About Programs Testimonials Press Blog Contact Franchise Opportunity Login

Cultivation Accounting and Tax for Cannabis Business Owners and Investors

If watching the pioneers in the Cannabis industry has taught us anything, it’s that getting businesses up and running and maintaining compliance has been a rocky road with plenty of tax and regulation pitfalls. It’s a lucrative industry slated for exponential growth. Experts predict the industry will breach $89 billion in the next two years – but those aren’t the only numbers that should concern new Cannabis business owners.

Along with growth in this industry comes great risk. Those in the know have seen Cannabis businesses tied up in legal issues, tax troubles, loss of licensure, and even business failures as a result of faulty, noncompliant practices. 

It’s more apparent than ever that having cultivation accounting and tax professionals who specialize in the field is a necessity. And while it’s fine to delegate the nitty-gritty to the practiced accountants, Cannabis growers, owners, and investors should still have a working knowledge of the...

Continue Reading...

Taxation and 280E for Dispensaries

280e 471 cannabis dispensaries Feb 22, 2022

The Challenges of Accounting for Cannabis Dispensaries

From cash control issues to inadequate reporting and POS software, accounting for Cannabis dispensaries is no easy feat and making the wrong move can land your client in serious legal trouble. 

Accounting professionals claiming to have Cannabis experiences are often misinterpreting tax codes in an effort to increase deductions dispensaries may not be allowed to take. This means that the CEOs who are heavily relying on their accounting teams are unknowingly putting their company at risk of large fees, or worse, being shut down for not following the correct procedure under IRC 280E.

Professionals who are new to the Cannabis industry that have never worked with such large sums of cash are also often finding themselves in a bind by relying on accounting controls from the past that likely won’t work in this industry. The fact of the matter is that if you want to successfully keep your Cannabis clients in compliance, you...

Continue Reading...

Do’s and Don’ts of Cannabis Cost of Goods Sold and IRC 471-11 Accounting and Tax

Legally Reducing Tax Liability in the Face of 280E

Due to the fact that Cannabis is classified as a Schedule I drug (in spite of the fact that the majority of states in this country have voted to legalize Cannabis in some form or fashion), ALL Cannabis companies must comply with 280E. There’s little grey area here, but if you’re in the business of harvesting, producing, manufacturing, or selling Cannabis in any way, shape, or form, your business is not able to legally take deductions.

IRC 280E clearly states:

No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted. Source: Cornell Law

...

Continue Reading...

5 Accounting Myths Cannabis CEOs Believe (and How to Debunk Them)

If you’re a Cannabis accounting professional, or are working towards learning how to serve clients in this space, you may have already experienced the frustrations of trying to reach out to Cannabis clients, only to be told that you’re not needed because they “already have an in-house bookkeeper” and that they’re sure their current accounting system is just fine. Until Cannabis CEOs understand that their practices are often inaccurate and self-damaging (as they likely don’t have access to or an understanding of the cost accounting tools required), they may not understand until they’re slapped with a severe penalty. 

Understanding the myths that business owners believe about Cannabis accounting can give you a leg up on understanding their perspective, and may better form how you pitch your value to them when you do reach out. For every myth they believe, you can counter with a well-researched answer, illuminating the consequences of...

Continue Reading...

4 Things Cannabis and CBD/Hemp Accountants Need to Know About 471 (That Will Save Your Clients Money and Frustration)

280e 471-11 irc 471 Jan 05, 2021

Cannabis companies are springing up across the country, and for good reason. There is a huge opportunity for growth in this market and businesses are just scratching the surface. However, it’s your job to be the expert on the numbers and the complicated rules to stay ahead of the game and keep your clients moving forward.

Despite the many opportunities in the industry, Cannabis companies face certain challenges due to its federally illegal status, especially in regards to tax liabilities. CBD/hemp companies can deduct normal business expenses, but must proceed with extreme caution as they are still highly regulated and often audited. Both niches require complex accounting and tax processes to stay compliant.

According to 280E, any business associated with the “trafficking” of Schedule 1 substances may not deduct ordinary business expenses (i.e. rent, vehicle expenses, mortgage interest, and much more). The only way Cannabis companies can lower taxable income is by...

Continue Reading...
Close

50% Complete