Cannabis Bankruptcy – What you need to Know
As you know, it’s hard to run a profitable cannabis business. It takes courage, patience, and a whole lot of determination, and being able to run a very smart and lean business. However, even with all of those traits in your arsenal, there is still one thing that can take your cannabis business down: bankruptcy.
Fortunately, there are ways to avoid bankruptcy liabilities, and in this blog post, we’re going to go through a few of them.
From not being able to manage cash flow, making poor business decisions, to not having a strategic plan in place, there are a lot of reasons why a cannabis business may need to claim bankruptcy.
Understand Cannabis Taxes
As the saying goes, “there are only two things certain in life: death and taxes.” And when it comes to the cannabis business, taxes are no joke. One of the biggest pitfalls for cannabis businesses is taxes – from IRC 280e to state and local cannabis taxes.
Keeping up with your tax obligations is a major key to avoiding bankruptcy.
Listen to this podcast to learn what you should watch out for:
To know more about what entrepreneurs should watch out for when it comes to taxes, bankruptcy and debt in the cannabis industry, check out our interview with Paula Collins, CEO and Founder of The Morton Street Group and co-founder of the New York Consortium of Cannabis Accountants (NYCCA).
Invest in a Financial Expert
Speaking of taxes, hiring a financial expert can help you run a profitable business. A professional accountant with experience in the cannabis industry can help you navigate complex tax laws, stay on top of your accounting, and help you make better business decisions.
Having an accountant on your team can also make you look more credible to potential investors when you’re ready to scale your cannabis business. Need an accountant, let us know!
Stay Up-to-Date on Regulations
Cannabis regulations are constantly changing, and it’s important to stay up-to-date on them. Falling out of compliance can lead to fines, penalties, and even the revocation of your business license.
Stay ahead of the curve by keeping up with local and state regulations, and attending industry conferences and events. Being informed and educated can make all the difference when it comes to avoiding bankruptcy.
Diversify Your Product Line and Build Multiple Streams of Revenue
If you’re only offering one product or service, your business is more vulnerable to economic changes. That’s why it’s important to diversify your product portfolio to appeal to a wide variety of your customers.
By offering multiple products or services, you’re creating a safety net for your business. Even if one product or service isn’t doing well, you have others to fall back on.
The bottom line
Starting a cannabis business takes a lot of hard work and is an investment, so make sure that you take proactive steps in running your cannabis business, so you can avoid bankruptcy. Understanding cannabis taxes, investing in an accountant, diversifying your product line, and staying up-to-date on regulations are just a few of the ways you can avoid bankruptcy.