Part 3 of 5
One of the big challenges marijuana growers face is Tax Code Section 280E, which prevents deductions or credits for expenses if a business is involved in the trafficking of controlled substances. In order for this law to change would require congressional action. Until that time, marijuana retailers are only able to deduct for the cost of goods sold, meaning the expenses that directly relate to your product. As an example, for resalers, cost of goods sold would be expenses for purchasing product and packaging, overhead such as rent of your storefront and labor are not deductible.