280E: The Federal Tax Code and Your Cannabusiness

If your business is more than a dispensary, you should consider splitting it into two businesses that are adjacent to each.
Of course, it is advisable for any business owner, no matter the industry, to work with professionals when it comes to this matter.There are three ways of setting up your cannabusiness:

280E: The Federal Tax Code and Your Cannabusiness

STARTING A CANNABUSINESS

WORKING WITH FEDERAL LAWS AND TAX CODES
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year if such trade or business consists of trafficking in controlled substances (Schedule 1 or 2).

280E APPLIES TO ALL CANNABUSINESSES

The word “trafficking” in the tax code can serve to confuse some business owners.
You may think that this means you will be unable to utilize deductions or earn credits when filing your taxes.  However, there are two steps you can take to maximize your benefits at tax time despite 280E.

SET UP YOUR CORPORATION CORRECTLY

There are three ways of setting up your cannabusiness:
C-corporation, S-corporation, and limited-liability corporation. While sole proprietorship is an option, it is not advisable for this particular industry.

  TWO ADJACENT BUSINESSES OR ONE STORE  

If your business is more than a dispensary, you should consider splitting it into two businesses that are adjacent to each.
Of course, it is advisable for any business owner, no matter the industry, to work with professionals when it comes to this matter.

Give Us a Call

(877) 355-8010