Why Section 280E Generally Does Not Apply
Section 280E disallows ordinary business expense deductions for businesses that traffic in a federally controlled substance, but its reach is limited to entities that actually buy, sell or otherwise handle cannabis. Consulting firms, security providers, packaging suppliers, equipment vendors and cannabis-focused real estate companies serving licensed Nevada operators typically never take title to or possession of cannabis, which means they generally retain full access to ordinary and necessary business expense deductions under standard federal tax rules.
We help ancillary businesses document their operational scope clearly, confirming and preserving the non-plant-touching status that keeps deductions for rent, marketing, payroll and administrative overhead intact, rather than inadvertently structuring a relationship that could blur this line.
Client Concentration and Cash Flow Risk
Serving cannabis operators as a primary client base means an ancillary business inherits some exposure to its clients' licensing timelines, cash flow constraints and payment delays, even without facing 280E restrictions directly. We help these businesses build receivables aging policies, deposit or retainer structures, and client diversification targets so a single licensee's setback does not threaten the ancillary vendor's own solvency.
- Receivables aging and collections policy for cannabis clients
- Client concentration limits and diversification targets
- Deposit and retainer structuring for service agreements
Lease and Equipment Accounting for Cannabis-Adjacent Landlords
Ancillary businesses that lease real estate or equipment to licensed cultivators, manufacturers or dispensaries need lease accounting that properly classifies rental income and determines capital versus operating lease treatment under current standards. We build lease schedules suited to landlords and equipment lessors serving Nevada's cannabis industry, including documentation that supports the lessor's own non-plant-touching status.
