STEVEN TOSCHER, SANDRA BROWN and JONATHAN KALINSKI to Speak at Upcoming CalCPA Webinar
Posted by Hochman Salkin Toscher Perez P.C. 
Posted on Friday, September 22, 2023
We are pleased to announce that Steven Toscher, Sandra Brown, and Jonathan Kalinski will be speaking at the upcoming CalCPA webinar “Handling Cannabis Tax Examination 2023” Tuesday, September 26, 2023, 9:00 a.m. – 10:00 a.m. (PST).
The sale and distribution of cannabis for recreational or medical use is a powerful economic engine generating billions in annual revenue, with over 40 states and the District of Columbia having some form of legalization of the substance. Despite state relaxation of marijuana prohibition laws, without careful planning, regulated cannabis businesses can be subject to hefty tax assessments and penalties.
Under Section 61, all gross income must be reported from whatever source it is derived. However, under Section 280E, cannabis businesses cannot deduct rent, wages, and other expenses unless it is for cost of goods sold (COGS), resulting in a substantially higher tax rate than other companies on their income. The IRS issued guidance to its agents on conducting audits of cannabis businesses giving IRS agents the authority to change a cannabis business’ accounting method. Under Section 280E, certain costs are not included in COGS. Thus, they remain non-deductible for income tax purposes.
As more states legalize cannabis and make available licenses to grow, manufacture, distribute, and sell cannabis, the IRS has increased cannabis tax audits, which could result in unbearable tax liabilities.
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