Effective tax planning allows business owners to anticipate and strategically manage their tax liabilities, rather than just reacting to them. New businesses, for instance, should anticipate a tax debt of at least 15% on even the smallest income, which can escalate to 40% or more depending on state tax jurisdictions.

Tax planning is not just about financial preparation; it's also about emotional readiness. It involves working proactively with your advisor to reduce tax burdens through strategies like timing expenditures, optimizing entity structures, and implementing appropriate cost categorization techniques.

This aspect of planning is crucial for companies in the cannabis and psychedelic industries. Due to IRC § 280E, which disallows the deduction of overhead expenses, cannabis business owners can face significant tax burdens, potentially leading to negative cash positions. Strategic tax planning is essential to mitigate the impact of IRC § 280E and enhance the profitability of plant medicine operations. This is especially critical for dispensaries and service “health” centers, which are subject to the strictest interpretations of the cost of goods sold. Our Calyx team, specializing in cannabis taxation, is equipped to navigate these challenges and help your company minimize its tax burden effectively.