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🚨 Everyone knows Section 280E was meant for cartels, but it’s like a handcuff on Cannabis CFOs 🚨 Section 280E was designed to stop drug traffickers from claiming tax #deductions—but for Cannabis businesses, it’s restricting their financial freedom. Here’s how CFOs can #manage the impact: 1. Expect a Higher Tax Burden: Cannabis businesses can only deduct #COGS, not operational expenses like rent or salaries, which leads to higher taxes and tighter cash flow. 2. Tax Strategy and COGs: #Maximize COGS deductions by carefully tracking production expenses. Look for state incentives to optimize savings. 3. Compliance with the law saves time & money: Stay on top of state and federal tax #laws, maintain detailed records, and partner with experts to avoid costly mistakes. This is the first in a series of weekly articles in Highly Capitalized Network-HCN covering the wild world of Cannabis #finance. It's geared toward CFOs navigating the complexities of our industry. We’d like to thank Growise CPAs for their valuable insights and review of our work. Growise CPAs are a highly-regarded & trusted accounting firm specializing in Cannabis & Psychedelics businesses, helping clients minimize tax liabilities, and stay compliant. 🔍 Want to learn more? Follow Highly Capitalized Network-HCN and subscribe for our free newsletter at highlycapitalized.com for the full series of articles on what you need to know for your business in #Cannabis #CannabisCFO #Section280E #TaxStrategy #CannabisIndustry

Curious to see how Growise CPAs can help you navigate 280E this upcoming tax season? Let’s chat about it!

🔥 Most Cannabis Companies get BURNED in Taxes 🔥 Unless they know this secret… 🤫 Are you a Cannabis business owner? Then be prepared to get lit up during your taxes, unless you hire an industry-specific accountant. 🌿 Why? ✖️ IRC 280E prohibits Cannabis businesses from deducting common business expenses due to the federal illegality of Cannabis. This drastically increases your effective tax rate, affecting profitability. Amateur accountants are trying to circumvent this tax code and it’s costing businesses. The Solution? ✔️ Perfecting the COGS (Cost of Goods Sold) calculation under IRC 471-11. This allows deductions of direct costs tied to producing/acquiring inventory. Get it right, and you can significantly reduce taxable income. How to Nail COGS: 1️⃣  Proper Inventory “GAAP” cost accounting: Implement stellar inventory accounting to correctly lower taxable income. 2️⃣  Direct vs. Indirect Costs: Understand which costs directly affect product production/acquisition. 3️⃣  Maintain Detailed Records: Ensure invoices, production records, and all relevant documentation are kept. Best practice: keep a Perpetual Data Room as well. 4️⃣ Consistency is Key: A steady accounting method for valuing inventory and calculating COGS is crucial. 5️⃣ Hire a Pro: A tax advisor who's well-versed in Cannabis taxation is worth their weight in gold. An inexperienced accountant will struggle to navigate the regulations of this industry, which can be costly for businesses. The Cannabis business tax scene is intricate, but with the right strategies and expert guidance, you can navigate through IRC 280E and IRC 471 with ease. 🍀 Need assistance so you don’t get burned? Our expertise in Cannabis accounting ensures you don't just survive but THRIVE! Let’s connect and discuss your tax strategy today. #DOPECFO #BeDOPE #280E #CannabisAudits #CannabisAccountingTips #CannabisAccounting #MarijuanaLife #DispensaryLife #Ganjapreneur #CFO #LegalCannabis #IRSaudits #CannabisLaws #CannabisTaxTips #Cannabiz #Cannabis #MarijuanaMovement #CannabisCommunity 

🔥 Most Cannabis Companies get BURNED in Taxes 🔥 Unless they know this secret… 🤫 Are you a Cannabis business owner? Then be prepared to get lit up during your taxes, unless you hire an industry-specific accountant. 🌿 Why? ✖️ IRC 280E prohibits Cannabis businesses from deducting common business expenses due to the federal illegality of Cannabis. This drastically increases your effective tax rate, affecting profitability. Amateur accountants are trying to circumvent this tax code and it’s costing businesses. The Solution? ✔️ Perfecting the COGS (Cost of Goods Sold) calculation under IRC 471-11. This allows deductions of direct costs tied to producing/acquiring inventory. Get it right, and you can significantly reduce taxable income. How to Nail COGS: 1️⃣   Proper Inventory “GAAP” cost accounting: Implement stellar inventory accounting to correctly lower taxable income.  2️⃣  Direct vs. Indirect Costs: Understand which costs directly affect product production/acquisition. 3️⃣  Maintain Detailed Records: Ensure invoices, production records, and all relevant documentation are kept. Best practice: keep a Perpetual Data Room as well. 4️⃣  Consistency is Key: A steady accounting method for valuing inventory and calculating COGS is crucial. 5️⃣  Hire a Pro: A tax advisor who's well-versed in Cannabis taxation is worth their weight in gold. An inexperienced accountant will struggle to navigate the regulations of this industry, which can be costly for businesses. The Cannabis business tax scene is intricate, but with the right strategies and expert guidance, you can navigate through IRC 280E and IRC 471 with ease. 🍀 Need assistance so you don’t get burned? Our expertise in Cannabis accounting ensures you don't just survive but THRIVE! Let’s connect and discuss your tax strategy today. #DOPECFO #TaxCode280E

