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Cannabis Certified Public Accountants (CPAs) are a distinct breed of accountants, adept at guiding cannabis businesses through one of the industry's thorniest regulations: Section 280E of the Internal Revenue Code. This provision, rooted in federal law, restricts standard tax deductions for cannabis companies, allowing them to deduct only the Cost of Goods Sold (COGS). As a result, Cannabis CPAs must help their clients navigate a unique financial landscape, balancing the demands of both Delaware’s specific laws and federal restrictions.
CPAs and Accounting Firms Offering Services to Cannabis Businesses in DE |
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CannaCPAs |
Puff Puff Accounting |
Unlike most states, Delaware imposes a 15% excise tax on retail cannabis sales rather than a general sales tax, creating a distinctive tax environment for cannabis businesses. Knowledgeable accountants with a deep understanding of Delaware’s tax framework are essential, as they help businesses align with the state’s unique financial requirements and avoid costly penalties.
Though cannabis, CBD, and hemp industries may seem similar at first glance, they face markedly different regulatory challenges. Cannabis businesses—dealing with federally prohibited substances—must abide by Section 280E, which denies them most standard tax deductions and places a premium on effective cost and inventory management. In contrast, CBD and hemp companies, federally legalized under the 2018 Farm Bill, are not bound by Section 280E and can deduct typical business expenses, significantly easing their tax burden. This difference underscores the critical role of specialized accountants who understand the nuances of each sector.
In Delaware, Cannabis CPAs provide services that go beyond basic bookkeeping, offering a tailored suite of financial solutions to meet the specific needs of the industry. Their expertise includes:
Cannabis businesses in Delaware benefit from working with local accountants who understand both the broader regulatory environment and the specificities of the state’s tax system. Local expertise allows these companies to better manage compliance and optimize their tax strategies under Section 280E, helping to mitigate financial strain in an industry already laden with regulatory costs.