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taxes

August 27 2021

Cannabis Cultivation Taxes: Demystifying Form 943

When filing taxes, cannabis cultivators have a major decision to make when faced with the question: “Will you be Filing 940/941 or 943 forms for payroll?” The differences between these forms appear minor, but if the wrong form is checked, there can be significant and lasting consequences....

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Filed Under: Taxes, Accounting, cultivator

August 12 2021

Cannabis Administration and Opportunity Act: What You Need to Know

On July 14th, Senate Majority Leader Chuck Schumer presented a newly revised proposal for a comprehensive cannabis reform bill in the United States. The Cannabis Administration and Opportunity Act (CAOA) would expunge federal non-violent cannabis convictions crimes, reinvest federal...

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Filed Under: News, Washington, Taxes, Business, Legalization

August 02 2021

The Real Reason Federal Lawmakers are Reluctant to Repeal 280E

When congressional lawmakers first conceived the obscure federal tax rules known as 280E in the early 1980s, the goal was to strip drug kingpins and smugglers of ill-gotten proceeds. A particularly brave drug trafficker had attempted to deduct a yacht and firearms purchases from his taxes. 

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Filed Under: Washington, Taxes, Accounting

May 21 2021

Economic Impact of Cannabis is Expected to be 5X Greater in 2021

It is no secret that the cannabis industry is growing quickly and strengthening the economies of states and territories with legal adult-use and medical programs. After a banner year in 2020, when the cannabis industry pumped an estimated $17.5 billion into the US economy, an analysis from ...

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Filed Under: California, Taxes, Nevada, Accounting

April 30 2021

Why and How the IRS Audits Cannabis Businesses

In comparison to mainstream industries, cannabis businesses have considerably greater odds of being audited by the IRS. Why the IRS prioritizes auditing the cannabis industry may come as no surprise to the majority of cannabis business owners across the US. However, we weren't aware of how...

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Filed Under: Compliance, Taxes

March 10 2021

Potential Tax Changes During the Biden Administration

As our country passes the presidential torch, business owners and individuals alike are lookingto upcoming changes to tax laws. Keep in mind – nothing has come to pass, yet.However, there are some potential changes you should have on your radar to stay aware of,over the course of the...

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Filed Under: News, Taxes

February 08 2021

Cannabis Financial Services | Accounting, Tax Prep, Banking, & Financial Reporting

Financial Operations

With our team of CPAs and financial experts that specialize in the cannabis industry, GreenGrowth CPAs is here to ensure that your business is set up for success. We create feedback loops for consistent optimization and compliance for your cannabis company. Maintaining...

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Filed Under: California, Michigan, Washington, Taxes, Oregon, Accounting

September 14 2020

IRS Guidance on Cannabis Businesses

The IRS has clarified guidance for the cannabis industry.

  • 280E applies to all cannabis businesses no matter if the business is legal or illicit
  • Form 8300 must be filed with every transaction that is $10,000+
  • Cannabis businesses should calculate CoGS based on Internal Revenue Code 471
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Filed Under: Taxes, Finance

September 08 2020

Cannabis CPA vs Local General CPA

As tax extensions are coming due, we wanted to share some ‘insider’ thoughts about choosing a CPA to prepare your cannabis business tax returns.Over the past 45 days, our team has been increasingly getting on calls with cannabis operators that chose to go with a local, generalist CPA firm...

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Filed Under: Compliance, Taxes, Accounting

March 26 2020

Economic Update for Cannabis Businesses

Small business owners around the country are in need of help as more and more states ask their citizens to stay at home. Cannabis is no exception.

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Filed Under: News, Taxes, Business, Operations, Accounting

March 04 2020

Cannabis Excise Tax Calculation Updates for 2020

As of January, 2020, distributors need to know about the CDTFA's changes to California's cannabis excise tax. 

