Cannabis Knowledge & Insights

New Tax Court Ruling Could Impact All Cannabis Dispensaries

On May 4th, the US tax court made a ruling on Richmond Patients Group v. Commissioner which will impact cannabis dispensaries and how they file their taxes.

In short, Richmond Patients Group (which is a California dispensary) ended up with $2MM in additional taxes and penalties due to improper calculations of their CoGS on their 2014/2015 tax filings.  

As you know, tax code 280E limits cannabis businesses, especially dispensaries, as to what they can include in their cost of goods sold (CoGS).  They can include pretty much only direct costs of products and not much else.

This tax court ruling made a few things very clear to cannabis dispensaries including:

In this video, we will break down the case to help you understand: