The Tax Code Limits Cannabis Businesses To "Cost of Goods Sold"

Описание: The Tax Code Limits Cannabis Businesses To "Cost of Goods Sold"

Even cannabis businesses operating under state law face significant tax penalties. Section 280E prohibits businesses trafficking in controlled substances from claiming any tax deductions or credits. But cost of goods sold is neither a deduction nor a credit - it is an offset qgainst gross receipts. Cost of goods sold is the cost of acquiring a business' inventory, either through purchase or production. Cannabis businesses can still claim cost of goods sold. But these costs are limited, especially for cannabis resellers. The Tax Court has repeatedly refused to expand what can be included in cost of goods sold. So the many expenses necessary to run a business remain nondeductible for cannabis businesses. This results in extra tax costs that must be passed on to customers - incentivizing many to utilize the 'black market.'

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