Some companies currently face two concurrent challenges—first, how to accelerate the utilization of otherwise non-deductible capital loss carryovers for tax purposes and second, how to guard against the impact of rising interest rates.

At the federal level, cannabis businesses that “touch the leaf” are taxed on the sum of revenue less cost of goods sold, according to IRC section 280E. Businesses that do not touch the leaf—meaning those that indirectly benefit from cannabis activity, such as suppliers and landlords—can also claim other deductions. But if there is a loss on your investment or loan, will the loss be deductible? Although the investment might appear rosy right now, storm clouds could one day come to this industry. 

Facing increased competition for donor dollars and a growing charitable base, many tax-exempt organizations have set their sights on income diversification. As part of this quest for alternative revenue streams, non-profits are expanding into businesses traditionally dominated by taxable entities.  While this can be a boon to an organization’s resources, it can potentially subject tax-exempt entities to reporting and paying taxes, the most common of which is the tax on unrelated business income.