taxes

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....

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...

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. 

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 ...

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...

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...

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...

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

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...

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.

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...

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,...

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...

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...

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 ...

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%.  

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

• 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...

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...

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. 

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...

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.

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...

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...

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...

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...

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...

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...

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...

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. 

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...