Cannabis & 280E strategies

5 plays in this category. Each one covers the mechanics, who it fits, and the estimated impact — then generates a deep dive against your own numbers.

• Cannabis & 280E

  §471(c) Inventory Method — Small-Business §280E Workaround

  Cannabis businesses <$29M avg receipts elect §471(c) to capitalize most operating costs into COGS, bypassing §280E disallowance.

  10–25 percentage points on effective tax rate
• Cannabis & 280E

  Non-Plant-Touching Subsidiary Split (CHAMP v. Commissioner)

  Separate ancillary services (consulting, IP, real estate, branding) into non-plant-touching entity — full deductions restored.

  30–50% of overall entity tax burden
• Cannabis & 280E

  C-Corp Election for §280E Cannabis — Cap Rate at 21%

  S-corp/LLC cannabis operators pay 37% on §280E-inflated income — C-corp caps federal rate at 21% flat.

  16 percentage points on federal rate on retained earnings
• Cannabis & 280E

  Cannabis Real Estate Holdco — Separate Building from Operation

  Owner-operator's real estate LLC leases to licensed cannabis co — rent is fully deductible to CannCo, tax-favored to Holdco.

  $100K–$1M/yr in restored deductions + separate exit value
• Cannabis & 280E

  Employee Stock Ownership Plan (ESOP) for Cannabis

  100% ESOP-owned S-corp cannabis operator pays ZERO federal tax — ESOP is tax-exempt shareholder.

  Eliminate federal tax on 100% of pass-through income