The Hidden Tax Credits Cannabis Farmers Are Leaving on the Table in New York

New York is expanding access to agricultural tax incentives and related programs for licensed cannabis cultivators through recent legislative changes. As a result, qualifying growers may now be able to take advantage of benefits ranging from property tax relief and refundable investment tax credits to workforce, redevelopment and energy-efficiency incentives. Understanding how these programs work can help cannabis operators evaluate potential savings and identify planning opportunities as they grow their businesses.

Cannabis Is Now an Agricultural Crop

For years, cannabis cultivators lived in a middle ground. They grew crops like farmers, but they were not always treated like farmers by local tax assessors or state programs. That ambiguity ended in late 2024, when Governor Kathy Hochul signed legislation adding cannabis to New York’s official definition of agricultural crops, and again in early 2025, when a follow-on bill made the change permanent. Cannabis now sits alongside grapes for wine, hops for beer and grains for distilling under the state’s Agriculture and Markets Law.

This means cannabis farmers now have more access to farm-specific tax credits and the same right-to-farm protections other agricultural producers enjoy. It also expands access to New York’s agricultural tax program on land used for cultivation.

Agricultural Assessment and Property Tax Relief

New York’s agricultural assessment program taxes qualifying farmland based on its farming value rather than its higher market value, which can reduce ongoing property tax costs. Eligibility depends on factors including acreage, farming activity and annual gross sales. For cannabis companies that qualify, classification as a farming activity may yield immediate savings in reduced property taxes; leaving more cash in the business for investment. One planning consideration deserves attention: converting the land to a non-farming use within five to eight years may trigger recapture of prior tax savings and interest.

The 20% Farmer Investment Tax Credit

New York offers eligible farmers a 20% refundable Investment Tax Credit on qualifying property placed in service in the state. Because the credit is refundable, taxpayers may receive a refund if the credit exceeds their New York tax liability.

The credit’s reach is broad. It covers greenhouse structures, LED grow lighting, climate control and HVAC systems, irrigation, benches and other production equipment. Buildings and their structural components are explicitly included, increasing the incentive to build greenhouses.

In order to qualify, the taxpayer must derive at least two-thirds of gross income from farming, tested at the entity level, and must use the property principally in agricultural production. Land, on-road vehicles and farmworker housing do not qualify, and anything expensed under federal Section 179 cannot be double-counted for the state credit. The state’s 2026-27 budget extended this program through 2033. As a planning point, enterprises may want to structure their operations specifically to meet the qualifications of this credit. Too many different activities within the same legal entity may lead to disqualification.

Labor-Related Tax Credits for Cannabis Cultivators

Cannabis cultivation is labor-intensive, especially during planting, harvest, trimming and packaging cycles. As a result, labor-related tax credits can be an important consideration for licensed cannabis operators that qualify as agricultural employers in New York. The following programs may provide opportunities to offset eligible workforce costs.

Redevelopment Incentives Through the Brownfield Cleanup Program

New York’s Brownfield Cleanup Program provides tax incentives for the redevelopment of contaminated or underutilized properties. The program offers refundable tax credits covering three major areas: site preparation costs, on-site groundwater remediation and tangible property placed in service on the cleaned-up site. For a cannabis operator eyeing an old warehouse, closed manufacturing plant or abandoned greenhouse, the program may provide significant refundable tax credits for eligible cleanup and redevelopment costs.

In order to qualify, a site must be accepted into the program by the Department of Environmental Conservation, cleaned up to the appropriate track and receive a Certificate of Completion. Sites outside New York City — meaning all of Western New York — qualify for the tangible property credit without needing to pass any of the special gate tests that apply within the city. Credit rates generally range from 10% to 24%, with the applicable rate determined by factors such as cleanup standards, site location and project characteristics.

The most important rule to remember is timing. Costs incurred before the site is accepted into the program generally do not count, making early diligence and pre-application planning critical. The current deadline to receive a Certificate of Completion is December 31, 2036, so now is the time to plan. Companies should also be sure that any potential site also meets the requirements of the state licensing regime to qualify to host a cannabis business.

NYSERDA and Energy-Efficiency Incentives

The New York State Energy Research and Development Authority (NYSERDA) does not offer programs specific to cannabis cultivation, but greenhouse and controlled-environment agriculture operations may qualify for several energy-related incentives and funding opportunities. Available programs may include:

Depending on the project, these incentives may be used in conjunction with other available tax benefits, including New York’s Investment Tax Credit. Planning is important, as energy audits and rebate applications often must be completed before equipment is ordered or installed.

Stacking Incentives for Cannabis Cultivation

Evaluating these programs individually is important, but their combined impact can be equally significant. For example, a licensed cannabis cultivator building a greenhouse on farmland in Western New York may be able to stack:

These programs are not automatic. Each one has records, deadlines and eligibility tests that must be managed. The broader takeaway is that New York has increasingly incorporated cannabis cultivators into programs traditionally available to agricultural businesses, creating access to a wide range of tax and incentive opportunities.