Cost Segregation Studies for Cannabis Properties
Accelerate Depreciation & Maximize Cash Flow Despite 280E
When Section 280E limits most of your business deductions, property depreciation becomes critical. Our specialized cost segregation studies help cannabis property owners accelerate depreciation deductions, improve cash flow, and reduce tax burden—legally and compliantly.
Don't let valuable depreciation benefits sit locked in 39-year schedules. Our engineering-based studies identify every opportunity to reclassify property components and front-load your tax savings.
What Is a Cost Segregation Study?
A cost segregation study is an IRS-approved engineering analysis that identifies and reclassifies personal property components within your cannabis facility. Instead of depreciating everything over 39 years, we separate eligible components into 5, 7, and 15-year categories for accelerated depreciation.
Here's how it benefits your cannabis business:
Accelerates depreciation deductions, letting you claim more in early years
Separates components like HVAC, lighting, and specialty equipment from the building structure
Delivers immediate tax savings when other deductions are limited by 280E
Improves cash flow by front-loading depreciation benefits
For cannabis businesses facing 280E limitations, this represents one of the most powerful remaining strategies to legally reduce taxable income and improve cash flow position.
Why Cost Segregation Is Critical for Cannabis Operators
Section 280E severely limits business deductions for cannabis operators, often resulting in effective tax rates of 40-70% or higher. While most operating expenses are disallowed, depreciation on owned property remains a legitimate deduction—making it absolutely critical to maximize.
Cost segregation studies help you claim the maximum allowable depreciation in the shortest time possible, providing crucial tax relief when other deductions aren't available. This isn't just a tax strategy—it's often the difference between profitability and struggling with cash flow.
This strategy delivers maximum impact for:
Cannabis cultivation facilities with specialized lighting, climate control, and electrical systems
Dispensaries with high-end security infrastructure, custom fixtures, and interior improvements
Processing facilities with industrial equipment installations and reinforced utilities
Multi-use cannabis properties combining retail, cultivation, and processing operations
The more specialized your facility, the greater the potential savings. Cannabis operations typically have significant investments in HVAC, electrical, security, and processing equipment—all potential candidates for accelerated depreciation.
Our Cannabis Cost Segregation Services
We specialize in cost segregation studies specifically designed for cannabis properties. Our team combines engineering expertise with deep knowledge of cannabis operations and 280E compliance requirements to deliver maximum-value studies that withstand IRS scrutiny.
Our comprehensive approach includes:
Detailed engineering analysis to identify all reclassifiable property components
Strategic coordination with your 280E tax planning to maximize allowable deductions
Classification of lighting systems, HVAC, security equipment, and interior improvements
IRS-compliant documentation packages with full audit support materials
Retroactive studies for missed opportunities, including Form 3115 applications
Ongoing support for audits and compliance verification
Every study includes detailed documentation, asset schedules, and depreciation calculations ready for your tax return. We also provide ongoing support to ensure you maintain compliance and maximize your benefits.
Who Should Consider Cost Segregation?
Cost segregation delivers the greatest benefits for cannabis businesses that own their facilities and have made significant investments in specialized equipment and improvements. If you've spent substantial amounts on property modifications, this strategy likely offers significant savings.
Ideal candidates include:
Cannabis businesses that own their cultivation, processing, or retail facilities
Operators who have made significant improvements or renovations to their properties
Multi-state cannabis companies expanding to new locations
Vertically integrated businesses with complex facility requirements
Cannabis real estate investors and developers
Generally, if you've invested $100,000 or more in your cannabis facility (purchase, construction, or improvements), a cost segregation study likely offers substantial tax benefits that far exceed the cost.
Get Your Free Cost Segregation Analysis
Discover how much you could save with a cost segregation study tailored to your cannabis facility. Our team will analyze your property and provide a detailed projection of potential tax savings, timeline, and return on investment.
Your free analysis includes:
FAQs
How much can I save with a cost segregation study?
Savings vary by property, but cannabis facilities often see $50,000-$500,000+ in accelerated deductions. The exact amount depends on your facility's improvements and specialized equipment.
Is this strategy compliant with 280E restrictions?
Yes. Cost segregation is a legitimate IRS-approved method that works within 280E limitations. It's one of the few remaining strategies to reduce taxable income for cannabis businesses.
Can I do this if I lease my cannabis facility?
Only if you own the improvements. Tenant improvements you've paid for may qualify, but you generally need ownership rights to the assets being depreciated.
How long does a cost segregation study take?
Most studies take 4-8 weeks from start to finish. We work efficiently while ensuring thorough documentation that will withstand IRS scrutiny.
What if my property is several years old?
You can still benefit through a retroactive study. We can file Form 3115 to claim missed depreciation and often recover multiple years of lost deductions.