Cannabis Industry Business Consulting and Tax Services
David Thomas and Associates specializes in Cannabis Business consulting. We also offer accounting and tax services to the Cannabis Industry in Maine. We currently work with licensed medical and recreational marijuana dispensaries, cultivation facilities, infused product facilities and quality control testing labs.
David Thomas and Associates is leading the accounting industry in Maine by working with the Cannabis Industry. We also perform the following services for our cannabis clients:
> Maintain accounting records
> Prepare weekly and monthly payroll
> Prepare federal and state income tax filings
> Prepare sales and excise tax filings
> Recommend and assist in implementing legal business structure and formation
> Conduct financial statement audits, reviews and compilations for owners, investors and banks
> Perform forensic accounting examinations when fraud or theft is discovered
> Prepare financial and accounting policy and procedures
> Prepare internal control evaluations for existing businesses to discover weaknesses
> Provide financial consulting services for business owners for a variety of financial areas
Due to the unique regulatory environment US Code 280E creates for marijuana businesses, owners cannot afford to work with inexperienced and unlicensed tax preparers and accountants.
Marijuana businesses income tax returns are governed by US Code 280E. 280E was passed by the US Congress in 1986 to prevent “illegal drug traffickers” of Schedule I and II substances (Controlled Substances Act) from filing a tax return with deductions and keeping ill gotten proceeds. Marijuana continues to be listed as a Schedule I substance and the
Internal Revenue Service (IRS) actively enforces 280E against legal marijuana business owners in all states. The US Tax Court has upheld the legality of the IRS applying 280E to legal marijuana business in two significant cases, CHAMP & Olive.
How 280E Affects You and Your Business
280E prevents an owner from taking tax deductions for significant expenses associated with selling such as advertising, bud tender wages, rent costs, signage, and certain improvements. Inventory production costs associated with the grow, cultivation, or production of an extract or infused product are allowable tax deductions.
Under 280E, tax is assessed by the IRS on gross income (sales – production costs) instead of net income (sales – production costs – admin costs – selling costs).
The tax strategy is accomplished by reviewing a marijuana facility’s operation and properly allocating deductible and non-deductible expenses