If you operate a business in the Cannabis Industry, were impacted by COVID-19 restrictions, and have W2 employees--you are likely eligible to receive ERC due to mandatory closures of businesses.
As the COVID-19 pandemic hit the United States, one of the biggest industries it affected was the cannabis industry. Businesses in many other industries were given the chance to apply for the Payment Protection Plan (PPP) in 2020 and 2021, but due to federal cannabis legalization regulations, the cannabis industry could not take part in this loan. While operating in this stressful financial period, many cannabis business owners had to deal with government-mandated restrictions that led to less sales and business.
Today, cannabis business owners may have the chance to find financial relief through the Employee Retention Credit (ERC), part of the 2020 CARES Act which can provide up to $26,000 per employee for already paid wages.
Contact Strategic Tax Planning to speak with an experienced Certified Public Accountant (CPA) to learn more about your business’s eligibility. Call us today at (202) 455-6010 or fill out this contact form, and we will reach out to you.
Ultimately, each business in the cannabis industry will be unique, so it is important to consult with a qualified CPA or team of tax professionals to review your eligibility. If you have full-time W-2 employees, then you may qualify if your business falls into at least one of the two following categories:
While some cannabis businesses were deemed essential and permitted to continue curbside or delivery operations during the COVID-19 pandemic, there were still many mandates that affected these businesses. Government-mandated restrictions may include, but aren't limited to:
Many business owners in the cannabis industry assume they are not eligible for ERC if they experienced an increase in sales in 2020 and 2021 during the COVID-19 pandemic. This is not necessarily true. If your cannabis business was affected by government-mandated restrictions, such as any of the factors listed above, then you may be eligible for ERC. Speak with an experienced CPA to review your business and its eligibility.
Business owners who have filed for the ERC may be wondering when they can expect to receive the tax credit. With so many businesses being affected by the pandemic, the IRS has a high volume of applications to process. Every case is unique and will have a different timeline. Your refund may be processed in about 8 months, although it could take longer.
If you wish to check the status of your refund, you may use the “Where’s My Refund?” feature on the IRS website, or you can call the IRS.
Claiming the Employee Retention Credit can be a needed relief for many business owners in the cannabis industry, but it is important to make sure you and your tax planners are diligent and thorough when examining your eligibility. It is critical to note that the IRS will carefully examine your claim for this credit. Submitting a claim with false information can lead to compliance risks such as ERC audits in the future, setting up a potential disaster.
Strategic Tax Planning’s experienced tax professionals and CPAs will work closely with you and your cannabis business, ensuring all of your ERC qualifications and facts are accurate and in order. We are here to help you receive your deserved relief for persevering during difficult financial times.
If you are a cannabis business owner and wonder if you may be eligible for ERC, reach out to Strategic Tax Planning for a free consultation. You can call us today at (202) 455-6010 or submit your information in our contact form, and we will call you.
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