  • Distributors will need to pay the excise tax more frequently, and the basis that they calculate the cannabis excise tax on could be lowered, but the markup on that basis has...
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Filed Under: California, Taxes, Accounting

February 26 2020

Cannabis Industry Chart of Accounts

This index of the financial accounts in the general ledger saves time and stress when tax season rolls around.

  • A COA can generate better, more accurate reporting on your cannabis business performance to help you grow. 
  • Transactions are broken into five main categories: assets,...
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Filed Under: Taxes, Finance, Accounting

January 15 2020

Case Study: Northern California Small Business Assistants, Inc.

The outcome of NCBSA v. CIR shows why it's so important to have a licensed tax expert help with your cannabis business taxes. 

  • NCBSA claimed $1.5 million in ordinary and necessary business expenses on its 2012 tax return. The IRS disallowed the company’s tax deductions under Section...
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Filed Under: Case Studies, Taxes, Accounting

January 08 2020

Case Study: Alternative Health Care Advocates Tax Penalties

AHCA v. Commissioner of Internal Revenue shows that courts are likely to view cannabis management companies as subject to the 280E regulation. 

  • Alternative Health Care Advocates used a cannabis management company to provide HR services. 
  • The court ruled that this management company...
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Filed Under: Case Studies, Taxes, Accounting

December 18 2019

Understanding Cannabis Nursery Businesses

 

Learn whether a cannabis nursery is the right investment for your business. 

  • Nurseries are a great way to diversify your cannabis operation.
  • Nurseries can be quite lucrative if you focus on perfecting a strain. 
  • Cannabis cultivation, excise, and sales taxes apply differently to ...
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Filed Under: Taxes, Business, Finance, Operations

December 05 2019

CDTFA Cannabis Excise Tax Update for 2020

Last month, the California Department of Tax and Fee Administration announced an increase in the cannabis excise tax. Starting January 1, 2020, the new markup rate will be 80%, an increase from the original markup of 60%.  

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Filed Under: California, Taxes

November 06 2019

Can Cannabis Businesses File for Bankruptcy?

The short answer: no. But there are other options.

  • Federal regulations outlawing the sale of cannabis mean cannabis operators can’t file for bankruptcy.
  • Garvin v. Cook and the case of Way to Grow, Inc. indicate the courts won't change their mind. 
  • Cannabis and hemp operators facing...
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Filed Under: Compliance, Taxes, Finance, Operations

October 11 2019

Opportunity Zone Credits for Cannabis Investors & Operators

Investing in an opportunity zone is a great way to support the community while taking advantage of tax credits.

  • Opportunity zones are those where the poverty rate is at least 20% or median family incomes are no greater than 80% of those of their surrounding areas. 
  • The IRS offers...
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Filed Under: Taxes, Investing

October 01 2019

Everything Cannabis Operators Need to Know About Form 8300

IRS Tax Form 8300 must be submitted by any business that receives $10,000 or more in cash in a single transaction or multiple related transactions.

  • The IRS has been auditing cannabis businesses that do not submit Form 8300.
  • This form needs to be filled out any time a business collects...
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Filed Under: Compliance, Taxes, Finance

September 12 2019

How Are Taxes Covered Under Cannabis Partnership and Operating Agreements?

Set up a formal partnership agreement to protect your business interests and make sure your taxes are allocated equitably. 

  • A partnership agreement covers things such as ownership, distribution of profit and loss, length of the business relationship, and the roles and responsibilities for...
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Filed Under: Taxes, Finance

September 03 2019

Managing Cannabis Employee and Contractor Payroll with Cash

The 280E regulation forces cannabis operators to pay their employees in cash – here's how to do so safely.

  • Whether members of your workforce is classified as "employee" or "contractor" impacts how you pay them and what taxes you take out.
  • Make sure every employee signs a receipt verifying...
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Filed Under: Compliance, Taxes, Finance, Operations

August 23 2019

Mergers & Acquisitions in the Cannabis Industry - Due Diligence

In the first of a two part series, learn how to do your due diligence on all aspects of a company's financial records and licenses.

