Ep. 118 | From Plant to Profit: Navigating Cannabis and Taxes
Download MP3About the Guest: Kareyna Miller
Kareyna is a Michigan-based Certified Public Accountant (CPA) noted for her expertise in the cannabis industry. She has been practicing since 2011 and entered the cannabis sector in 2016. Kareyna is highly regarded for her knowledge in cannabis-related tax and accounting compliance and is recognized as an authority in handling the complex issues surrounding cannabis industry taxes and financial attestations. She actively participates in educational initiatives for cannabis professionals and maintains involvement in industry groups and resources.
Kareyna is a Michigan-based Certified Public Accountant (CPA) noted for her expertise in the cannabis industry. She has been practicing since 2011 and entered the cannabis sector in 2016. Kareyna is highly regarded for her knowledge in cannabis-related tax and accounting compliance and is recognized as an authority in handling the complex issues surrounding cannabis industry taxes and financial attestations. She actively participates in educational initiatives for cannabis professionals and maintains involvement in industry groups and resources.
Episode Summary:
In this episode, hosts John and Chris delve into the intriguing dynamics of cannabis industry taxation. This episode features a detailed discussion with Kareyna Miller, CPA, who addresses the nuanced relationship between cannabis and taxes. The exploration is timely given that changes in regulations and federal classifications could impact industry finances. The core discussion reveals essential tax considerations and implications that businesses within the cannabis industry face, drawing significant insights from Miller's experience and expertise.
Throughout the conversation, the dialogue reveals the intricacies of operating within a highly regulated industry. The cannabis sector's unique tax challenges arise from federal classifications, chiefly the implications of IRS Code §280E. This legislation prohibits cannabis-related businesses from deducting ordinary business expenses, setting the stage for a fascinating exploration of accounting strategies these businesses employ to remain compliant and economically viable. As potential reclassification from Schedule 1 to Schedule 3 looms, the podcast underscores the significance of forthcoming legal changes and how these could reshape financial strategies within the sector.
Key Takeaways:
- Unique Taxation (280E): Cannabis businesses struggle with IRS Code §280E, which limits tax deductions to only cost of goods sold due to federal classification as a Schedule 1 controlled substance.
- Potential Regulatory Changes: Reclassification of cannabis could potentially alter tax liabilities, creating new financial landscapes for industry players.
- Transactional Compliance: Industry participants, including vendors and landlords, must be aware of their tiered roles and related banking challenges.
- Early Professional Involvement: Engaging a knowledgeable CPA early can mitigate complex tax and regulatory missteps.
- Resource Utilization: Leverage state-specific resources and social media groups for guidance and industry networking.
Notable Quotes:
- "Michigan operators are required to have an attestation every three years, and the state puts together agreed-upon procedures for compliance." – Kareyna Miller
- "Cannabis is a Schedule 1 controlled substance at the federal level, so they're subject to a tax rule called 280E." – Kareyna Miller
- "Early engagement with a CPA can prevent regulatory missteps and ensure proper financial set-ups from the start." – Kareyna Miller
- "Banks want to know what they call tier 2 or tier 3 to understand financial flows linked to cannabis businesses." – Kareyna Miller
- "It's not just waking up one day and deciding to start; compliance and capital demands are intense in cannabis." – Kareyna Miller
Episode Sponsor:
REPStracker
REPStracker
Listeners are encouraged to explore the full episode to deepen their understanding of the intriguing tax dynamics within the cannabis industry. Stay tuned for future episodes from the Teaching Tax Flow Podcast for more engaging discussions surrounding contemporary financial topics.
- (00:01) - Cannabis Industry Tax Challenges and Opportunities
- (03:02) - Journey to Cannabis Industry Tax Expertise
- (04:25) - Understanding Attestation Requirements for Michigan Business Operators
- (07:37) - The Importance of Early CPA Consultation for Business Startups
- (09:14) - Unique Tax Challenges in the Cannabis Industry
- (12:16) - Potential Cannabis Rescheduling and Its Regulatory Implications
- (13:36) - Challenges of Starting a Cannabis Business
- (16:27) - Banking and Tax Challenges in the Cannabis Industry
- (24:20) - Navigating Cannabis Tax Challenges Across Different States
