Strategic Tax Solutions for Cannabis Operators
AAFCPAs is an industry pioneer and since 2012 has been deeply immersed advising national cannabis operators on tax, finance, and outsourced accounting. We have extensive experience advising U.S. operators on strategies to solve the cannabis industry’s annual $1+ billion income tax challenge: Internal Revenue Code (IRC) Section 280E. AAFCPAs’ expertise was recently sought by the U.S. Treasury and Senate Finance Committee for guidance on critical considerations regarding the 280E transition following DEA rescheduling news. As a key advisor through the AICPA, AAFCPAs provides insights to shape regulatory guidance on this issue.
Given the current state of rescheduling and the recent uncertain tax positions taken by leading MSOs, AAFCPAs is well-positioned to advise clients on the pros and cons of a non-IRC 280E approach. We support clients in making informed decisions based on their financial situation, risk profile, and other relevant factors. Our services include analyzing and disclosing specific tax positions, navigating IRS scrutiny, and considering timing implications.
Additionally, we offer strategic tax advice on optimizing Cost of Goods Sold (COGS), implementing ESOP structures, and utilizing 471(c) strategies. These strategies impact taxation, accounting methods, and audit readiness. Given the slim cash flow and narrow margins in the cannabis industry, taxation remains a significant challenge. Until rescheduling occurs, AAFCPAs ensures clients are well-informed about the strategies they can implement now.
Cannabis Tax Advisory and Compliance Solutions:
- Analysis and proper disclosure of uncertain tax positions
- Guidance on how entity structure impacts 280E planning
- Guidance on identifying and segregating non-deductible expenses from deductible business expenses
- Guidance on optimizing deductible business expenses/costs of goods sold
- Calculation of Inventory Balances
- Compliance with Internal Revenue Code § 280E
- Tax planning & preparation of federal and state income tax returns
- Tax guidance for operators considering expansion into a new jurisdiction
- Research of feasibility and applicability of tax credits
- Consultation on sales and use tax filings
- Guidance on processes to ensure compliance with federal and state: IRC Section 280E compliance; Income reporting; Cash payment options; Reporting large cash receipts; and Estimated payments.
- Advice to ensure accurate books & records pertaining to transactions, so that the IRS will allow expenses claimed
- Advice on systems that can streamline indirect tax compliance and reduce administrative costs. This includes calculating liability, tracking and adhering to advanced payment schedules, and filing of all applicable returns.
We are committed to staying abreast of changes to IRC, tax regulations, Revenue Rulings, Revenue Procedures, private letter rulings, and court decisions, and advise cannabis clients on how changes may impact their tax position. Federal legalization will be welcomed by operators, but will no doubt add new layers of complexity to an already mammoth tax compliance burden.
With national recognition, our multi-disciplinary team of advisors include: CPAs, CFOs, estate planning & tax attorneys, wealth advisors, as well as business process, data analytics, IT, and cyber security professionals. Learn more about the Tax, Advisory, Accounting & Assurance Solutions AAFCPAs provides for Cannabis Businesses.>>