Nathan Russell’s Post

Cannabis rescheduling provides much needed tax relief to an overtaxed, struggling, growth industry. That's great news. But the new classification also obviously fails to go (even close to) far enough. Like many: I celebrate, through gritted teeth. Read my thoughts in my latest post to Cannabis Uncaged. Link in first comment.

A lot of cannabis processors and producers try to reduce customer acquisition cost by marketing more efficiently. This usually means using a cheaper provider or team.  Sometimes this is useful, but it does require you to change processes, which has a cost and may reduce results. Another strategy is to take that marketing as a tax reduction. Yes, sales and marketing are not deductible under 280E, but royalty payments for intellectual property are inventoriable, and therefore eligible for cost of goods sold.  And the entities selling those rights to use their intellectual property are not subject to 280E.  So why not set up an entity for this? Most cannabis cultivators and manufacturers have intellectual property but no accounting for it.  But they can set up a separate entity for trademarks, patents, intangibles, and let that non-plant entity do the marketing for them.  Then they can pay that entity a royalty fee and effectively move the marketing spend to COGS. If tax rates are an effective 70% of net income under 280E, then these deductions will be incredibly valuable, as they will reduce the taxable income assessed at that rate. In other words, tax goes down. Now your marketing is functionally cheaper, and your CAC has gone down without doing much else than spending from a different account. #CAC #LTGP #CannabisAccounting

Given the complexity and evolving nature of cannabis taxation, heightened IRS scrutiny is a common concern for cannabis businesses and investors. Ensure that your tax returns are accurate, well-documented, and comply with all applicable laws and regulations to minimize the risk of audits or investigations. Make sure to accurately report all sources of income related to cannabis investments, including capital gains, dividends, or other forms of investment income. Contact us at 📩 fa@fascpaconsultants.com or 📞 us at (786) 462 7899. #cannabis #businessreporting #businesstrategies #taxplanning #cannabistaxes #timelyreporting #cannabisrequirements #fascpaconsultants #FL #IRS #TaxSeason #420 #420Tips #420Business #CannabisUSA

This is an eye opener. Only 27% of Cannabis businesses are profitable. That means that over 70% are just breaking even or are losing money. And, with an effective tax rate of over 52.5% many are operating on razor thin profits. That isn't going to change any time soon. With the rescheduling hearings being delayed, cannabis businesses need to have a laser-focus on their numbers, a view into their cash flow, and the right tax, accounting and advisory team to help them navigate. Reach out to me or anyone from the Dark Horse Cannabis CPAs team to help. (Hat tip to Scott Newman for posting the original article!)

Starting a cannabis business can be an exciting yet challenging endeavor, with numerous regulations and bureaucratic hurdles to overcome. As you embark on this journey, it's crucial to make informed decisions that will set your business up for long-term success. One of the most critical considerations is the choice of business structure. Should you opt for an S-Corp or an LLC? Understanding the implications of each option is essential for minimizing tax liability and optimizing your business operations. Additionally, opening a bank account can be a hurdle for cannabis businesses. Finding a financial institution that is willing to work with your industry is essential for managing your finances effectively. Another crucial aspect is ensuring adequate tax planning. Consulting with a cannabis accountant can help you understand your tax obligations and develop strategies to minimize your tax burden. By seeking professional guidance from the outset, you can avoid potential pitfalls and lay a strong foundation for your cannabis business. 📑 Grow your business, we'll handle the numbers. Reach out to us now at buddaccounting.com #CannabisAccounting #CannabisFinance #CannaAccountants #CannabisBookkeeping #CannabisTaxation #CannabisAudit #CannabisCompliance #CannabisFinancialServices #CannabisBusinessAdvisory #CannabisManufacturing #CannabisDistribution #CannabisSuppliers #CannabisGrowers #CannabisProcessing #CannabisIndustry #CBDManufacturing #THCProduction #CannabisLogistics

A world without 280E on cannabis… The IRS’s collections of tax revenues from cannabis companies will be lower in the short term. In the long term (and not even that long likely), cannabis companies will grow without the super impediment of 280E, and eventually will pay just as much tax as they were. It will just be a lower percentage of their profits. And since cannabis will then be an asset that allows the expectation of a legal profit, then more investment capital will come into the industry, fueling growth, and so the tax revenues will increase once more. This is why I trust my hope that the IRS will probably not fight the tax impacts of rescheduling too hard if it happens. Well, one can dream anyway. #Cannabis #Evolution #Future

🌿 Ben Burstein on Financial Strategies for Cannabis Rescheduling:  He suggests that operators prepare to capitalize on potential changes by identifying deductible expenses, reallocating costs for better tax benefits, and filing refund claims in anticipation of retroactive tax structure adjustments. These steps could unlock billions in annual cash for the industry.   #CannabisNewsHub #CannabisIndustry #BenBurstein #LeafLink #TaxStrategy #280E

LeafLink’s Ben Burstein breaks down how cannabis rescheduling could reshape the landscape for CRBs. Explore his top three key considerations for operators aiming to reduce tax burdens once these changes take effect. You don't want to miss these valuable insights! Cannabis NewsHub #CannabisNews #CannabisBusinesses #LeafLink

Cannabis Operators' Delinquent Payments Hit $3.8 Billion in 2023 A recent report by Whitney Economics unveils a financial crisis brewing beneath the surface of the booming US cannabis industry. Cannabis businesses are struggling under a mountain of unpaid bills, exceeding a staggering $3.8 billion. This alarming number is expected to climb further, painting a bleak picture of the industry's health. The report identifies declining revenues and crippling limitations imposed by federal tax code 280E as the root causes. This perfect storm has created a cash flow crisis that's rippling throughout the industry. Cultivation businesses bear the heaviest burden, but the financial squeeze impacts all sectors. Even more concerning is the disproportionate effect on smaller and minority-owned operators, threatening to stifle diversity and equal opportunity within the legal cannabis market. The report exposes a domino effect where businesses are unable to pay their own bills because they are waiting on payments from others. Industry experts from Whitney Economics and Cannabiz Credit Association warn that this unsustainable trend will only worsen without intervention from both federal and state regulators. Urgent action is needed to prevent the financial woes from crippling the cannabis industry and the businesses that depend on it. #CannabisDebtCrisis #cashflow #TaxCode280E #diversity #billion