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:

• Your business experienced decreased revenue during quarters 1-4 in 2020 and 1-3 in 2021, compared to 2019
• Your business suffered from government-mandated restrictions

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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:

• Full or partial closures
• Hourly or capacity restrictions
• Operations suspensions, such as dispensaries not being permitted to sell “deli-style”
• Supply chain disruptions
• Sanitation requirements

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. 

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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.

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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. 

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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.