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Cannabis Retailer Tax Compliance: IRS Guidance, Expenditures, Section 280E, Maximizing Deductions, State Tax Issues

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Friday, March 1, 2024

Recorded event now available

or call 1-800-926-7926

This CLE/CPE webinar will provide tax counsel and advisers guidance on handling tax compliance issues for cannabis retailers and provide effective tax planning methods for businesses engaged in the cannabis industry. The panel will discuss key federal and select state tax law provisions impacting cannabis businesses, the impact of rescheduling cannabis from a Schedule I to Schedule III drug, Section 280E, and key tax planning techniques to avoid or minimize tax liability.

Description

The sale and distribution of cannabis for recreational or medical use have become a powerful economic engine generating billions in annual revenue with a majority of states and the District of Columbia having some form of legalization of the substance. Despite state relaxation of marijuana prohibition laws, without careful planning, the taxation of cannabis retail businesses can result in hefty tax assessments and penalties.

Cannabis businesses are accounting for and reporting the results of their operations with gross receipts, cost of goods sold (COGS), and other deductions just like other for-profit businesses. However, under Section 280E, cannabis businesses cannot deduct rent, wages, and other expenses unless it is for COGS, resulting in a substantially higher tax rate than other companies on their income.

Recently, the Department of Health and Human Services recommended to the Drug Enforcement Administration that cannabis be reclassified as a Schedule III drug under the Controlled Substances Act (CSA). This reclassification of cannabis from Schedule I to III under the CSA will provide significant opportunities for businesses grappling with complex federal and state tax rules.

Listen as our panel discusses federal and select state tax rules impacting the cannabis industry, the impact of rescheduling cannabis from a Schedule I to Schedule III drug, Section 280E, and key tax planning techniques to avoid or minimize tax liability.

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Outline

  1. Federal and state tax law issues for retail cannabis businesses
  2. Key planning strategies to minimize tax liability and avoid audits
  3. Section 280E
  4. Ownership structures
  5. Deductions
  6. Navigating IRS examinations of retail cannabis businesses

Benefits

The panel will review these and other key issues:

  • Recent court decisions impacting the taxation of cannabis businesses
  • Application of tax rules to the cannabis industry and key planning techniques
  • Structuring the ownership of cannabis businesses to minimize tax
  • Key issues raised in IRS audits and methods to avoid them
  • Effect of Section 280E and deduction of the cost of goods sold

Faculty

Keating, Mitzi
Mitzi S. Keating, CPA, CFE
Partner - Founder of the Cannabis Advisory Services Practice
Citrin Cooperman Advisors

Ms. Keating is a partner in the firm’s Rhode Island office and Founder and Co-Leader of the Cannabis Advisory...  |  Read More

Landis, Katye
Katye MaxSon-Landis, CPA
Director
Citrin Cooperman Advisors

Ms. MaxSon-Landis is a director in the firm’s Rhode Island office and an experienced cannabis professional with...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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