Accountants that work for the cannabis industry are faced with ever changing rules from the IRS. This means that financial experts serving cannabis clients must continually check on what the Internal Revenue Service is expecting. Complying with the laws and rules can help them keep their clients out of legal trouble and also help them get the most out of their tax returns. The IRS Code 280E was implemented to keep illegal sellers of cannabis from deducting their flight expenses when filing their tax returns. Initially, these drug kingpins used to transport cannabis from Colombia by air and when they filed tax returns, they were able to deduct the cost of airplanes that were used for transportation of the drugs.
The IRS Code 280E has its own set of rules as to which kinds of expenses a cannabis business owner can deduct and which ones they cannot deduct. Generally, cannabis business owners cannot make all the deductions that a normal business can do when filing for tax returns. There is a list of acceptable and not acceptable expenses. In most cases, the cannabis business can only file for expenses which are related to the direct costs of goods or the costs of goods sold.