What examiners look for
Federal cannabis examinations concentrate on a short list. Is the taxpayer a reseller or a producer? Were selling costs pushed into inventory? Do the inventory balances reconcile to track-and-trace? Are related-party charges arm's length? Is there contemporaneous support for every allocation?
Missouri Department of Revenue reviews focus on different ground — cannabis tax collection and remittance, sales tax, and the state income tax position including the Article XIV deduction.
How we handle an examination
We take over correspondence, so nothing is answered informally or in a way that widens scope. Document requests are reviewed before production, responses are complete but bounded, and every position is supported in writing.
- Power of attorney and single point of contact with the examiner
- Scope management and a controlled document production process
- Written technical memoranda supporting inventory and COGS positions
- Reconstruction of records where documentation gaps exist
- Appeals representation when the examination outcome warrants it
Preparation beats defense
The strongest examination outcomes are decided years before the notice arrives, in whether contemporaneous documentation exists. We run audit-readiness reviews for Missouri operators who have never been examined, identifying gaps while they can still be closed.
That review covers the inventory methodology memo, allocation support, related-party agreements, cash controls documentation and the Metrc reconciliation history.
If you have already received a notice
Do not respond on your own, and do not send documents before the request has been reviewed. Deadlines matter and early informal answers frequently expand the examination beyond its original scope. Call us first.
Frequently asked questions
How likely is an audit for a Missouri cannabis business?
Cannabis operators face meaningfully higher examination rates than comparable businesses in other industries, driven by cash intensity and the 280E position itself.
Can you represent us if another firm prepared the return?
Yes. We frequently step into examinations on returns we did not prepare, beginning with an independent assessment of the filed position.
What if our documentation is incomplete?
We reconstruct what can be reconstructed from operational and track-and-trace records, and we are candid about which positions are strong and which are exposed before deciding on strategy.
