1. We will begin shortly…
Thanks for joining us!

2. Accounting Cannabis 101: Are You Ready to File Your Tax Return?
Thought-Leadership Webinar Series
Accounting Cannabis 101: Are You Ready to File Your Tax Return?
@enjoywurk
enjoyWurk.com
BridgeWestCPAs.com

3. Thought-Leadership Webinar Series
The only cannabis compliant workforce management solution that provides an entire human resource system integrated into one, safe platform.   The Wurk Platform is recognized as the most stable, scalable, all-in-one solution for the cannabis industry.

4. Thought-Leadership Webinar Series
CPAs & Consultants who help growers, dispensaries, & ancillary businesses navigate the rapidly changing cannabis industry.

5. Our Guest Speakers Cory Parnell, COO Jim Marty, CEO
Bridge West CPAs & Consultants, LLC
Cory Parnell, COO
Bridge West CPAs & Consultants, LLC

6. Cannabis Accounting 101: Are You Ready to File Your Tax Return?
Maintain current books and records
Have a general understanding of IRC 280E
Key Distinction between a Dispensary and a Cultivator/Processor
Labor Costs
Contractor vs. Employee
Annual Reporting for Contractors and Employees

7. Maintain Books & Records
Keep your books up to date and reviewed by your accountant.
The number one complaint from investors and business purchasers is the lack of adequate financial information.
Keep your books up to date and reviewed by your accountant as early in the new year as possible.
This goes for your accountant as well.

8. General Understanding of IRC 280E
IRC 280E applies to all individuals and businesses who
cultivate, transport, distribute and sell cannabis.
IRC 280E permits the deduction of Cost of Goods Sold (COGS) and disallows selling and/or trafficking expenses.
Results in a much higher taxable income than net book income, significantly increasing the taxes due.

9. General Understanding of IRC 280E
If section 280E is not managed properly, profits can be eroded by the increased tax liabilities and, in some cases, wiped out completely.
280E tax implications are important to understand what operating expenses are included in or allocated to COGS.

10. Key Distinction between a Dispensary and a Cultivator/Processor
The bulk of the activities of a cultivator does not involve the “trafficking” of a controlled substance.
With the possible exception of transportation and delivery of the product to dispensaries, as well as certain other overhead expenses directly allocated to the sale of the product that might be considered “trafficking,” the majority of a cultivator’s expenditures should be COGS and therefore tax deductible.

11. Key Distinction between a Dispensary and a Cultivator/Processor
The reverse would likely be true for dispensaries; the deductible COGS could be minimal, and the vast majority of expenses would then fall under IRC Section 280E and would not be deductible.
Again, as noted in CHAMP, diversification into other separate business activities would then be the focus of a taxpayer’s tax planning.

12. How To Keep More Money In Your Pockets
Keep a chart of accounts so that you can code direct and indirect costs in real time. Reviewing the chart of accounts and vendor coding makes the accounting at the end of the year go smoother
To accurately calculate COGS, you will need to conduct a physical inventory count at year end, preferably on Dec. 31 at close of business, and track the units produced throughout the year.
Cost of Goods Sold is calculated as follows:
Beginning Inventory + (Purchases/Direct Expenses) – Ending Inventory = COGS

13. How To Keep More Money In Your Pockets
To simplify this equation, an inventory count conducted at year-end provides value for beginning inventory for the subsequent year.
The purchases and direct expenses are the key components to the equation because, for growers, cost-absorption methods will be applied, requiring specific identification of costs traceable to inventory. Once all production costs have been properly identified, the cost per unit can then be determined, as well as the ending inventory value, and ultimately the COGS for the year.

15. Labor Costs
The activities of each employee should be documented in a job description and be monitored throughout their employment. Employees’ activities determine whether their labor is deductible/allocable to COGS or non-deductible.
It is important to know your employees and gauge whether any overlap exists in job duties so that the allocation of deductible versus nondeductible labor can be completed.
Document labor for the various tasks involved in your operation. This includes labor in the cultivation, retail, extraction and the handling and safeguarding of the inventory.
Wurk is the best tool to help keep track of these costs and create support.

16. Wurk Platform
A single data storehouse for all your HR, payroll, and timekeeping in one, safe platform.
Reduce errors and costs with overall compliance.
Minimize your risks with a stable, scalable, all-in-one solution.

17. Contractor vs. Employee
Determine whether a person is an employee or an independent contractor - the company weighs factors to identify the degree of control it has in the relationship with the person.
Does the company control or have the right to control what the worker does and how the worker does the job?
Does the company control the business aspects of the worker’s job?  These include arrangements like how the worker is paid, whether expenses are reimbursed, and who provides tools and supplies.

18. Contractor vs. Employee
Is there a written contract or employee benefits such as a pension plan, insurance, or vacation pay?
Will the relationship continue and is the work a key aspect of the business?
The Internal Revenue Service uses a right-to-control test to assess a business' tax liability.  Visit the IRS website for more information.
Each state also has tests to determine a person’s status under workers’ compensation and unemployment insurance laws.

19. Annual Reporting for Contractors and Employees
Deliver 1099s and W-2 to your contractors, landlord(s) and employees in a timely manner. These should be issued by January 31 of the new year.
Know the rules for contract labor versus employees.
Wurk is the best partner to help you file timely.

20. Recap Cannabis vs Non-Cannabis Sales and Cost of Sales
Review Entity Structure
Consider these tax-planning items and follow through with them so your tax preparation process will be more smooth and you will have a better understanding of your tax liability — and maybe a little more in your pocket come next year’s tax season.
Review Entity Structure – this will be discussed at another presentation

22. Contact Information
Bridge West LLC
Jim Marty, CEO:
Cory Parnell, COO:
Wurk
Review Entity Structure – this will be discussed at another presentation