Now that recreational and medical cannabis use is decriminalized in California, entrepreneurs and business entities must grapple with the complex implications of taxes. Unfortunately, there are a number of different taxes that apply to licensed cannabis business, such as sales and excise taxes. There are also business taxes that are applied for the local municipality, and the tax rates differ by jurisdiction. It is important to understand these different taxes and how they might apply to your chosen activity in the cannabis sector.

Perhaps most important to understand is IRS Regulation 280E. This rule applies to income tax reporting for a cannabis business and disallows ordinary business deductions, while allowing so-called above the line
reductions in gross taxable revenue for COGs or costs-of-goods sold.

Although a cannabis business will normally employ the services of an accountant or CPA to prepare state and local tax returns, and to address 280E issues, Chernis Law Group is often retained to handle tax audits by both local, state and federal tax authorities.

With more than 12 years of experience, Michael C. Chernis has become a leading attorney in cannabis law. Clients in Santa Monica, Los Angeles, Orange County and throughout California come to him at Chernis Law
Group P.C. for representation in all aspects of legal compliance, including IRS and tax law compliance. He can also assist clients with ongoing corporate maintenance issues necessary to maintain legal protection and minimize the impact of IRS Regulation 280(e).