What Operators Need to Know About 280E, COGS, Cash, and Audit Risk
A state cannabis license does not make federal tax treatment simple.
Cannabis operators face overlapping federal, state, and local rules. These rules affect deductions, inventory accounting, cash reporting, payroll, tax payments, and audit exposure.
The federal landscape also changed in 2026. Certain state-licensed medical marijuana activities received Schedule III treatment, while adult-use and other cannabis activities may remain subject to Schedule I treatment.
This free webinar explains what the changes mean and what operators should do now.
Watch the Free Webinar
Tax attorney Jason D. Carr, Esq., LL.M., explains the federal tax rules that can determine whether a cannabis business remains profitable.
You will learn how to:
- Determine where Section 280E may still apply
- Understand the 2026 medical-marijuana rescheduling order
- Distinguish operating expenses from cost of goods sold
- Identify reseller and producer inventory costs
- Avoid aggressive or unsupported COGS allocations
- Evaluate a separate non-cannabis business
- Prepare mixed medical and adult-use operations for allocation rules
- Manage Form 8300, payroll, estimated taxes, and cash records
- Build documentation that can withstand an IRS examination
Download the Cannabis Tax Risk Checklist to follow along.
What You Will Learn
1. What Changed in 2026
The Department of Justice moved FDA-approved marijuana products and marijuana covered by qualifying state medical licenses into Schedule III. Other marijuana remained in Schedule I.
Treasury announced future guidance for mixed operations, expense apportionment, and transition-year treatment.
The webinar explains why operators should segment their records now.
2. How Section 280E Changes Taxable Income
Section 280E denies deductions and credits connected to businesses trafficking in Schedule I or II controlled substances.
An affected company can therefore report taxable income far above its accounting profit.
3. What Belongs in COGS
Proper cost of goods sold reduces gross receipts.
Retailers and producers follow different inventory rules. Retailers generally have narrower COGS, while cultivators and manufacturers may capitalize qualifying production costs.
The webinar explains why marketing, administration, and selling costs cannot simply be relabeled as inventory.
4. Why Separate Businesses Require Economic Substance
The Tax Court has allowed deductions for a genuine separate caregiving business. It has rejected activities that remained economically connected to cannabis sales.
Separate entities and contracts must match actual operations.
5. Cash and Form 8300 Compliance
Cannabis cash sales remain taxable income.
A business receiving more than $10,000 in cash from one or related transactions generally must file Form 8300 within 15 days.
The webinar explains the records and procedures operators should maintain.
6. How to Prepare for an IRS Examination
A defensible return connects:
- Point-of-sale reports
- Seed-to-sale data
- Inventory records
- Cash logs
- Payroll records
- General-ledger entries
- Tax returns
- Allocation workpapers
The webinar provides a 90-day plan for identifying and correcting gaps.
Who This Webinar Is For
- Cannabis dispensary owners
- Cultivators and manufacturers
- Medical cannabis operators
- Adult-use operators
- Cannabis finance teams
- Investors and executives
- Accountants and advisors serving the industry
Your Next Step
Watch the free webinar and download the Cannabis Tax Risk Checklist.
If you need help evaluating your tax position, schedule a cannabis tax review with The Law Office of Jason Carr.
This webinar is for educational purposes only and does not create an attorney-client relationship or constitute legal advice.
