This categorization brings with it significant tax implications for state-legal cannabis businesses. Under Section 280E of the federal tax code, these companies cannot deduct their everyday business expenses when filing their taxes. A research firm in Portland found that in 2022, marijuana businesses were subjected to much higher taxation compared to non-cannabis enterprises due to Section 280E regulations. Maintaining Accurate Records and Filing Timely ReturnsTo best prepare for the end of Section 280E, marijuana companies should maintain comprehensive records of their operations and file tax returns punctually. Nonetheless, companies with unpaid taxes under this section may still be required to pay those outstanding balances even after rescheduling.
At present, marijuana is classified as a Schedule 1 drug under federal law. This categorization brings with it significant tax implications for state-legal cannabis businesses. Under Section 280E of the federal tax code, these companies cannot deduct their everyday business expenses when filing their taxes. This has resulted in an increased tax burden on the burgeoning industry. A research firm in Portland found that in 2022, marijuana businesses were subjected to much higher taxation compared to non-cannabis enterprises due to Section 280E regulations. Moreover, start-up cannabis ventures often face negative cash flow and...
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