240 Logistics: Weekly - November 12 2024

280E

Working in Cannabis Retail, It's your biggest headache come the end-of-the-year tax season.

But what does it mean exactly?

We have the answer to that question and all other questions you may have regarding 280E!

Get your notepads out! Class is in session! ??

Since the last week of October, we have seen changes to our consumer insights - here is what we found:

• ?? Basket size: No Change
• ?? Average basket price: Increase by $0.49
• ?? Flower prices: Decrease by $0.10
• ? Top 3 performing categories: No Change

As the end of the year approaches, Cannabis Retailers have a key responsibility to optimize their inventory in preparation for tax season. Under Section 280E, inventory costs can’t be deducted from your taxes. Ensuring a well-balanced, consistently selling inventory is crucial for maximizing profitability. FlyWheel offers a range of tools to help identify slow-moving products, phase them out effectively, and keep your shelves stocked with items that will drive revenue. In this guide, we’ll discuss strategic steps to improve year-end inventory efficiency using FlyWheel’s insights and tools to mitigate tax liability and boost sales.

The Problem: Identifying Slow-Moving Inventory to Prevent 280E Tax Burdens

A well-balanced inventory is critical for both profit and tax efficiency. Products that move slowly tie up valuable capital and may inflate your tax burden under Section 280E if they remain unsold.

The Solution: FlyWheel

FlyWheel makes it easy to identify these slow-moving items, helping you create targeted strategies for clearing out underperforming stock before year-end.

To get started, follow these steps:?

1. Analyze Sales Velocity: Use FlyWheel’s sales velocity insights to quickly identify items with low sales performance. Sorting products by their movement over the past few months highlights which ones are failing to meet sales targets. FlyWheel’s ‘Sales’ Report gives you the ability to filter specific product categories and view top performing, and lowest performing items.
2. Pinpoint Extended Shelf Time: Products with longer projected run-out times are likely candidates for phasing out. Reviewing these projections allows you to take early action and avoid inventory stagnation. FlyWheel’s ‘Stock Aging Report’ gives you visibility into the shelf-life of all of your products and allows you to develop a gameplan.

Once identified, you can create a plan to move these items effectively.?

Gameplan: Strategic Steps to Phase Out Slow-Moving Products

Rather than allowing slow-moving items to linger, FlyWheel’s tools help you devise strategies to clear them out effectively, such as loyalty promotions and in-store recommendations.?

Here’s how to execute a few effective strategies:?

• Loyalty Program Promotions: Loyalty programs are an ideal way to incentivize customers to purchase slow-moving items. Consider offering loyalty points or exclusive discounts on underperforming products. This approach not only helps clear stock but also engages loyal customers by rewarding them for their repeat business.?
• Budtender Recommendations: Budtenders play a key role in guiding customer purchases. Educate your budtenders on slow-moving products and encourage them to recommend these items to customers. This personal touch can,

. . .

Interested in learning more? Read the full blog here.

Section 280E is a tax code that prevents cannabis businesses from deducting ordinary business expenses due to federal prohibition. Since cannabis is still classified as a Schedule I substance, any company engaged in its trade cannot deduct most business expenses. This leaves cannabis retailers unable to claim deductions that are essential to maintaining profit margins.?

Impact on Inventory: Section 280E directly affects how retailers manage unsold inventory, as these products are considered taxable assets at the year-end. Minimizing this remaining stock is crucial to reducing your taxable burden.?

Costs of Goods Sold (COGS) is an important concept for cannabis retailers, as it’s the only deductible expense under Section 280E. COGS includes expenses directly tied to the production and procurement of inventory, such as:

• Product cost
• Shipping fees
• Storage expenses?

Why It Matters: By accurately calculating and documenting COGS, cannabis retailers can reduce the taxable income and unsold inventory. Ensure all qualifying expenses are,?

. . .

Interested in learning more? Read the full blog here.

• Year-End Inventory FAQ Guide: Managing 280E Tax Implications for Cannabis Retailers
• Comprehensive Guide to Cannabis Inventory Management
• Millie Relief: CBD Relief Gel

280E

What is it? Why does it exist? Why does it make the #CannabisIndustry so difficult? You're not alone in the fight against 280E. Everyone working in the #Cannabis Industry is impacted by 280E. What makes us different from everyone else is we have a gameplan for you. Yes, you!

240 Logistics has come together to help you and your store survive the current legal and financial climate of today's 280E-era. The industry is far too advanced to improvise, and "figure your way out" through this. You need actionable insights supported by bulletproof data ?

240 Logistics is here to watch your back, and get your store what you need when you need it. A purpose-fueled mission carried out by passionate professionals.

Are you ready?

Year-End Inventory FAQ Guide: Managing 280E Tax Implications for Cannabis Retailers

• Eliminate Aging Inventory
• Measure Brands and their Product Performance
• Know What To Do Next

FlyWheel is your modern-day tech solution for your budding Cannabis company

See how ABC Reporting, Top Selling Products by Category, Average Discount Reporting and many more of our unique features will help your store today!

Comprehensive Guide to Cannabis Inventory Management

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Ready to get started? Reach out to us today: 240logistics.com/contact

Schedule your FlyWheel Demo: 45min w/ Brian H. - VP of Sales