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Work Around 280E To Maximize Deductions

One of the keys, is to learn how to work around the 280E to maximize deduction, especially with these complex tax laws. Frankly, it is not that complicated. First, click here to look at our website, then get in touch with us, and we will help you with that, or you can keep reading, and we will try to unfold it all.


The base of getting around 280E is to have a structured and smartly built business.

As mentioned earlier, if the corporation separates into two commodities, everything becomes much easier to handle. So, let us explain how this works; by dividing the company into two entities, we directly make the business responsible for producing and distributing cannabis.


This is how you could divide the two entities:

  1. Sell ancillary products like shirts, owning, car services, and the place where the business operates.

  2. The second business files the tax for return claiming all ordinary deductions.


So, how does this work? Simple, the two companies pay fewer taxes if they operate as a combined corporation. The next question is if this falls into the loophole of illegal firms? The answer is no: as long as the organization works with a tax and legal adviser to create a solid legal structure for the business they are allowed to keep operating accordingly.


However, many argue that section 280E should not apply to cannabis companies given legalization. So, as long as cannabis is still a controlled substance under that federal law, the law still holds that cannabis companies are engaging in trafficking for section 280e. Moreover, as long as the taxpayer is in the trade or business of selling cannabis, and it falls under section 280e, the business cannot claim a deduction for other costs of goods; it is legal to proceed with the establishment.




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