of tax and subject matter experts, ensuring that we understand not only the legislation, but also how that applies to your business.
Through our partnership with the Cannabis Industry Council, all CIC members have access to discounted rates on R&D relief services. The CIC will also benefit from a referral fee.
Get in touch with our team to learn more.
T: +44 7365 105500 E: Alex@taxcreditcompany.co.uk