Cannabis Business Accountants in Hawaii

Key Points:

• Tax Rates: Cannabis businesses are subject to the same general sales tax (GET) as other businesses, without any additional cannabis-specific taxes.
• Services Unique to Cannabis Businesses: 280E compliance, specialized cash handling, and enhanced reporting strategies are essential for meeting regulatory requirements and investor transparency demands in the cannabis industry.
• Value of Cannabis CPA: In-Depth knowledge of state and federal laws, expertise in complex tax requirements, and financial transparency for growth and compliance

What Does a Cannabis CPA Do?

A cannabis CPA isn't just any accountant. They're experts in the tax and accounting needs of the cannabis industry, fully aware of federal, state, and local tax laws that impact cannabis businesses. Unlike a general accountant, a cannabis CPA knows the unique hurdles that cannabis, CBD, and hemp businesses face. One of the biggest challenges? Navigating IRC Section 280E, a regulation that restricts typical business deductions due to cannabis’s status as a Schedule I substance. This makes accounting in the cannabis industry a whole different game, requiring specialized strategies for state tax regulations, cash handling, and cost accounting.

• Hawaii’s cannabis industry is thriving, with over 38 licensed medical cannabis facilities, including around 13 production centers and 25 retail locations. Each of these businesses, as well as those in Hawaii's CBD and hemp sectors, faces unique financial challenges. Whether you're operating a dispensary, a grow facility, or a CBD company, you need more than just any accountant—you need someone who truly understands the ins and outs of the industry. This is where a cannabis CPA or a fractional CFO comes in.

• Are you a Hawaii-licensed CPA offering services to cannabis-related businesses? Request to be listed .

Hawaii’s Tax Landscape for Cannabis Businesses

The tax setup in Hawaii adds its own layer of complexity. Medical cannabis sales here are subject to the state’s General Excise Tax (GET), which sits at 4% for most of Hawaii but rises to 4.5% on Oahu due to a county surcharge. Unlike other states, Hawaii doesn’t add extra cannabis-specific taxes for medical marijuana; it simply applies the standard GET. This is a big difference for medical cannabis businesses here, though the tax landscape remains intricate.

But cannabis isn’t alone in this complexity. Hawaii's other goods and services face varied GET rates too—0.15% for insurance commissions, 0.5% for wholesale services, and 4% for retail sales. Some counties impose additional surcharges, making tax regulations a bit of a maze for all businesses, but especially so for those in cannabis.

How Tax Requirements Differ for Cannabis, CBD, and Hemp

Cannabis, CBD, and hemp businesses share certain challenges, yet their tax requirements are distinctly different. The most notable difference? Cannabis businesses are bound by the infamous Section 280E, which only allows them to deduct the Cost of Goods Sold (COGS), disallowing other regular business deductions. Cannabis CPAs play a vital role here by structuring expenses and inventories in ways that maximize deductions within legal limits.

On the other hand, CBD and hemp businesses enjoy more flexibility. Legalized under the 2018 Farm Bill, these businesses can deduct typical business expenses as long as they maintain less than 0.3% THC in their products. Accountants for CBD and hemp focus on inventory accounting and comply with IRC Section 471, which is less restrictive than the provisions for cannabis businesses.

Services That Set Cannabis CPAs Apart

Cannabis businesses face challenges that typical companies don’t, so they need specialized accounting services. Here’s what a cannabis CPA can do:

• 280E Compliance Strategies: Cannabis CPAs work within the law to reduce the burden of 280E, finding ways to lower tax liabilities while staying compliant.
• Cash Handling Solutions: Since traditional banking options are limited, many cannabis businesses operate in cash. A cannabis CPA can help set up secure and compliant cash handling practices.
• Enhanced Reporting for Investors: Given the unique risks of the cannabis industry, investors often need detailed financial transparency. Cannabis CPAs help you prepare thorough reports, building trust with potential backers.