Cannabis Industry Financial Management

Our goal is to deliver comprehensive support tailored to your cannabis business. We offer more than just tax preparation, bookkeeping, or fractional CFO services; we understand that your success depends on the seamless integration of these financial functions. By aligning our expertise with your unique needs, we help ensure your business thrives in a competitive landscape.

Distinct challenges demand tailored solutions

Cannabis businesses often begin with inherent disadvantages. Whether contending with complex tax regulations, insufficient transparency, or the so-called “green tax,” cannabis enterprises face numerous hurdles that are not typically encountered by conventional businesses. Leafy Accounting Group specialize in accounting and taxation within this sector. We are committed to helping you navigate these challenges and leverage opportunities for growth.

Maximizing Deductions Under Section 280E Through Accurate Tracking of Employee Hours

The Challenge: Organizations with employees involved in a range of tasks often face challenges in accurately tracking and assigning time to inventory-related activities. Proper tracking is essential, as it enables businesses to factor employee costs into inventory, increasing the potential deductions for Cost of Goods Sold (COGS) when filing taxes.

How Leafy Accounting Group Can Help: We will partner with you and your management team to ensure accurate tracking of employee hours spent on inventory activities. We’ll help develop standard operating procedures (SOPs) for precise time tracking and suggest software solutions to reduce administrative overhead. 

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Are You Prepared to Confidently Face an IRS Audit Today?

How well can you substantiate your Cost of Goods Sold deductions with documentation?

The Challenge in 2024: The U.S. Treasury Inspector General for Tax Administration (TIGTA) recently released a report urging the IRS to bolster its auditing efforts for cannabis businesses. The report revealed that the IRS could potentially collect significantly more revenue from audits of cannabis enterprises compared to other industries. TIGTA’s recommendations stemmed from findings indicating that many cannabis businesses are 1) misapplying IRS Section 280E and Section 471, and 2) lacking adequate documentation to support their deductions when these sections are properly applied.
How Leafy Accounting Group Can Help: We focus on ensuring your tax positions are defensible. Our team organizes and maintains digital records, receipts, and invoices, ensuring you are fully prepared for any IRS inquiries. Each position we take on your tax returns is grounded in IRS laws and regulations, providing you with the confidence that your returns are robust and ready to withstand scrutiny.

Vertically integrated cannabis enterprises may possess various licenses under a single entity.

The challenge: It is essential to accurately account for income and expenses associated with different license types. Each license type is subject to distinct tax regulations regarding the accounting and deduction of expenses for tax purposes. Furthermore, keeping separate financial records for each license enables a clearer assessment of the performance of each segment of your business.

How Leafy Accounting Group can assist: We categorize different licenses and activities into divisions within your financial records, allowing you to readily discern the operational status of each division at any given moment.

Find a friendly and knowledgeable cannabis accountant who understands the specific requirements for your business to succeed.

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