The cannabis industry is a rapidly growing industry with immense potential. However, the industry is also fraught with difficulties and challenges, one of which is tax. The cannabis industry is subject to a unique tax code known as 280E.
In order to comply with 280E, businesses in the cannabis industry need to have a clear understanding of their inventory and expenses. This can be a daunting task, especially for businesses that are just starting out. This is where a cannabis accountant can help.
A cannabis accountant can help you navigate the complex world of 280E and ensure that you are in compliance with the tax code. They can also help you manage your inventory and expenses in a way that is advantageous for your business. If you are looking to start or grow a business in the cannabis industry, a cannabis accountant is an invaluable resource.
With that in mind, check out our latest video with Katye Maxson-Landis, COO of Indiva Advisors LLP. She gives a quick introduction to the intent of 280E and discusses the best approach for mitigating its impact.
The intent of 280E is to tax you to death.
In the realm of tax, you would like to have on your side a cannabis accountant or an accountant that specifically is capable of assessing how your business is running and the costs that can be defensively put into cost of goods sold in order to be able to come to the calculation of what is taxable income.
In practicality that means you cannot just let your accountant drive, and you cannot be uneducated. As cannabis accountants, our goal is always to educate you on what costs relate to cost of goods sold, what costs relate to inventory, controlling inventory, securing it, maintaining it, producing it, dealing with the inventory function, so that you feel like you have a little cannabis accountant in your pocket when you make business decisions.
The decisions that get made on a daily basis, make or break at the end of the year, what your business is going to do for taxes. Unfortunately, in regular business, owners tend to leave those tax decisions to the end of the year, thinking “Well, we probably have some sort of silver bullet that can save the day.” In cannabis, there is no silver bullet to help you get around 280E. It's not optional. It's required to be applied to these businesses.
And so if you as a business owner do not have a fluid and very clear relationship with your accountant to be able to say, “Hey, I'm making business decisions and want to spend money in these specific ways. Talk to me about that impact and my tax return,” you're gonna have a really surprising bill.
We advise clients all the time to really look at what your business is doing and understand how what you're doing relates to inventory. And when it doesn't relate to inventory, really consider if you need to spend that money.
You do in some cases, obviously. You cannot run a business without our general costs or administration costs, and so forth. But if you have flexibility as to how you spend that money, please make the decision to to not spend it and really look towards spending money on inventory, inventory control, or other areas that are related to inventory in relationship to your accounting professional.
Partner With The Cannabis Accountants At Indiva Advisors LLP
When it comes to 280E, cannabis businesses need all the help they can get. That's where Indiva Advisors LLP comes in. We are a team of cannabis accountants who can help you navigate the complicated world of 280E. We'll help you stay compliant and make sure you are taking advantage of all the deductions and credits you are entitled to. So if you are looking for help with 280E, give us a call today.