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:
- What the IRS considers a cannabis reseller vs cannabis producer
- What can be reasonably added into CoGS
- The responsibility a business STILL has, even when working with a CPA or accountant
In this video, we will break down the case to help you understand:
- Facts of the Case – Operations Details
- Facts of the Case – Tax Filing Details
- Results of the Case
- Four Ways How This Ruling Could Impact Your Cannabis Dispensary