According to a study by BofA Securities, the U.S. Cannabis industry saw a 67% revenue jump in 2020, and another 40% leap in 2021. These massive surges in interest took it far ahead of all international competition and made stepping in the market a tempting opportunity for many. In fact, years since have seen businesses turn more than 10 billion USD in profit from the crop or from other related products, and this sum is projected to increase all the way up to over 40 billion by 2025.
However, with such extreme growth in such a uniquely legislated sector come business hurdles that are equally distinct, especially when it comes to taxation and the declaration of profits. Even though over forty states and territories have legalized Cannabis in some form, Federal and State law tends to lag far behind the standard, bringing difficulty and additional complexity to those looking to build and maintain Cannabis-related businesses.
Here at Vertices, LLC, we see many of our clients suffering strain from these issues and limitations, adding to the challenges presented by an already ever-changing business environment. Thus, to match the dramatic growth of the Cannabis industry in the U.S and the needs of its pioneers, we have decided to further expand and develop our catalog of services in a complementary direction.
Due to IRS Law 280E, dispensary owners cannot declare any expenses in rent, marketing, and employee care involved with the sale of their product as a tax deduction. Growers and processors can declare rents and employee wages only when these expenses are verifiably attributed to the direct production of their goods. This is only one example amongst numerous other complications and quirks in the law surrounding the production of Cannabis, many of which require meticulous and time-consuming navigation.
In the words of Thomas Carton, Vertices' Chief Operating Officer, "The cannabis industry is highly competitive, a lot of passionate owners pouring their energy into a business that many never have thought could exist. While providing accounting services fit specifically for the unique challenge posed by IRS Law 280E, we quickly discovered that a lot of our clients were too busy growing their business they never slowed down enough to determine if their 'growth' was actually adding value. Our staff got together and determined we could add additional value to our clients by offering the expertise of our Certified Valuation Analysts to show them the difference between growth and value, and through that, whether it was better to increase margins, reduce overhead, expand, or leave a market. It's the experience of our staff in finance and business management that has allowed us to better serve our clients in the cannabis industry along with the many other industries we serve."
However, the steps in development do not stop there. "Our tax department has experience in helping other Cannabis businesses in filing correct returns based on the 280E Tax Code", tells Tax Department head Debi Ropp. "The enemy of any cannabis industry business is the 280E Tax Code, which prevents a business that handles Schedule I or Schedule II-restricted substances from deducting business expenses. However, deductions are permitted for expenses directly tied to the cost of the production of goods (COGS). We might need to have a conversation about splitting the business in half and running two entities. The first business handles the business expenses such as rent, maintenance and employee benefits. The second business is directly related to the cannabis, including growing, curing, packaging and distribution."
Moving forward, we hope that our increased array of services allows us to rise up to support businesses suffering strain and feeling limited by the presence of these obstacles. Our job is to be there for companies big and small - taking the stress out of uncertain waters and paving the way to success today, tomorrow, and for years to come.
Press Release Service by Newswire.com
Original Source: Service List Expands Due to Growing Demand in the Cannabis Industry