Marijuana is now legal in many states, but still illegal on the federal level. The Cannabis industry is experiencing tremendous growth but there are also high risks involved with these businesses.
The Internal Revenue Code section 280E forbids the deduction or ordinary business expenses from gross income for Schedule I or II substances. Cannabis is a Schedule I substance and therefore illegal in the eyes of the IRS. However, cost of goods sold is an allowable expense.
There is great scrutiny of marijuana businesses from the IRS over the classification of allowable cost of goods sold expenses and ordinary business expenses. The right CPA and/or accountant will establish criteria for these expenses in the initial stages of business.
Many established CPAs and accounting firms are not interested in servicing the market due to the lack of guidance established by regulatory boards. Others in the accounting world do not possess the knowledge to work for this niche. This adds additional risks for those operating these businesses.
In this industry accountants & CPAs must:
Cannabiz Accounting has the ultimate goal to work with clients who are always in compliance. We can help you implement processes as well as prepare month end work for you, so you can maximize our "Expert Service that Pays for Itself."