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Permitting and engineering for site assessment for marijuana farms

February 02, 2017 • Jamie Walling • Log In to Post Comments

 I'm looking for guidance on the appropriate method of reporting the costs of engineering firm studies for site assessment required to apply and obtain the required permits to culivate marijuana, and to be in compliance with the Ca Department of Fish and Wildlife regulations.  Also, the costs paid to professionals who put the permit applications together along with the engineering firms who prepare the maps.  Not to mention the attorney fees for the applications. These farmers are already cultivating while undergoing this process so I don't see these as startup expenses.  In some cases, no actual land development is occurring.  I think these should be a deduction under code section 280E.  


Comments

Jamie,

I agree with your analysis.  There is nothing in your fact pattern that suggestions these costs would not be deductible, with the exception of marijuana being illegal for federal purposes.

Thank you for the response.  Do you think the costs should be treated as section 197 intangibles and amortized?

Jamie,

No, I don't believe they need to be capitalized and amortized.

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