UPDATE: Click here to view the new codes for 2022.
Around tax time, I get this question a lot:
“What is my cannabis business’s NAICS code or Business Activity Code?”
Basically, the NAICS code is classification within the North American Industry Classification System. It’s used by Federal statistical agencies for the collection and analysis of statistical data related to our economy. The IRS requests your business’s “Business Activity Code” on a tax return filing, which is based on the NAICS code system. Now, the cannabis industry is relatively new, and no doubt federal statistical agencies are still figuring out how to collect data on the federally illegal, but state legal, cannabis industry. Of course, which code may be appropriate depends on the cannabis business’s actual activities.
Below, please find a list I compiled of some relevant NAICS codes for the cannabis industry.
Marijuana Cultivation:
INDOOR 111998 – All Other Miscellaneous Crop Farming, including Marijuana Grown in an Open Field
OUTDOOR 111419 – Other Food Crops Grown Under Cover, including Marijuana Grown Under Cover
115112 – Soil Preparation, Planting, and Cultivating
“This U.S. industry comprises establishments primarily engaged in performing a soil preparation activity or crop production service, such as plowing, fertilizing, seed bed preparation, planting, cultivating, and crop protecting services.”
Marijuana Retail Sales:
453998 – All Other Miscellaneous Store Retailers (except Tobacco Stores), including Marijuana Stores, Medicinal and Recreational
Marijuana Infused Product Manufacturing/Extraction:
325411 – Medicinal and Botanical Manufacturing
“This code is for Manufacturing uncompounded medicinal chemicals and their derivatives (i.e., generally for use by pharmaceutical preparation manufacturers) and/or Grading, grinding, and milling uncompounded botanicals”.
Other applicable codes may be:
311812 – Commercial Bakeries, 311991 Perishable Food Manufacturing, or generally,
424590 – Other Farm Product Raw Material Merchant Wholesalers, including Marijuana Merchant wholesalers
Marijuana Delivery:
492210 – Delivery Services (except part of an intercity courier network, USPS)
“This industry comprises establishments primarily engaged in providing local messenger and delivery services of small items within a single metropolitan area or within an urban center.”
Marijuana Distributors:
424590: Other Farm Product Raw Material Merchant Wholesalers, including Marijuana Merchant wholesalers.
If you would like to discuss your tax situation with a Greenspoon Marder attorney, please feel free to reach out to [email protected].
By: Rachel K. Gillette*
*The blog author is no longer with Greenspoon Marder LLP.