The Cannabis Industry Is Affected

In an earlier blog post, we talked about the 280e, and we are bringing it back this week again. As we already know, section 280e forbids businesses from deducting any expenses from their gross income. In addition, this includes any credits as well. Thus cannabis is classified as a schedule 1 controlled substance cannabis businesses fall into drug trafficking. That is why cannabis corporations pay taxes on all of their income.

This is how the cannabis industry is affected overall section 280e means giving away most of your earnings to taxes. First and foremost, remember that cannabis entrepreneurs pay taxes on their gross income rather than on their net income. The tax-rate number cannabis businesses end up paying is very high, almost triple the rate non-cannabis owners have to pay.

Consider the following costs: rent, utilities, employee salaries, benefits, and rent. There is not much left for a cannabis business to profit from. That is where we certainly realize that something needs to change. Despite the negative effect that the 280e has on cannabis businesses, there are ways to lessen the burden. One is to let us take care of the taxes for you; it all starts with accounting and compliance. Most lawyers would advise cannabis businesses to set up as a C- or S-corporation or even LLC. However, we will take a look at your business and help you with any concerns you might have.