Matt Hawkins’ Post

U.S. cannabis companies encounter higher taxation due to the substance's federal illegality, resulting in limited deductions under IRC Section 280E. This section prohibits deductions for expenses related to Schedule I or II substances, including cannabis. Consequently, these businesses bear a disproportionately high tax burden. Despite this, some companies are exploring strategic alternatives, such as employee stock ownership plans (ESOPs), to alleviate tax liabilities. Learn more about the adoption of ESOPs in the cannabis industry with my latest article on Forbes, featuring comments from Darren Gleeman, Adam Hoffer, Peter Su, CTP, CCBP, CCCE, GRCP, GRCA, IDPP, ACBP, CBE, and Scott Solomon. https://lnkd.in/d3VvwyNH #cannabisbusiness #cannabis #280E #cannabisindustry #ESOP #cannabistaxation #taxation

Wondering what to expect from cannabis rescheduling? 🔍🌱 Here’s our latest featured content from 420 CPA on the potential impacts for cannabis businesses, co-authored with my colleague Simon Menkes. Cannabis moving from Schedule I to III could significantly reduce #federaltax burdens for the industry. However, our analysis shows this rescheduling process will be lengthy, with continued 280E impacts likely through 2024 tax filings. 🗓️ While rescheduling promises lower taxes eventually, proper planning is key to future savings. It could also pave the way for #banking access and interstate #commerce. Read below for further insights on how to navigate these upcoming changes and position your #cannabisbusiness for success. 🌟 Follow 420 CPA for more expert guidance on cannabis tax and finance strategy as regulations evolve. #420CPA #cannabis #taxes #rescheduling #280E #cannabisfinance

What are your thoughts about ESOPs in cannabis? As a tool against 280E? "...finds the ESOP adopted in the cannabis industry to be a brilliant idea, though not without complexities. While ESOPs offer a workaround for cannabis retailers grappling with Section 280E tax burdens, he believes their setup entails significant accounting and legal expenses." https://lnkd.in/e7bVUUV6

Pleased to share our latest feature in Bloomberg Tax! As the DEA considers shifting cannabis to #ScheduleIII, we’re dissecting the impact and shift in finance strategy for cannabis businesses. Did you know rescheduling cannabis could lighten your tax load soon? 🌿💰 While the DEA’s move to reclassify cannabis promises lower #federaltaxes eventually, it's a slow process. In this piece, Simon Menkes and I break down how this reclassification could dramatically reduce your tax burden and reshape financial planning in the industry. #Strategy and foresight is key here to capitalizing on the upcoming tax savings. 🔐 Businesses should prep for continued #280E impacts in the meantime. Read our latest article below to learn what this means for your cannabis business as legislation progresses. Follow me here on LinkedIn and subscribe to my newsletter at 420CPA.com to stay informed on the evolving developments in regulation. 420 CPA #cannabis #cannabiscompany #taxtips #rescheduling

🌱✨ The CBD & Cannabis industry is experiencing exponential growth, yet it continues to face significant hurdles, particularly from federal regulations and tax laws. As these businesses expand, they're confronted with unique financial challenges, primarily due to IRS tax policies that prohibit them from deducting common business expenses. This predicament means cannabis businesses, unlike others, must pay taxes on their gross income, unable to deduct operational costs like rent, salaries, or utility bills. This leads to substantially higher effective tax rates, imposing a severe financial burden that can stymie growth and even force entities out of operation. #Cannabis #CBD #TaxLaw The disparity between state legalization and federal prohibition further complicates matters. While several states have recognized the burgeoning potential of the cannabis market and adapted their tax laws accordingly, the absence of federal reform continues to cast a shadow over the industry's future. #FederalRegulation #StateLaw #BusinessChallenges Efforts to resolve these conflicts are underway, with ongoing advocacy for federal legal reforms that would allow cannabis businesses the same tax deductions as other industries. Success in these efforts could signal a more stable and thriving future for the market, bolstering innovation and economic contribution. #CannabisReform #EconomicGrowth 💬 How do you see the future of the cannabis industry unfolding in light of these regulatory challenges? Join the discussion and share your insights or experiences with navigating these complexities. Let's drive the conversation forward! #IndustryGrowth #FutureOfCBD #ProfessionalDiscussion

For many states, taxing #cannabis is brand-new territory. Taxing recreational cannabis is sometimes seen as a potential gold mine for tax revenue, but the reality is more complicated. Watch: Green Rush: Principles for Taxing Cannabis https://hubs.ly/Q02zSGFh0

For many states, taxing #cannabis is brand-new territory. Taxing recreational cannabis is sometimes seen as a potential gold mine for tax revenue, but the reality is more complicated. Watch: Green Rush: Principles for Taxing Cannabis https://hubs.ly/Q02ttNsf0

Cannabis tax complexities require insight and adaptability through the regulatory shifts. The introduction of a wholesale #excisetax, as seen in New York's recent policy evolution, presents both challenge and opportunity. Adding predictability, it allows strategizing with more certainty. However, excise tax structures differ greatly across state markets. This highlights the difference a tailored and informed approach can make in financial planning in cannabis. Leverage lies in uncovering new opportunities, before and as they emerge. At #420CPA, we decode the intricacies in cannabis, turning tax challenges into financial opportunities for our clients. In this article, my colleagues and I examine the impact this tax shift could have on streamlining compliance and strengthening the legal #adultuse market in NY. Read on in the link below to learn more about the state's evolving market and the proposal initiated by Governor Kathy Hochul. For expert help with your cannabis tax strategy, connect with our Biz Dev team at info@420CPA.com to learn how we can create opportunities together. #420CPA #cannabis #cannabisfinance

Everyone wants to know where the Maryland cannabis tax revenues go. According to the latest Cannabis Quarterly Update from Maryland Comptroller Brooke Lierman, Maryland collected $22.4 million in cannabis taxes from April to June 2024, marking a 52 percent increase compared with revenue collected in Q1 of 2024. Despite this surge, local governments still receive only a tiny portion of the revenue. Why it matters: Adult-use cannabis in Maryland carries a 9 percent sales tax, which supports several State funds. Local governments, however, receive just 5 percent of that revenue, among the lowest shares nationwide.

280E Cannabis Tax Update! The Tax Court yet again ruled that 280E is NOT unconstitutional for a state-law allowed cannabis businesses in Patients Mutual Assistance Collective Corp. v. Comm'r. And . . . while this case was going on, the AICPA has requested guidance from IRS/Treasury on how 280E will apply if and when cannabis is moved from Schedule I to Schedule III. Regardless, 280E still applies to cannabis businesses. We are not quite there for cannabis businesses to start claiming deductions. https://lnkd.in/eUB62Nws #280E #cannabis #marijuana #taxpolicy #taxupdates #taxdeductions #cannabistaxation