Best all-in-one accounting software for cannabis businesses
All-in-one finance platform for accounting, bookkeeping, taxes and payroll for cannabis businesses
Why cannabis business owners love mesha
Hours saved on accounting, bookkeeping and financial admin tasks
saved on bookkeeping and tax fees
accurate financial insights
Financial powerhouse for your cannabis dispensary
Intelligent accounting software for modern cannabis businesses
Supercharge your cannabis business growth and close your books 3X faster
Expert bookkeeping tailored to your cannabis business needs
Operating a cannabis business comes with its own set of financial intricacies. Our specialized accounting, bookkeeping, and tax services are tailored to meet the unique requirements of your cannabis enterprise. Whether you're a small dispensary or a large cannabis producer, we comprehend the complexities of the cannabis industry and are equipped to handle your financial needs effectively.
Trusted tax management and filing for cannabis dispensaries
Tax Management Software
  • Automated tax calculation for sales, payroll and federal
  • Reminders on taxes and compliance filing
  • Tax ready reports with P&L, expenses and balance sheets
Tax Prep and Filing
  • Instant access to top tax consultants for cannabis dispensaries
  • Proficient counsel on cannabis industry specific tax frameworks and tax-efficient strategies
  • Minimizing tax liabilities and maximizing deductions
  • Stay up to date on dynamic tax laws and regulations impacting the cannabis industry

Tax related FAQs for cannabis businesses

What are the federal tax implications for cannabis businesses?

Federal tax implications for cannabis businesses are significant. The main challenge arises from Internal Revenue Code Section 280E, which restricts businesses "trafficking in controlled substances" from deducting most business expenses. This results in cannabis businesses being unable to deduct common operating costs like marketing, rent, and wages. Consequently, the effective federal tax rate can be substantially higher for cannabis businesses compared to other industries.

While cannabis businesses cannot fully escape the constraints of 280E, strategic cost allocation can help minimize the impact. Properly categorizing expenses as COGS or non-COGS can reduce federal tax liabilities. Additionally, some cannabis businesses explore setting up separate legal entities for non-cannabis-related activities to optimize their tax position.

State taxes for cannabis businesses can vary, but they often include sales tax, excise tax, and sometimes income tax. Sales tax is applied to the retail sale of cannabis products, excise tax is levied on the production or wholesale sale, and income tax is calculated based on the company's earnings. Tax rates and specific requirements are determined by individual state regulations, which can differ considerably.

To ensure compliance, cannabis businesses should work with experienced tax professionals who are well-versed in state-specific cannabis tax regulations. Maintaining accurate records is crucial. Additionally, staying informed about evolving state tax laws and regulations is essential to avoid potential penalties and liabilities.

Common pitfalls include errors in classifying expenses, such as incorrectly categorizing COGS and non-COGS expenses, which can result in incorrect tax liability calculations. Inadequate record-keeping can lead to incomplete or inaccurate tax returns. Furthermore, failing to address state tax obligations, such as excise tax or sales tax, can lead to compliance issues and penalties.

To prepare for an IRS audit, cannabis businesses should maintain meticulous records of all financial transactions, expenses, and income. Following IRS guidelines for record-keeping and compliance is crucial. Engaging with a qualified tax professional who understands the unique challenges of the cannabis industry can ensure readiness and effective representation during an audit.

Making payroll painless for cannabis businesses

Our comprehensive payroll features help make payroll management super simple.

Stay compliant with mesha
  • Off Cycle payroll and flexible payment schedules

  • Next day direct deposit

  • Payroll Deductions and Garnishments

  • Overtime and reimbursement calculations

  • Payroll and taxes across multiple states

  • Payroll for FTEs, contractors and freelancers

Payroll taxes and compliance

We take care of taxes and compliance to adhere to the local regulations and government declarations.

Stay compliant with mesha
  • Automated tax calculation

  • Tax filing and reporting

  • Tax codes and regulation updates

  • Multi jurisdiction compliance

  • Tax liability tracking

  • Work Classification Compliance

  • SUI Reporting

  • Wage Garnishments and Deductions

Want to start a cannabis business, but don’t know how to go about it?
Build a foundation of financial success with mesha