RU Selling Cannabis | Need a Business Valuation?

When considering how to value a company, remember that business valuation guidelines indicate the need for adjustments for laws and regulations affecting the valuation results. 

26 U.S. Code Section 280E bars a company from taking tax deductions or credits when engaged in trafficking a controlled substance such as cannabis. However, a workaround is available for inventory costs such as seeds, direct labor costs such as planting, harvesting, sorting, and cultivating. Indirect costs that are incidental and necessary for production may include a percentage of depreciation, excise taxes, factory administration expenses, indirect labor, indirect materials and supplies, insurance, maintenance, quality controls, repairs, and utilities.  Importantly, expenses related to the marketing and distribution of cannabis products are not deductible on federal tax forms but may be allowed on state forms according to state law depending on the jurisdiction.