What Can I Include in COGS?

Cannabis COGS and Tax Compliance: A Deep Dive Into Accounting Strategies That Minimize Risk and Maximize Deductions

Understanding Cannabis COGS and Tax Compliance is critical for cannabis accountants and business owners who want to minimize tax liabilities while staying compliant with federal regulations. In this course, we explore how the IRS tax code applies specifically to cannabis operations and how businesses can lawfully reduce their tax burden by applying proper accounting strategies to cost of goods sold (COGS).

Whether you’re working with cultivators, manufacturers, or dispensary owners, this course provides the foundational knowledge you need to navigate complex cannabis tax rules with confidence.

Why Cannabis COGS and Tax Compliance Matters

Due to IRS Code Section 280E, cannabis companies cannot deduct ordinary business expenses the way most traditional businesses can. However, by leveraging the right accounting techniques under IRC 471-3 and 471-11, cannabis operators can shift eligible expenses into inventory via Cannabis COGS, effectively reducing taxable income.

Cannabis COGS and Tax Compliance are not just about avoiding penalties—they’re about empowering cannabis businesses to thrive financially despite harsh tax restrictions.

What You Will Learn in This Course

This course is designed to arm accounting professionals with the tools needed to deliver value to cannabis clients. We’ll show you exactly how to approach Cannabis COGS and Tax Compliance from both a practical and strategic perspective.

• Understand which cannabis-related expenses can legally reduce tax liability under current IRS guidelines.

• Apply tax code IRC 471-3 for cannabis resellers and IRC 471-11 for producers and cultivators.

• Learn key strategies for capitalization, depreciation, and expense allocation within Cannabis COGS frameworks.

• Avoid costly compliance errors that could trigger audits or IRS penalties.

Applying IRC 471-3 and IRC 471-11 in Cannabis Accounting

For resellers such as dispensaries, IRC 471-3 allows specific costs—like inventory purchase prices, shipping, and handling—to be included in Cannabis COGS. This provides a narrow but meaningful opportunity to reduce taxable income.

Producers, on the other hand, benefit from IRC 471-11, which allows for a broader range of indirect costs (e.g., rent, utilities, and some labor) to be capitalized into inventory. Mastering these rules is essential to providing compliant and optimized financial reports for your cannabis clients.

By accurately applying these tax codes, accountants can ensure their cannabis clients aren’t overpaying taxes while staying within the legal framework.

Capitalization, Depreciation, and Allocation: Key Compliance Strategies

Cannabis COGS and Tax Compliance go hand in hand with proper capitalization and depreciation strategies. Many accountants miss opportunities to reclassify expenses or fail to allocate overhead correctly between cost centers, leading to higher tax bills for their clients.

In this course, we’ll cover:

• Capitalizing direct and indirect costs for cannabis producers.

• Allocating facility overhead using square footage or labor hours.

• Depreciation methods that can be applied for equipment and long-term assets involved in the production process.

These techniques are not only essential for maximizing deductions but are also required for maintaining accurate records in case of an IRS audit.

Who Should Attend

This course is ideal for:

• Accountants and bookkeepers serving cannabis operators

• CFOs and financial controllers in the cannabis industry

• Cannabis entrepreneurs who want to understand Cannabis COGS and Tax Compliance

• Tax professionals looking to specialize in a high-growth niche

If you’re ready to gain a deeper understanding of Cannabis COGS and Tax Compliance and help your clients build profitable, audit-ready businesses, this course is for you.

The cannabis industry presents unique tax challenges that require specialized knowledge and attention to detail. By understanding Cannabis COGS and Tax Compliance, you’ll not only be able to provide more value to your clients—you’ll also set yourself apart as an expert in a rapidly expanding field.

Enroll now and gain the skills you need to protect your clients, maximize deductions, and grow your cannabis accounting practice with confidence.

This Training Qualifies for CPE Credits

LEARNING OBJECTIVES: Cannabis Cost Accounting

INSTRUCTIONAL DELIVERY METHOD: Group Internet Based

RECOMMENDED CPE CREDIT: 1 hour

FIELD OF STUDY: Specialized Knowledge

PROGRAM LEVEL: Basic

ADVANCED PREPARATION: None

PREREQUISITES: Accounting professional (CPA not required)

FEE: None*

Green Leaf CFO, LLC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org

*For more information regarding administrative policies, refund information, or any other feedback, please contact us at naomi@greenleafcfo.com.

Presented by:

Brian Whalen, CPA and Steven Berley, CPA

Brian Whalen, CPA

Tattooed and occasionally cursing like a sailor (he was a sailor in the Nuclear Navy), Brian is not your typical CPA. He has no problem serving Cannabis Entrepreneurs; it’s his calling. Corporate America’s competitive advantage lies within their finance and accounting functions. Green Bean CFO was founded to level the playing field for established cannabis businesses and newcomers alike by providing an affordable finance/accounting department. We help you navigate the corporate landscape, survive IRS audits, maintain compliance with state regulators and absolutely minimize the taxes that cannabis touching businesses pay under the punitive §280E tax law. We help you grow your profits!

Steven Berley, CPA

Steven Berley is a licensed CPA and MBA with over 20 years of accounting and finance experience in major corporations to cannabis companies worldwide. Steven has published books, via Amazon, on commodity risk management and financial risk management systems (type ‘Steven Berley’ in Amazon) and has authored audit articles in IIA .In his rare spare time, Steven can be found in the backcountry of Oregon, Colorado and California.