The "Green Rush" Does Tax Season

The medical marijuana industry in Oklahoma is in what I like to call the “Green Rush”. Everyone wants a piece of it.

Having worked with several entities within the industry I would like to provide some information to help you navigate this tax season. Many business owners finished the 2019 tax year with high hopes only to figure out they had a large tax bill awaiting them due to 280E. I want to share some information with you that will help guide you through the puzzling world that is the medical marijuana tax season.

The complexity of the issues begin with taxation on medical marijuana businesses. It is listed as a schedule one drug on the federal level and therefore, is still illegal and subject to 280E. This left a large discrepancy between state and federal governments. The federal taxation through 280E has left cannabis business owners at a huge disadvantage as opposed to normal businesses.

Cannabis business owners are not taxed like other businesses in the United States. What does this mean? They are not allowed to deduct anything other than the cost of their goods. Which means cannabis businesses are taxed on Gross Profit. Therefore, knowing what items are considered part of the cost of goods is vital.

Here is a non-comprehensive list of items not allowed as cost of goods for dispensaries:

• Rent • Salaries • Contract Labor

• Storage

• Display Cases

• Utilities

• Insurance

• Professional Fees

• Licenses and Fees

Tax preparers take your data from the previous year and put it into a properly filed return. Without documentation of your tax information this can be messy.

Did you know cannabis companies are more likely to be audited? Most companies that fail their audit are due to haphazard record keeping. If the cost of goods information is incorrect from your records, they will be incorrect on the return as well. I strongly urge all business owners in the medical marijuana field to seek out an accountant to keep you compliant and save you money. You have a lot to juggle already if you are a business owner in the field. Let us take this worry off your plate.

Do you feel like people price gauge you just because you’re a cannabis company? Calypso Financial has low rates and top-quality service. We treat our clients like family and not a paycheck. Come find out what it means to have the cannabis experts on your team.

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