Serving the san francisco bay area + beyond since 1976
Serving the san francisco bay area + beyond since 1976
CANNABIS BUSINESSES
Manage Tax Exposure + Strengthen Financial Operations
Operating a cannabis business requires more than entrepreneurial vision—it requires navigating one of the most complex tax and regulatory environments in the country.
For over a decade, we have worked with cannabis businesses in California and supported clients with operations in multiple states, including Nevada, Colorado, and New York. Our team understands the unique challenges cannabis businesses face, from IRC Section 280E and entity structuring to multi-state tax considerations and operational growth.
Federal and state tax treatment may differ. IRC Section 280E can significantly affect federal taxable income. Inventory accounting and cost allocations require careful analysis and documentation. Entity structure, ownership changes, expansion, and transactions can introduce additional tax consequences.
And when margins and cash flow are already under pressure, unexpected tax liabilities, penalties, or accounting issues can make an already challenging operating environment more difficult.
50
years
EST. 1976
50
years
EST. 1976
CANNABIS BUSINESSES
Cannabis Businesses
Manage Tax Exposure + Strengthen Financial Operations
Operating a cannabis business requires more than entrepreneurial vision—it requires navigating one of the most complex tax and regulatory environments in the country.
For over a decade, we have worked with cannabis businesses in California and supported clients with operations in multiple states, including Nevada, Colorado, and New York. Our team understands the unique challenges cannabis businesses face, from IRC Section 280E and entity structuring to multi-state tax considerations and operational growth.
Federal and state tax treatment may differ. IRC Section 280E can significantly affect federal taxable income. Inventory accounting and cost allocations require careful analysis and documentation. Entity structure, ownership changes, expansion, and transactions can introduce additional tax consequences.
And when margins and cash flow are already under pressure, unexpected tax liabilities, penalties, or accounting issues can make an already challenging operating environment more difficult.
For over a decade, we have worked with cannabis businesses in California and supported clients with operations in multiple states, including Nevada, Colorado, and New York. Our team understands the unique challenges cannabis businesses face, from IRC Section 280E and entity structuring to multi-state tax considerations and operational growth.
Federal and state tax treatment may differ. IRC Section 280E can significantly affect federal taxable income. Inventory accounting and cost allocations require careful analysis and documentation. Entity structure, ownership changes, expansion, and transactions can introduce additional tax consequences.
And when margins and cash flow are already under pressure, unexpected tax liabilities, penalties, or accounting issues can make an already challenging operating environment more difficult.
The goal: Maintain compliance + manage tax exposure + protect cash flow + make informed business decisions.
We help cannabis growers, dispensary operators, and investors manage compliance, improve profitability, and make informed decisions in an industry that continues to evolve.
The goal:
Maintain Compliance
Manage Tax Exposure
Protect Cash Flow
Make informed Business Decisions.
For 50 years, we have helped families make informed decisions through life’s important financial milestones. We take the time to understand each client’s unique goals and work closely with attorneys, wealth advisors, bankers, and other trusted professionals to create coordinated strategies that support wealth preservation, family legacy, and future generations.
Address the Issues Before They Become Problems
How We Help Cannabis Businesses
Tax Planning + Compliance
Prepare for federal and state filing obligations, estimate tax liabilities, evaluate planning opportunities, and address issues before filing deadlines.
IRC Section 280E Analysis
Evaluate how Section 280E applies to the business and the potential effect on deductions, taxable income, and overall tax liability.
Inventory + Cost of Goods Sold
Review accounting methods, inventory practices, and cost classifications to support appropriate tax treatment and consistent financial reporting.
Accounting + Financial Reporting
Build reliable financial information that helps you understand profitability, margins, cash flow, and operating performance.
Cash Flow + Tax Forecasting
Anticipate upcoming tax obligations and evaluate how taxes, operating costs, capital needs, and other commitments may affect available cash.
Entity + Ownership Planning
Evaluate the tax and financial implications of entity structure, ownership changes, restructuring, expansion, and other significant business decisions.
Transaction + Transition Planning
Prepare for a potential sale, acquisition, succession, or ownership transition by identifying tax, accounting, and financial considerations early.
Services for Cannabis Businesses
Advisory
When you’re running a business or managing significant financial decisions, it can be difficult to know which move to make next. We help you understand your options, improve profitability, plan for growth, and prepare for major transitions—so you can make decisions today that support where you want to be tomorrow.
Tax Planning & Compliance
Tax decisions made throughout the year can affect how much you ultimately owe. We help you plan ahead, stay current with changing tax rules, and identify opportunities to reduce your tax burden—so you can avoid surprises and keep more of what you’ve earned.
Assurance
When others rely on your financial statements, you need to know the information is reliable and meets their requirements. We help you get the right level of assurance, meet reporting obligations, and identify issues that may need attention—so you can reduce risk and move forward with greater confidence.
Frequently Asked Questions
What is IRC Section 280E and how does it affect cannabis businesses?
IRC Section 280E limits the ability of cannabis businesses to deduct most ordinary and necessary business expenses for federal income tax purposes. As a result, many cannabis operators are taxed on gross profit rather than net income. Proper inventory accounting under Section 471, cost allocation methodologies, and operational structuring can significantly impact a company’s effective tax rate and overall profitability.
Does California follow federal Section 280E?
California’s treatment of cannabis business expenses has changed over time and does not necessarily conform to federal treatment. The applicable rules can also depend on the type of California taxpayer and the tax year involved. Cannabis businesses operating in California should evaluate their federal and California tax positions separately rather than assuming the same treatment applies to both.
Does a cannabis business need a CPA with cannabis industry experience?
Cannabis businesses operate under a unique combination of federal tax restrictions, state regulations, licensing requirements, and financial reporting challenges. An experienced cannabis CPA understands issues such as Section 280E, inventory costing, multi-state taxation, cash-intensive operations, and regulatory compliance, helping businesses reduce risk while improving financial performance and decision-making.
What entity structure is best for a cannabis business?
The optimal structure depends on ownership goals, licensing requirements, investor considerations, multi-state operations, and tax implications. Cannabis businesses often require more complex entity structures than traditional businesses due to regulatory requirements and tax planning opportunities. Periodic reviews help ensure the structure continues to support operational and financial objectives.
What records should a cannabis business maintain for tax purposes?
Records should support income, expenditures, inventory, cost of goods sold, payroll, fixed assets, ownership transactions, and positions reported on federal and state tax returns. The appropriate documentation will depend on the business’s operations and accounting methods. Strong recordkeeping also helps management evaluate financial performance and respond more efficiently if a taxing authority requests supporting information.