canna law blog

California Cannabis Taxes and IRC Section 280E

In California, the first Cannabis Tax Return is due on April 30, 2018 and many of our clients are now working through the issues related to the Cannabis Cultivation and Excise Tax. In addition, many marijuana businesses must file their first 2018 estimated federal tax payment by April 17, 2018. To estimate taxable income, every

canna law blog

The C Corporation Tax Election for Cannabis Entities: It’s Easy!

The Tax Cuts and Jobs Act took effect January 1, 2018. This Act made dramatic changes to prior federal tax law. The most significant changes were: 1) the reduction of the corporate tax rate, and 2) a new 20% deduction for individuals and other non-corporate taxpayers operating a business. We outlined the income tax consequences

canna law blog

California Sales Tax: Good News for Cultivators!

California cannabis businesses are now acquiring temporary permits to enter the new cannabis marketplace made possible under MAURSCA. As part of that process, all cannabis businesses have been introduced to the California Department of Fee and Tax Administration (“CDTFA”), the agency tasked with administering the new cannabis cultivation taxes and sales tax. The CDTFA administers

canna law blog

The Tax Act and Cannabis Employment Practices

President Trump signed the Tax Cuts and Jobs Act (the “Act”) into law on December 22, 2017.  The Act contains several sections that will impact companies that work with cannabis businesses and provide important indications of where states might be going with taxes in the coming year. As for the Act itself, its sweeping provisions went into

canna law blog

Tax Reform and Cannabis: What You Need to Know

On December 22, 2017, the Tax Cuts and Jobs Act (“The Act”) otherwise known as PL-115-97, was signed into law. The Act is the most significant overhaul of the U.S. Tax Code since 1986 and is effective beginning in 2018. Accordingly, cannabis businesses need to understand now how the new tax law affects their business.

canna law blog

The Top Five Cannabis Business Tax Myths

I regularly speak with clients regarding the tax issues that impact their buying, selling or operating a cannabis business. There are certain things I hear again and again regarding their taxes and their tax planning that are simply not true. The below are the five most common. 1. Calculating the Odds of Getting Audited Constitutes

canna law blog

Cannabis Taxes and Section 280E: Canna Care v. The IRS

The United States Court of Appeals for the Ninth Circuit recently ruled on its second tax case regarding IRC §280E.  Decisions from the Ninth Circuit are significant as they apply to the cannabis-friendly states of Alaska, California, Nevada, Oregon; and Washington. In Canna Care vs. the Commissioner, the Court of Appeals upheld the United States Tax

canna law blog

Employee Leasing and Cannabis Companies

As the marijuana industry grows and consolidates, marijuana businesses are forced to consider more complex business structures to meet their business needs. Such business structures must reduce costs, increase operating efficiency, and most importantly, strictly comply with federal and state law. One strategy for cannabis retailers, especially those with multiple outlets, is to establish an

canna law blog

Cannabis Excise Taxes: Are They Fair?

High Times has a column out this week arguing against excise taxes for marijuana. The main point is that excise taxes on marijuana are unfair to consumers because they aren’t proportional to the harm caused by marijuana. Marijuana taxes are higher, for example, than alcohol taxes, even though alcohol is a more dangerous product. The

canna law blog

Minority Ownership Buyouts of Cannabis Businesses

I recently worked on a relatively typical, relatively straight-forward LLC member buyout of a cannabis business. Member A wants to stay with the company, but Member B is ready to exit. Member A will be the sole Member of the company after the purchase. The parties have agreed on a price and on payment terms,