Section 280E of the Internal Revenue Code (IRC) is a federal tax provision that prohibits businesses involved in the "trafficking" of Schedule I or II controlled substances—as defined by the Controlled Substances Act—from deducting ordinary business expenses on their federal income tax returns. Since marijuana is currently classified as a Schedule I substance under federal law (fingers crossed that this changes this year!), that means there are very few expenses that cannabis businesses can deduct, leading to a much higher tax burden.

The question isn’t really “do you need an accountant?” but rather “what kind of accountant do you need?” That depends on what your goal is.

• Tax Specialist: you’ve probably heard the term “280E” thrown around. With cannabis still being federally illegal (rescheduling on the horizon, stay tuned!), there are different rules between federal and state on what you can or can’t deduct. Our tax services will allow you to predict and mitigate your tax liabilities, and help you stay compliant with all these ever-changing rules.

• Fractional CFO/Controller: there’s more to accounting than just tax, and more to business than just accounting. Utilizing us as a fractional CFO or controller gives you an additional resource for tying the numbers to your vision and goals. Whether we’re developing accounting SOPs, using financial modeling for cash flow management, or tracking defined KPIs to measure the health of your business, we bring the knowledge and guidance you need to look forward to growth and profitability.

• Bookkeeping: the day-to-day accounting is handled by one of our primary business partners, Realize Balance Accounting & Financial. Through them, you have an array of services to choose from, from weekly bookkeeping, month-end close, payroll, & more!

At a minimum, quarterly. Maybe monthly. Maybe more! With compliance being a main area of focus in cannabis accounting, we need to make sure we’re paying attention. There are a lot of rules around cannabis, and they’re ever-changing. That requires more than one touch a year. We’ll work with you to figure out the best cadence, but require all cannabis clients to be on at least a quarterly engagement. Because, after all…

As they say, “an ounce of prevention is worth a pound of cure.” Your best defense in an audit is to be prepared, and that’s where we come in. We’ll help you get (and stay!) compliant, and in the event of an audit (gasp!), we’ll be there to advise you, provide support, and guide you through what to expect.

Note: cannabis is already a high audit risk industry, and with the imminent rescheduling and potential dissolution of 280E, it will likely be under even more scrutiny when that transition happens! The time to get compliant is now!

On December 18, 2025, President Trump signed an executive order directing federal agencies to move marijuana from a Schedule I to a Schedule III controlled substance. This does not legalize marijuana at the federal level, as the order is primarily meant to reduce restrictions; however it does mean that IRC Section 280E will no longer apply and cannabis businesses will be able to deduct their normal operating expenses, which will significantly reduce their tax liability and increase profitability. We are still waiting on action from the Drug Enforcement Agency (DEA) and approval from the Department of Justice (DOJ) before marijuana is officially rescheduled, so as of February 2026, Section 280E still applies.

No way! We are here to fill in the gaps in your business. Already have bookkeeping down? Already have payroll and everything figured out?

Great! We absolutely prefer ongoing engagements with our clients, especially in the cannabis industry. We will expect to meet with you at a minimum on a quarterly basis, this really benefits us both from an operational and compliance perspective.