Financial Operations Insights, Guides, and Tools
How Multi-License Cannabis Operators Can Simplify Tax and Entity Management
Cannabis is one of the most regulated and complex industries in the United States. No matter what entity structure you choose, tax compliance coupled with federal and state regulatory hurdles will keep you on your toes!
Cost Accounting for NY Cultivators:The Secret to Surviving 280E
As all cannabis operators are acutely aware of, IRC 280E is the bane of the industry. Without proper cost accounting strategies in place, already-tight margins contract into a painfully tight place, threatening continuity and weakening any opportunities for growth and expansion.
280E for NYC Dispensaries: What You Can Deduct and What Will Get You Flagged
New York state’s decoupling from IRC 280E is good news for New York dispensaries, as it provides significant tax relief at the state level. Federally, 280E still applies, prohibiting all cannabis businesses from deducting normal business expenses, including payroll, office equipment, marketing, lease payments, and more.
Pass-Through Entities in the Cannabis Industry: Structure Smart, Stay Compliant, and Save on Taxes
Structuring a cannabis business as a pass-through entity is—at least on the surface—an excellent way to reduce the tax burden for cannabis businesses. When a company is structured this way, it is not subject to federal income tax as the tax burden is passed on to the owners, who report the income on their personal returns and pay the applicable taxes, avoiding double taxation.
What a Sample Cost Segregation Report Looks Like—and Why It Could Save Your Cannabis Business Thousands
Cannabis businesses are constantly challenged by federal and state tax laws that limit business deductions and over-inflate taxable revenue. Cost segregation is a tax-planning strategy that enables any cannabis business that has purchased new real property or has expanded or remodeled existing real estate to reduce taxes, increase cash flow, and accelerate depreciation, effectively deferring federal and state taxes payable.
Dispensary Bookkeeping Done Right: Stay Compliant, Maximize Deductions, and Know Your Numbers
The cannabis business may be booming, but profits are always tight—thanks in no small part to the rigors of IRC 280E. Despite cannabis’s legal status in almost every state, it is still classified as an illegal substance, meaning that cannabis companies can’t deduct “normal” business expenses, like payroll, security, and marketing—virtually any expense that can’t be attributed to cost of goods sold (COGS).
Tax Accounting for Cannabis Businesses: Navigate 280E, Maximize Deductions, and Stay Audit-Ready
The cannabis industry is booming, but success does not happen without considerable sacrifice. Proper tax accounting practices are essential to ensure you maximize allowable deductions under IRC 280E and have audit-ready books.
280E vs. Your Bottom Line: How to Minimize the Damage Legally
Every cannabis operator knows only too intimately the woes of IRC 280E. This tax rule prohibits legitimate cannabis businesses from deducting normal and customary business expenses like rent, utilities, payroll, marketing, and office equipment, or any business expense, unless it can be attributed to the cost of goods sold (COGS).
Cannabis Accounting 101: How to Stay Compliant, Reduce Risk, and Maximize Profits
Cannabis operators are challenged at every turn. Regulatory and tax compliance are essential to business continuity, but stringent requirements often come at a cost. Considering the limitations placed upon the industry by IRC 280E, which prevents cannabis businesses from deducting even the most basic business expenses at the federal level, margins are tight (a gross understatement). To ensure success in this challenging environment, operators must apply diligence with their accounting to stay compliant, minimize risk, and maximize profits.
A Local Guide to Southern California Cannabis Taxes: What LA, San Diego, and Riverside Dispensaries Need to Know
Cannabis dispensaries in Southern California have unique tax concerns. In addition to federal taxes and the onerous burdens of IRC 280E, they must maintain separate accounting for state taxes to maximize deductions, while adhering to local cannabis tax legislation that varies significantly from jurisdiction to jurisdiction. Today, we’ll discuss California cannabis taxes, with a particular focus on Los Angeles, San Diego, and Riverside dispensaries, and how local retail taxes can impact their accounting.
How to Prepare for a CDTFA Audit: Tips for SoCal Cannabis Retailers
The California Department of Tax and Fee Administration (CDTFA) oversees state-level taxation, licensing, reporting, and compliance for California cannabis businesses. Since cannabis companies are under extreme scrutiny at the best of times, it pays to keep your books in order, file and pay your taxes on time, and ensure your business licenses are up to date to avoid issues if and when an audit comes your way.
The Essentials of Cannabis Inventory Accounting, Procedures, and Controls
Understanding inventory is essential for cannabis operators as it is intrinsically related to regulatory compliance and taxation. The complexities can be monumental as state reporting requirements are stringent and largely dictate how inventory must be reported. Companies can find some relief by capitalizing some assets under 471(c), but this approach can be risky.
Navigating New Mexico’s Cannabis Tax Landscape: A Dispensary Owner’s Guide
The Cannabis Excise Tax and GRT can be a compliance headache for dispensaries in New Mexico—but avoiding penalties and protecting your profits starts with staying ahead of the rules. We broke down the must-know facts and links in our new article.
Surviving the Squeeze: What Oklahoma Dispensaries Can Do About Price Compression
Oklahoma’s cannabis industry is in a crunch. With one of the most open licensing systems in the country, the state saw a flood of dispensaries open in record time. But now, many operators are facing a harsh reality: prices are plummeting, margins are razor-thin, and competition is more intense than ever. Here are five strategies Oklahoma dispensaries can implement today to survive price compression—and even thrive in it.
Top 5 Financial Mistakes NY Dispensaries Make (and How to Fix Them)
Running a NY dispensary? Don’t let these 5 common financial mistakes kill your profits or trigger an audit. From 280E missteps to messy inventory, we break it all down—and show you how to fix it.
Unlocking Potential with 280E Assets for Cannabis Business Exits
While cannabis companies may be restricted in many ways, leveraging certain assets can help to recover costs and potentially reduce tax liability.
ESOP for Cannabis: A Hot Exit Strategy with Misleading Tax Claims
A few of my clients have mentioned receiving emails about Employee Stock Ownership Plans (ESOPs) for cannabis companies, touting it as a strategy to pay no federal or state taxes. This statement is hugely misleading as you can’t avoid tax—it can only be deferred, meaning you’ll have to pay eventually. That being said, ESOP is an excellent exit strategy… with a few caveats.
Cannabis Rescheduling: What Happens Next with 280E?
Will they, or won’t they? We’re all waiting on pins and needles to find out whether the DEA will agree to reschedule cannabis to Schedule III from where it currently resides at Schedule I.
What Cannabis Companies Need to Know About 280E
In the rapidly evolving world of cannabis, businesses face unique challenges, especially when it comes to taxation. One of the most significant hurdles is navigating Section 280E of the Internal Revenue Code.