A 2019 study estimated that there were 340,000 jobs in the marijuana industry in the United States.
This number reflects the growing social and legal acceptance of the plant. If you own one of the businesses providing these jobs, you’re part of one of the fastest-growing industries on the planet.
However, every business has its challenges. One of the main considerations for marijuana business owners today is tax.
Read on as we explain what a Kansas tax attorney can do for your cannabis enterprise.
What Does a Tax Attorney Do?
Whether you own a business or you’re a salaried individual, taxation is a complex business. Properly calculating what you owe takes a lot of time, and the penalties for making a mistake can be severe.
As well as this, many people don’t know about all the allowances they’re entitled to claim. This means that a huge number of taxpayers give more away each year than they have to.
Tax attorneys help you to avoid these pitfalls by managing your tax affairs.
Tax in the Marijuana Industry in Kansas
With the exception of CBD products with 0% THC content, marijuana is not currently legal in Kansas. However, given the prevailing trends in other states as well as current negotiations about the legalization of medical marijuana in the state, this is almost certain to change in years to come. When it does, you need to be prepared.
Selling marijuana is like any other business in many respects. When it comes to taxes, you’ll be paying a lot of the same charges as stores selling clothes or groceries.
This is the most important tax to be aware of. When you buy something in a store, sales tax is the difference between the price you see on the tag and the amount you have to hand over to the cashier.
Sales tax in Kansas is generally 6.5%. Areas within the state can charge taxes on top of this, which can be as much as 3% in some cases.
This is another type of tax that governments can levy on goods and services. Excise taxes traditionally attach to alcohol, tobacco, and fuel, but many American states have started using them to tax marijuana. Examples include Nevada, Massachusetts, and Michigan.
Recreational Marijuana vs. Medicinal Marijuana
Medicinal marijuana benefits from its status as a medicine when it comes to taxation. Some states subject it to the same sales tax as any other good, but others apply a general pharmaceutical rate to it.
Excise taxes, privilege taxes, and surcharges may also apply.
Some states use medical marijuana to fund general expenses. Others put it towards specific goals, including marijuana research or funding of the medical marijuana system.
The approaches of different states also vary when it comes to taxing recreational marijuana.
In California, taxes are spread between cultivators (who pay a percentage per ounce produced) and customers (who pay 15% excise duty on the price they pay for their purchase).
In Alaska, on the other hand, growers pay a flat tax of $50 per ounce on their products. Producers and retailers then decide the extent to which to pass this cost onto customers.
How to Manage Your Tax Liability
There are many steps you can take to keep your tax exposure to a minimum. We’ve looked at some of the most important here.
Stay on Top of Regulatory Changes
The tax landscape is constantly changing. New rules and regulations come into force all the time.
As a business owner, it’s your responsibility to keep on top of these. Failure to do so may result in costly overspends or penalties.
Use Automation Wherever Possible
There is a growing number of digital tools available to help business owners with their returns. Whether it’s as simple as recording sales or expenses or calculating payroll, or a more advanced function like automated data entry, you should use technology to save time and money wherever you can.
Appreciate the Complexity of the System
Don’t assume that an approach that worked for you once will work forever.
As businesses get larger, their sales tax obligations become more complex. As well as this, audit becomes more likely, and the penalties for a mistake become greater.
This is another reason to hire a cannabis tax specialist.
What a Kansas Tax Attorney Can Do for You
As you can see, taxation is a complex business. If you’re in the cannabis business, chances are that tax isn’t something you have a professional knowledge of.
If you enlist the help of a tax attorney, you can put systems in place that will keep your liabilities to a minimum for years to come. As well as this, a tax professional will ensure that you don’t make any mistakes that could result in costly fines.
At Polston Tax, we have a long track record of saving money for business clients on their tax returns.
Because we’re specialists in the area of tax, we know everything there is to know. We’re on top of all relevant rule changes, we know how different charges apply to different businesses, and we can tell you about the tax entitlements you never knew you had.
Managing Your Tax Liability to Grow Your Business to New Heights
Nobody likes paying taxes. However, if you take the right steps to keep your tax burden as low as possible, you can give yourself a significant advantage over less tax-savvy competitors.
This is exactly what a Kansas tax attorney will allow you to do. If you give your tax affairs to a competent professional to handle, you can spend your time concentrating on growing your business while safe in the knowledge that your taxes are being well-managed.
If you’d like to learn more about how we can help your business, contact us today.
More On Cannabis CPA Accounting & Tax Services
- Cannabis CPA Accounting & Tax Services
- A Cannabis Tax Preparation Guide for Business Owners
- Everything You Need to Know About Paying Marijuana Tax
- Can’t Pay Taxes: 4 Options Cannabis Companies Should Know
- The Tax Implications of Owning a Dispensary
- 5 Benefits of Hiring a Lawyer for Your Cannabis Business