We Understand Cannabis Tax Laws

Expert Cannabis Accounting and Advisory Service in PA, NJ, NY, DE, & More 

The cannabis industry is one of the fastest growing business segments in the United States. But this emerging industry comes with complex tax and accounting issues which can be difficult to understand and navigate. The experts at SD Associates, P.C. can help cannabis business owners make sense of the operational and regulatory challenges, which include conflicting legal parameters at both the state and federal levels.

 

Tax & Accounting Challenges for Cannabis Business Owners

Even though there are many states that have legalized cannabis, under federal law it is still considered a Schedule 1 controlled substance. This classification creates unique tax compliance challenges for cannabis business owners, which include:

• Cash Flow: Under their federal charters, many traditional financial institutions cannot accept deposits from businesses in the cannabis industry, which makes cannabis businesses cash intensive.  SD Associates, P.C. can assist with establishing relationships with financial institutions that are able to conduct business within the cannabis industry, can help with best practices for handling cash flow from an accounting and tax perspective, and can process the required IRS reporting.
• Deductions and Credits: The classification of cannabis under federal law affects what business expenses can be deducted. The tax experts at SD Associates, P.C. works to assure cannabis businesses remain compliant through proper classifications and allocations to maximize allowable deductions.
• Legal and Operational Structure: The choices can be complicated for business owners in the cannabis industry due to the different regulations at the state and federal level. SD Associates, P.C. can help to make sure you are correctly licensed and that you comply with federal, state, and local laws.

 

Cannabis Industry Accounting & Advisory Services

SD Associates, P.C. is an experienced accounting and advisory CPA firm that can help manage tax services, bookkeeping and tax planning, as well as provide financial consulting services for businesses in the cannabis industry.

Tax Services: Our tax services include business structure, business and partnership returns, and tax dispute resolutions. We can help your cannabis business stay compliant with both state and federal accounting regulations, while maximizing your tax benefits and minimizing your tax liability.

Bookkeeping: Keeping accurate and detailed records is essential for any business, but it can be especially challenging for businesses in the cannabis industry. Our bookkeeping experts at SD Associates, P.C. will help you stay organized and compliant to assure your obligations are met so you can avoid penalties associated with non-compliance.

State and IRS audits: All cash-intensive businesses face the possibility of being audited. SD Associates, P.C. has extensive experience handling state and IRS audits and can help manage the process.

Cash Flows, Forecasts, and Projections: SD Associates, P.C. offers forecasting services to help you plan for the future and make informed decisions about your cannabis business. We’ll help you develop short and long-term financial goals and create a roadmap to achieve them.

Compliance and internal controls: Staying compliant in the cannabis industry can be a daunting task if you are not knowledgeable about or do not keep up with changes in regulations. The experts at SD Associates, P.C. can make sure you stay organized and up-to-date on changes to assure your business remains compliant at every level.

 

Cannabis Accounting FAQs

What is the difference between a cannabis CPA and a regular CPA?

A cannabis CPA is a certified public accountant who specializes in accounting, tax, and financial consulting services for businesses in the cannabis industry. Cannabis CPAs are familiar with the unique challenges that businesses in this industry face.

What are some of the challenges of the cannabis industry?

The cannabis industry is growing rapidly, but it faces many challenges. These include strict regulations, a lack of banking services, and limited access to capital. Cannabis businesses also must deal with complex tax laws and the risk of audits from state and federal agencies.

How can a cannabis CPA help me?

A cannabis CPA can help you with bookkeeping, tax planning, and financial consulting. They can also help you navigate the complex world of taxes, stay compliant with state and federal regulations, and maximize your tax benefits.

Is cannabis legal in PA, NJ, and DE?

Yes, cannabis is legal for medicinal use in Pennsylvania, New Jersey, and Delaware. The states have different laws regarding the cultivation, sale, and use of cannabis, so it’s important to be familiar with the regulations in your state. Not every state allows recreational use, so it’s critical that you be aware of your home state’s legal guidelines.

What type of businesses need a cannabis CPA?

Any business that touches the plant or engages in any ancillary services related to the cannabis industry can benefit from working with a cannabis CPA. This includes businesses that cultivate, process, manufacture, distribute, or sell cannabis products. Even businesses that don’t directly handle cannabis need to be aware of the unique challenges that the industry presents.

The IRS provides additional answers to frequently asked questions for business owners in the cannabis industry on their website.

 

Helpful Tips for Cannabis Business Owners

• Make Sure You’re Licensed: Cannabis businesses are highly regulated by state and municipal regulatory agencies.
• Know Your Investors: Unregistered and “silent” financing and ownership arrangements within the cannabis industry, otherwise known as “beneficial owners”, creates complex challenges, and may contribute to the failure to file a tax return or accurately report gross receipts. Cannabis business owners need to be aware that the IRS examiners explore the potential for these arrangements during examination engagements. In addition, outside investors may try to inject funds into new businesses that could result in the business owner losing the entire business through ownership claims. This opens the business to becoming complicit in money-laundering for drug traffickers.
• Report Cash Transactions: If a cannabis business receives more than $10,000 in cash in a single transaction or in related transactions, Form 8300 must be filed within 15 days after receiving payment.

 

Why SD Associates, P.C.

Unparalleled service: At SD Associates, P.C. we provide our clients with the highest level of service and attention to detail. Our team of experienced professionals is dedicated to helping businesses in the cannabis industry succeed.

Personalized advice: Every business is different, and we tailor our services to meet your specific needs. We’ll work with you to develop a customized plan that helps you reach your financial goals.

High professional standards: We adhere to all of the American Institute of Certified Public Accountants (AICPA) auditing standards, guidelines, rules and regulations. Our quality control system has been reviewed by the Pennsylvania Institute of Certified Public Accountants and has received the highest possible rankings.

Wide client base:  Our clients include businesses of all sizes, from start-ups to established companies. We have experience working with businesses in a wide range of industries, including the cannabis industry, and we have the necessary expertise to enhance your company.

Accessibility: We strive to make ourselves as accessible as possible. This means you can always get in touch with us via phone, email, or in-person. It’s easy to get in touch with us if you have a question about your business’s finances.

 

Cannabis Accounting Service Areas

SD Associates, P.C. is proud to provide professional tax services throughout the tristate area for businesses in the cannabis industry. Our service areas include, but are not limited to:

Philadelphia, PA

Bucks County, PA

Montgomery County, PA

Chester County, PA

Lehigh County, PA

North Jersey

South Jersey

Maryland

Delaware

 

Own or are starting a Cannabis Business? Contact us today.

If you’re looking for a qualified cannabis CPA in Bucks County, Montgomery County, or Philadelphia, or the surrounding areas, SD Associates, P.C. can help. We offer a full range of accounting and tax services for businesses in the cannabis industry. Contact us today to schedule a consultation.