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 showcases how to set up your accounting operations to track deductible costs that fall under 471c.

Rachel Wright, MST

Rachel Wright is a Managing Partner with AB FinWright LLP and has vast experience building accounting departments and creating internal controls for fast-growing entities. As a leader in her field, she successfully navigates the tax landscape to find the best solutions for clients to elevate their businesses, while making complicated tax issues simple to understand.

Rachel previously founded and managed her own firm Wright Accounting Services for 15 years.

 

 

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