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What's ERC and How Can It Benefit Cannabis Companies?

Partner Blog 11/9/22 2:26 PM

“We don’t qualify for ERC.” I’ve heard that from many cannabis company executives.

It’s understandable, since cannabis companies are often excluded from tax benefits that other businesses enjoy. Fortunately, that’s not the case with the Employee Tax Credit.

Why Your Cannabis Business May Qualify

  • Did you need to change your ordinary business model to accommodate customer spacing and sanitation requirements? 
  • Were you and your team unable to attend trade shows or conduct face to face sales meetings? 
  • Did you suspend in-store demos and budtender events?

More Contributing Factors

Qualifying for ERC is extremely nuanced. Despite what many believe, It’s not just for those who lost revenue.

Here are a few more factors that could qualify your company:

  • Switching to remote work.
  • Mandated shutdowns and limited hours.
  • Supply chain issues, and many more subtle business operation details.

How Can We Help

If you answered yes to any of the above, your business may qualify for the ERC. Yes, even if your business was deemed “essential”. In order to substantiate your application with the IRS, my team thoroughly reviews and documents your business operations to validate and ensure that your business can qualify for the ERC credit while remaining 100% compliant.

To date, we’ve successfully filed over $30M in cannabis ERC tax credits alone. We’ve firmly positioned ourselves as a trusted cannabis industry partner and I’ve personally conducted countless meetings walking cannabis businesses through the ERC process. Below are some examples of successful filings, and it’s important to note that they were all previously advised that they did not qualify for ERC.

  • Major Emerald Triangle cannabis brand received $2M+.
  • Multi-store operator and distribution center received $1.7M.
  • Small California delivery business received $800k.

Who do I work With?

There are lots of people offering ERC services, so how do you know who to work with?

You definitely don’t want to work with a team that is haphazardly checking boxes. The most important question is whether they understand the cannabis landscape. Choosing to work with the wrong consultants for ERC can mean missing out on substantial amounts of funds. We’re looking at $12k-$15k in credits on average, per employee. That’s a big chunk of change. Especially in complex industries like cannabis, details easily slip through the cracks leading to significantly lower credits and/or future compliance issues. 

Our Process

To assess your potential credit, we look at your 2020 and 2021 W2 payroll taxes for eligibility, and if you’re in a state that imposed strict COVID-19 restrictions, it’s possible that your business qualifies for a higher refund.  With the extremely complicated paperwork involved in this process, it’s no surprise that many cannabis businesses are advised by their financial advisors and legal teams that they do not qualify. Despite this, at the end of the day, it’s worth looking into the ERC. 

With a bit of finesse and thorough analysis by industry experts, you could receive a hefty check in the mail, courtesy of the IRS. There’s no financial risk to filing, we only get paid when you do. Contact me anytime, I’m happy to answer any questions you have concerning your cannabis company and ERC, even if you’ve been previously told your business does not qualify.

Contact Us Today

Tom Beaulieu: (310) 567-7787