280E & Tax

Cannabis Taxes Are Complicated: Why You Should Not Do Them Yourself

The software doesn't know what business you're in

Consumer tax software is built for normal businesses. It will cheerfully deduct your rent, marketing, and payroll — deductions a plant-touching cannabis business cannot legally take. A self-prepared return that follows the software's suggestions is an examination finding waiting to be written up, with penalties and interest attached.

The errors run both directions

The opposite error is just as common and just as expensive: operators who have heard 280E is scary and respond by capitalizing nothing, claiming almost no COGS, and paying tax on numbers far higher than the law requires. Section 471 gives producers in particular real room to capitalize production costs into inventory — but only with a methodology, applied consistently, documented as you go. No software prompts you for that.

What professional preparation actually buys

Not just a filed return — a defensible one. A preparer who works in cannabis daily knows what examiners test, which positions survive, and what documentation each one needs. The fee is usually recovered several times over in the first year, either in tax legitimately saved or in exposure legitimately avoided. In this industry, the return is not paperwork; it is the position you will defend.

This article is general information, not tax advice.