Nearly every cannabis manufacturer and cultivator has some type of sales and marketing expenses. Products don’t magically sell themselves, even if you have a strong brand.
As you know, 280E only allows you to deduct CoGS to get to that final taxable base…and that usually excludes those sales and marketing expenses.
But one strategy that is not talked about often is the use of intellectual property and royalty payments to fund a totally separate business that can then run your sales and marketing.
And that royalty payment…it can potentially be rolled into CoGS!
In this episode, we cover:
- Royalty Payment Strategy
- Old vs. New Model
- Tax Considerations for This Strategy
- Considerations for Calculating a Reasonable Royalty
- Potential Tax Savings Example
- Understanding Your Exposure