How might cannabis companies operate differently to reduce the impact of section 280E?
A. CPA replied:
Can you elaborate? If we use FOB Shipping point then the freight and delivery costs associated with the sale & transport (within the state of course) fall on the buyer, which are both COGS, correct? I understand the advantage of being able to capture the other COGS associated with the sale sooner with shipping point; however, if we shift away from recognizing costs associated with shipping we are ultimately increasing our taxable revenue by missing the opportunity to capture COGS...correct? I would love your professional opinion related to the article: https://www.californiacannabiscpa.com/blog/marijuana-business-cost-of-goods-sold-cogs-overview
Hieu Tran
asked
Luigi Zamarra
How might cannabis companies operate differently to reduce the impact of section 280E?
Assuming it is possible, how might cannabis companies operate differently to reduce the impact of section 280E?
There are many ways! But the one for all of us to embrace is to shift from FOB Destination to FOB Shipping Point with respect to shipping terms.
A. CPA replied:
Can you elaborate? If we use FOB Shipping point then the freight and delivery costs associated with the sale & transport (within the state of course) fall on the buyer, which are both COGS, correct? I understand the advantage of being able to capture the other COGS associated with the sale sooner with shipping point; however, if we shift away from recognizing costs associated with shipping we are ultimately increasing our taxable revenue by missing the opportunity to capture COGS...correct? I would love your professional opinion related to the article: https://www.californiacannabiscpa.com/blog/marijuana-business-cost-of-goods-sold-cogs-overview