Specialty Tax for Cannabis Businesses

Section 280E disallows business deductions and credits outside of cost of goods sold for cannabis operators, significantly increasing effective federal and state income tax rates. We help you minimize its impact through careful planning.

• COGS Tax Optimization: Maximize allowable COGS under Section 471 and its regulations, taking into account the latest in cannabis tax case law.
  
  
• Methodology Documentation: Ensure consistency and defensibility in your COGS tax accounting practices.
  
  
• Section 280E Structuring: Review overall business operations to identify potential legal entity and operational structuring opportunities that can minimize the impact of Section 280E, consistent with cannabis tax case law, while complying with regulatory restrictions.

Our goal is to protect your margin while helping you stay compliant with the latest understanding of Section 280E.

Your entity structure plays a critical role in tax liability and licensing. We help cannabis businesses structure intelligently as they grow.

• Entity Classification Analysis: Evaluate entity types that balance tax considerations with growth and exit goals.
  
  
• Ownership, Operating Agreements, and Management Agreements: Structure capital, profit allocations, and management rights to support compliance and strategic flexibility.
  
  
• Restructuring Support: Reorganize your entity group with careful attention to tax consequences, supply chain, IP licensing considerations, and regulatory restrictions. 
  
  
• Buy-Side and Sell-Side Due Diligence Support: Identify and quantify exposures tied to a variety of federal, state & local, and international tax issues with a special industry focus on Section 280E tax positions, sales & use tax, and excise tax.
  

We build structures that support scale, simplify compliance, and stand up under scrutiny.

Cannabis businesses may operate in multiple states, each with its own tax rules and regulatory limitations. We help you manage state and local obligations from registration through audit defense.

• Nexus & Taxability Analysis: Identify where you’re obligated to file and avoid missed registrations and filings.
  
  
• Sales & Use Tax and Excise Tax Planning: Ascertain optimal tax strategies, and ensure timely & accurate compliance.
  
  
• Local Jurisdiction Tax Support: Address city- and county-level licensing fees and specialized cannabis taxes.

Our multistate expertise helps you reduce surprises and stay ahead of complex, potentially overlapping tax requirements.

With cannabis companies under heightened scrutiny with the IRS and state & local tax authorities due to the significant ROI on cannabis operator audits, audits are an ever present risk. We prepare you with the right documentation, filing strategy, and technical support to respond confidently to any tax disputes.

• Pre-Audit Reviews: Assess risk areas and resolve issues proactively.
  
  
• Federal, State, and Local Representation: Manage communications with tax authorities and guide responses.
  
  
• Penalty Mitigation Strategies: Identify opportunities to reduce penalties and interest

We help you prepare before the audit starts—and help protect you if one comes your way.

Cannabis tax laws consistently evolve. We provide year-round advisory support to help your business adapt and make informed decisions before problems arise.

• Responsive Guidance: Get answers when new tax or regulatory questions emerge.
  
  
• Issue Spotting and Planning: Identify tax risks early—before they impact financial performance.
  
  
• Integrated Support: Coordinate tax strategy with legal and accounting teams.

With proactive support, you stay compliant, agile, and ready for what’s next.