What's the difference between a general accountant and a cannabis accountant? A cannabis accountant specializes in the complex financial and regulatory landscape of the cannabis industry allowing you to be sure that your business stays compliant and successful. As a cannabis accountant, I can help you navigate the regulations that have a daily impact on your business. By choosing a cannabis accountant, you can be audit ready from day one! https://lnkd.in/eTcGD__M

What are your thoughts about ESOPs in cannabis? As a tool against 280E? "...finds the ESOP adopted in the cannabis industry to be a brilliant idea, though not without complexities. While ESOPs offer a workaround for cannabis retailers grappling with Section 280E tax burdens, he believes their setup entails significant accounting and legal expenses." https://lnkd.in/e7bVUUV6

Here are the FIVE misconceptions you have been told about the cannabis industry 👇🏼 💵 1. "Cannabis is a Cash-Only Business" Truth: While it's true that traditional banking options are limited, there are compliant financial institutions and payment solutions tailored for the cannabis industry. 💵 2. "You Don't Need to Worry About Taxes Until You're Profitable" Truth: Tax obligations start from the moment you generate revenue, regardless of profitability. Cannabis businesses face unique tax challenges under Section 280E, which disallows most business deductions. 💵 3. "Licensing Is the Only Major Regulatory Hurdle" Truth: Licensing is just the beginning. Compliance with ongoing local, state, and federal regulations is complex and ever-changing. Regular audits, meticulous record-keeping, and adherence to strict operational standards are necessary. 💵 4. "You Can Use the Same Accounting Practices as Any Other Business" Truth: The cannabis industry requires specialized accounting practices due to its unique regulatory and tax environment. For example, cost accounting becomes critical under 280E restrictions, and inventory management must be precise. 💵 5. "The Market Is So Lucrative, You'll See Quick Profits" Truth: The cannabis market is competitive and saturated, and profitability can take time. High startup costs, compliance expenses, and market fluctuations impact financial performance. By understanding these misconceptions and working with experienced cannabis accountants, you as a business owner can better navigate the complexities of the industry and position yourself for long-term success. What’s a common misconception in the cannabis industry that we missed? Comment below! 👇🏼

Panel Spotlight: Schedule III & Section 280E: Navigating the Future of Cannabis Taxation 📊 Get Ready for Insights on Cannabis Taxation! Join us for an in-depth discussion on how the rescheduling of cannabis to a Schedule III drug could reshape the cannabis landscape at our Ohio Stakeholder Summit! This panel features industry experts who will help you navigate the complex terrain of cannabis taxation. Key Learning Objectives: • Regulatory Landscape: Understand the impacts of rescheduling on compliance and state tax obligations. • Tax Planning Strategies: Discover how to optimize your financial strategy in light of new deductible expenses. • Future Preparation: Get insights on implementation timelines and how to position your business for success. Meet Our Experts: • Aaron Smith (Moderator): Co-Founder & CEO of NCIA, guiding the conversation on industry shifts. • Thomas Haren: Partner at Frantz Ward LLP, sharing his legal expertise on cannabis compliance. • Ashley Mosby (Linston), CPA, MBA: DOPE CFO Certified Advisors, focusing on financial strategies tailored for the cannabis sector. Don't miss this opportunity to empower your business with essential knowledge! 💡 #CannabisTaxation #NCIAEvents

Here's how to navigate the search and select an accountant with the expertise to meet your cannabis business needs: 🟢 Deep Industry Knowledge is Key: Experience is paramount. The cannabis industry is complex and constantly evolving. Due to the discrepancies between federal and state laws, prioritize a cannabis accountant with a proven track record serving similar companies. In-depth knowledge of cannabis tax law is essential. 🟢 Understanding the Legal Landscape: Federal law classifies cannabis as a Schedule I controlled substance, regardless of state legalization. This means companies operating in the cannabis space are subject to Section 280E, which limits deductions for business expenses. However, recent legislative developments suggest that Section 280E may become obsolete soon, potentially easing the tax burden on cannabis businesses. A qualified cannabis accountant will understand these nuances and navigate them effectively. 📑 Grow your business, we'll handle the numbers. Reach out to us now at buddaccounting.com #CannabisAccounting #CannabisFinance #CannabisCPA #CannaAccountants #CannabisBookkeeping #CannabisTaxation #CannabisAudit #CannabisCompliance #CannabisFinancialServices #CannabisBusinessAdvisory #CannabisManufacturing #CannabisDistribution #CannabisSuppliers #CannabisGrowers #CannabisProcessing #CannabisIndustry #CBDManufacturing #THCProduction #CannabisLogistics