(Bloomberg) -- New York’s marijuana producers and distributors are poised to get a tax break in the state budget that could give them an edge over pot companies in the rest of the U.S.

The language was included in one of 10 bills unveiled Thursday as New York Governor Kathy Hochul tries to forge a budget deal with Democratic legislative leaders. The fiscal 2023 budget is now seven days past its April 1 due date. 

U.S. tax law prohibits companies that sell an illegal substance from taking tax deductions, under a provision known as 280E. Cannabis companies have long complained that this treats them unfairly, and that if they could take deductions like other businesses, they would be more profitable.

The proposal would let New York state producers and distributors of adult-use marijuana book a deduction for amounts that are disallowed under the federal 280E provision. That could be a boon for companies based in New York that already have medical licenses, and are expected to move into the recreational market, like Curaleaf Holdings Inc., Green Thumb Industries Inc., Cresco Labs Inc. and Columbia Care Inc.

It could also make it easier for small businesses as the state tries to promote diversity among New York’s first dispensary owners.

State lawmakers are expected to pass the bill, which was agreed upon by leadership, later Thursday. The tax break would apply to taxable years beginning on and after Jan. 1, 2022.

(Updates with information on bill throughout.)

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