Cannabis
Accounting, tax, and advisory for cannabis operators — navigating 280E, compliance, and growth in a fast-moving industry.
Overview
Cannabis businesses operate under a tax code and regulatory environment unlike any other industry. Pease Bell is a Cleveland, Ohio-headquartered, Top 200 U.S. CPA firm that helps licensed cultivators, processors, dispensaries, and vertically integrated operators manage IRC 280E, build clean books, and stay audit-ready. From 280E-aware cost accounting and entity structuring to assurance and outsourced accounting, we bring practical, compliance-first guidance. We serve operators in Ohio’s growing medical and adult-use market and support multi-state expansion across the country, pairing full-service depth with a boutique, hands-on touch as your business scales.
How we help cannabis operators
Focused accounting, tax, and advisory services built for the realities of a federally illegal, state-regulated industry.
280E Tax Planning
We help you apply IRC 280E correctly, identifying which costs may lawfully be captured in cost of goods sold so you meet your obligations without overpaying tax.
Cost Accounting (GAAP / 280E)
We build inventory and absorption costing under Section 471 so production costs flow properly into COGS, giving you defensible support for the numbers on your return.
Audit & Assurance
We deliver audits, reviews, and compilations that satisfy investors, lenders, and regulators, giving stakeholders confidence in your financials as you raise capital or expand.
Entity Structuring
We advise on entity and ownership structures that fit licensing rules, investor requirements, and 280E realities, helping you organize operations for compliance and growth.
Compliance & Internal Controls
We help design controls over cash, inventory, and reporting that address the risks of a cash-heavy, heavily regulated business and support state licensing requirements.
Outsourced Accounting & CFO Support
Our client accounting services team handles bookkeeping, close, and reporting, plus CFO-level guidance, so you get accurate numbers and strategic insight without building a full internal team.
Contact Us
Tell us about your business and a member of our cannabis team will be in touch.
The pressures we help you manage
Cannabis operators face financial and regulatory challenges few other businesses encounter. We help you get ahead of the issues that most affect your tax bill, compliance standing, and access to capital.
- ✓IRC 280E exposure — the disallowance of ordinary business deductions makes disciplined, defensible cost accounting essential to your effective tax rate.
- ✓Inventory and COGS treatment — capturing production costs properly under Section 471 determines how much you can lawfully recover through cost of goods sold.
- ✓Cash-heavy operations and banking — limited banking access raises the stakes on cash controls, documentation, and reconciliation.
- ✓State licensing and compliance — evolving rules in Ohio and other states demand accurate reporting and reliable internal controls.
- ✓Multi-state expansion and capital — entering new markets and raising money require audit-ready financials and structures that scale.
Why cannabis operators choose Pease Bell
Compliance-first 280E approach
We focus on lawful cost accounting under 280E and Section 471, not shortcuts. You get defensible positions and documentation that hold up with the IRS, lenders, and investors.
Ohio roots, nationwide reach
Headquartered in Cleveland, we understand Ohio’s medical and adult-use market and support operators expanding into new states, serving clients across all 50 states.
Full service, boutique touch
As a Top 200 firm with 150+ professionals, we bring deep tax, audit, and advisory bench strength while staying hands-on and responsive as your operation grows.
Cannabis Team
Featured Insights
Cannabis insights from our team
Practical guidance on 280E, cost accounting, and the changing cannabis tax landscape.
- 280E
Building 280E-Compliant Cost Accounting for CannabisHow to reduce gross receipts through COGS computed under Section 471.
- 280E
280E Demystified: What Cannabis Businesses Can and Cannot DeductA plain-English look at which deductions 280E denies and why.
- Policy
Cannabis Reclassification: Schedule III Tax ImpactWhat a move to Schedule III could mean for 280E and your taxes.
- Ohio
Ohio Tax eServices: A Guide for Ohio Business OwnersNavigating Ohio’s tax filing platform for in-state operators.
Cannabis accounting & 280E FAQs
What is IRC 280E and how does it affect cannabis businesses?
IRC Section 280E disallows ordinary and necessary business deductions and tax credits for any business that traffics in a federally controlled substance, which currently includes state-legal cannabis. In practice, cannabis operators cannot deduct most operating expenses such as advertising, selling, and general administrative costs. They can still reduce gross receipts by cost of goods sold, which makes accurate, defensible cost accounting central to managing an operator’s effective tax rate.
Can cannabis businesses still deduct cost of goods sold under 280E?
Yes. Section 280E disallows most business deductions but does not prevent cannabis businesses from reducing gross receipts by cost of goods sold. COGS is computed under inventory rules, generally Section 471, so production and inventory costs can be captured lawfully. The goal is not to evade tax but to properly reflect the costs of producing your product, which requires disciplined cost accounting and clear documentation to support the amounts reported.
How can a cannabis company lower its tax burden without breaking the rules?
The most reliable way is building compliant cost accounting so all allowable production and inventory costs are properly captured in COGS under Section 471. Correct entity structuring, accurate books, and strong documentation also help. We focus on lawful positions that hold up under IRS scrutiny, not aggressive strategies. The objective is to avoid overpaying while meeting every obligation 280E imposes.
Do cannabis businesses need audited financial statements?
Often, yes. Investors, lenders, and some state regulators may require audited or reviewed financial statements, and audit-ready books become essential when raising capital or expanding into new markets. Even where not required, reliable financials build stakeholder confidence and support licensing. Pease Bell provides audits, reviews, and compilations tailored to the needs of cannabis operators and their stakeholders.
Do you work with cannabis operators outside of Ohio?
Yes. While Pease Bell is headquartered in Cleveland, Ohio and knows the state’s medical and adult-use market well, we serve clients across all 50 states. We support multi-state operators and companies expanding into new jurisdictions, helping them address 280E, differing state rules, and the reporting demands that come with growth.
Why is cost accounting so important for cannabis companies?
Because 280E disallows most operating deductions, cost of goods sold is one of the primary ways cannabis businesses can reduce taxable income. How you capture production and inventory costs under Section 471 directly affects your tax outcome and your ability to defend it. Strong cost accounting also improves inventory control, supports state compliance, and gives investors and lenders reliable numbers.