  • Hire a due diligence team of lawyers, CPAs, operations engineers and any other experts to learn about the state of the company you’re purchasing. 
  • Use...
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Filed Under: Taxes, Finance, Investing

August 09 2019

Filing LA Cannabis Excise and Use Tax Incorrectly Will Cost You

As a cannabis operator, you’re probably sick of having to contend with the many, frequent taxes due to the state and local government. Cannabis distributors, cultivators, and manufacturers are all responsible for different taxes, in addition to federal taxes required of all business...

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Filed Under: California, Taxes

August 02 2019

Everything Cannabis Distributors Need to Know About Taxes

Cannabis distributors play a big role in collecting and paying taxes in California's cannabis industry

  • Distributors are responsible for collecting cannabis tax from the cultivators and manufacturers with whom they work.
  • Distributor licenses are tricky to obtain to variable zoning...
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Filed Under: California, Taxes

June 27 2019

Reduce Your Cannabis Taxes with 471 Allocations

 

 

The § 1.471-1 is a tax code that can be applied to reduce your tax burden – here's how. 

  • The § 1.471-1 tax code defines inventory capitalization rules for businesses.
  • If something counts as an inventory costs, it can be considered a COGS and deducted. 
  • Note that allocations under...
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Filed Under: Taxes, Finance

June 19 2019

Managing Your Cannabis Business Fund Flow

 

 

Learn how to budget and allocate your cash so that you don’t miss any important bills and can keep track of your money. 

  • When cash comes in, put some in a safe and some in a bank, depending on how you're paying your bills (electronically or cash).
  • Only keep as much cash on site as...
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Filed Under: Taxes, Finance

March 06 2019

Partnership Audit Rules for Cannabis Companies

Businesses that are structured as partnerships for federal income tax purposes have seen their audit activity increase – here's what you need to know.

  • The general rule under the new partnership audit rule is for partnerships to be taxed at the entity level.
  • Companies should factor in new...
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Filed Under: Compliance, Taxes

February 28 2019

3 Best Tax Software Tools for Cannabis Companies

The right tax software tool can help you organize your tax return, but double check all the information before you file.

  • We strongly recommend you speak to a CPA before you file your taxes, as the IRS is notorious for auditing cannabis operators. 
  • Xero, Quickbooks Online, and Freshbooks...
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Filed Under: Taxes

February 27 2019

199A - Qualified Business Income Deduction for Cannabis Operators

The QBI deduction is a complicated one that could help you save money on your cannabis business taxes.

  • Qualified business income refers to the ordinary, non-investment income your cannabis company generates
  • There a number of complexities that need to be taken into account when determining...
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Filed Under: Taxes

February 21 2019

The Big List of Things You May Not Deduct Under the 280E

This list offers some common business expenses that you many not write off on your cannabis business tax return.
  • IRC 280E prohibits any company operating in connection with a Schedule 1 or Schedule 2 drug from deducting certain business expenses.
  • The cost of goods sold (COGS) provision...
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Filed Under: Taxes

February 19 2019

How to Beat the Competition in Oklahoma’s Cannabis Market

Oklahoma legalized medical cannabis in June 2018, and since then, the market has exploded with dispensaries and grow operations.

By our count, the Oklahoma market has more than 1600 growers, 436 processors, and 947 dispensaries – a very competitive landscape for anyone wishing to enter the...

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Filed Under: Taxes, Business, Oklahoma

January 31 2019

Tax Preparation Checklist for Cannabis Operators

Follow this checklist to gather everything you need to fill out your  cannabis tax return.

  • You will need your tax returns for prior two years, plus copies of your sales, excise, and local tax returns. 
  • Make sure you have your income statements ready as well as your P&L and balance sheets. 
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Filed Under: Compliance, Taxes

January 24 2019

What to Expect in a Tax Audit

Tax audits are relatively common in the cannabis industry – here's how to prepare for one at your business. 

