For cannabis businesses, federal income taxes can be ruinous—even in loss years. Unlike other industries, which pay income taxes only on actual income, cannabis businesses, defined in federal law as drug traffickers, are singled out for an extra tax on a portion of their expenses. As a result, even the best tax planning tends to be complex and unpredictable. Recently, however, planners have become interested in a simple loophole which could eliminate cannabis’s disparate tax treatment entirely.

Making a change in your accounting method is the most exciting technique in cannabis tax planning today, and it yields a large tax savings from a small investment in tax planning. Executing this plan is a simple two-step process, both will be handled by the business’s CPA.

Today’s video discussion provides historical context of 280E and how 471c has changed the tax landscape for the cannabis industry now.

Andrew Gradman, Esq.

Andrew Gradman is a Trusted Advisor at AB FinWright LLP and founder of Gradman Tax. He is an expert in tax law who helps clients understand and minimize tax obligations including income, estate, employment, property, excise, sales, use and franchise taxes.

Prior to Gradman Tax, Andrew practiced law for various employers, garnering a decade’s worth of experience and expertise.

 

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