IRS Section 280E & Marijuana: Tax Limbo or Hell?

Colorado marijuana tax forms and money
Colorado tax forms

 

Cannabis complications for CPAs, clients and consumers.

By Justin P. Breidenbach
cannabizcpa.pro

Providing a client with tax services can be hard work.  Things get especially difficult when an accountant becomes the bearer of bad news. It’s never easy informing a client that they owe unexpected or, what the client believes to be, unreasonable taxes.  Imagine a situation where you had to tell a client that their effective tax rate is 70%, 90%, or even exceeds 100%.

I expect some may be reading this and asking themselves, “What tax hell would require a taxpayer to pay an effective rate exceeding 100%?”  I am here to inform you that this does exist, and in the marijuana industry it is known as Section 280E.

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Justin Breidenbach



About the Author

Justin P. Breidenbach, MAcc, CPA, CFE (jpbreide@owu.edu) serves as an Assistant Professor of Accounting at Ohio Wesleyan University (Delaware, Ohio). Justin instructs courses relating to financial accounting, taxation, and audit & assurance services. Additionally, Justin has had extensive professional work experience in public accounting and has provided services to organizations operating in the fields of agriculture, manufacturing, distribution, service, and not-for-profit.

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