  • Make sure your sales, inventory, employee, and tax records are detailed and thorough. 
  • Be prepared with historical financial records, receipts, tax returns, and anything else you...
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Filed Under: Compliance, Taxes, Finance

October 08 2018

A Look at this Week in California's Local Cannabis Ordinance and Applications Scene

The important weekly cannabis updates for California are in. We have news from Commerce, Cathedral City, Imperial Beach, Woodlake and the National Cannabis Industry Association Conference.

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Filed Under: Taxes, Weekly Update

October 04 2018

IRS Penalizes Cannabis Operator for Federal Income Tax Evasion

The IRS fined an Oregon cannabis operator for failing to file income tax returns on his legal cannabis operation. 

  • Cannabis business owner Matthew Price did not report nearly $1 million in income and used his business money on personal expenses in violation of federal tax regulations.
  • This...
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Filed Under: News, Compliance, Taxes, Oregon

August 21 2018

5 Tips for Great Cannabis Business Accounting

Take some of the stress out of running your cannabis venture by setting up a strong accounting system.

  • Start with a chart of accounts that can help you keep track of everything.
  • Even if you can’t deduct everything from your taxes, you should still keep track of ALL your expenses.
  • Revisit...
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Filed Under: Compliance, Taxes

August 15 2018

How the 280e Tax Regulation Affects Your Cannabis Business

The 280e prevents legal cannabis businesses from deducting certain business expenses on their tax returns.

  • Cannabis is still a federally-regulated Schedule I Controlled Substance, which means the 280e applies to legal cannabis operators. 
  • The taxable amount of a cannabis business is often...
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Filed Under: Compliance, Taxes

July 04 2018

How Does California’s Cultivation Tax Apply to Cannabis Pre-Rolls?

Who pays the cultivation tax, and how much tax is charged for cannabis pre-rolls? We'll take you through it in this post. 

  • The cultivator is not responsible for the cultivation tax when they sell cannabis pre-rolls to a processor. 
  • The processor pays cultivation tax to the distributor...
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Filed Under: California, Taxes

June 27 2018

How Do Cannabis Taxes Apply to Immature Plants, Seeds and Clones?

Learn how the cultivation, excise, and sales taxes apply differently to immature plans, seeds, and clones.

  • Cultivation tax does not apply to the sale of immature plants, seeds, and clones. 
  • Sales tax applies when any cannabis item (including plants, seeds and clones) is sold in the retail...
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Filed Under: Taxes

June 27 2018

How to Collect and Disburse the Cannabis Excise Tax

Cannabis retailers must collect a 15% excise tax from customers – here's how to do it

  • Excise tax is charged differently in an arm's length and non-arm's-length transaction. 
  • In an arm’s length transaction, you should factor the excise tax into any discounts or promotional pricing you...
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Filed Under: Taxes

March 29 2018

Tax Reform Updates: Should You Convert from an S-Corps to a C-Corps?

The 2018 tax reform bill passed by Congress brought a lot of new changes to federal taxes for California cannabis businesses. You may have some questions about how to take advantage of these changes, which is why we’re covering all new deductions, liabilities, and tax considerations in...

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Filed Under: Taxes

December 11 2017

California’s Cannabis Excise and Cultivation Taxes (and Penalties)

Questions about cannabis excise and cultivation taxes in California? Read this complete guide for everything you need to know.

  • Retailers are responsible for collecting the cannabis excise tax and then for paying the tax to the distributor.
  • Excise tax is set at 15% of average market price. 
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Filed Under: Compliance, Taxes

December 04 2017

5 Tax Questions to Ask When Structuring Your Cannabis Business

Nonprofit, C-Corp, LLC: what business structure offers the best tax benefits for new cannabis companies?

  • A multi-entity structure limits your liability and can protect your interest – but also create a logistical nightmare.
  • C-Corp is one of the most popular options, but beware the double...
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Filed Under: Taxes, Business

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