Hidden Tax Dangers in Cannabis Outsourcing Arrangements

As cannabis becomes mainstream, we are seeing more of what we call outsourcing arrangements—that is, contracts where one entity (LicenseCo) pays another entity (OutsourceCo) to help run its business. There are many good reasons to do this. Maybe someone owns land, which is licensed and zoned for cultivation, but has no clue how to cultivate it. Or they may prefer to have another company act as the employer, to shift liability under state and federal employment law. Some tasks are best done by a specialist who does nothing else.

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