It’s tax time again and time again for the inevitable question: Does the IRS have a business code for marijuana?
The answer is: yes and they have changed for 2022.
Cannabis, marijuana and hemp activities were first categorized in 2020 into general industry categories that include other non-cannabis businesses. So, for example, indoor marijuana cultivation fell under NAICS 111419 “Other Food Crops Grown Under Cover” and outdoor under NAICS 111918 “All Other Miscellaneous Crop Farming”. The codes for cultivation, wholesale and retail sales have been changed for 2022 but it appears the other applicable industry codes remain unchanged.
NAICS stands for North American Industry Classification System and it is used by the U.S., Mexico and Canada to classify business types and develop and analyze statistical data. The IRS also requires taxpayers to include NAICS codes, but calls them the “Business Activity Code,” on various tax returns. In disclosing a business code for a cannabis company the question is always, are they using that to audit businesses? And, the inclusion of cannabis activities in the larger NAICS categories suggest that the IRS is not assigning the codes in order to gather cannabis industry data or conduct audits.
Below are the NAICS codes for the cannabis industry
Marijuana Cultivation:
INDOOR 111419 – Cannabis Grown Under Cover
OUTDOOR 111998 – Cannabis Grown in an Open Field
SUPPORT ACTIVITIES 115112 – Soil Preparation, Planting, and Cultivating
Marijuana Sales:
WHOLESALE 424590 – Other Farm Product Raw Material Merchant Wholesalers
RETAIL 459991 – Marijuana Stores, medical or recreational
Other Applicable Industry Codes:
325411 – Medicinal and Botanical Manufacturing
311812 – Commercial Bakeries
311991 Perishable Food Manufacturing
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)
If you would like to discuss your tax situation with a Greenspoon Marder attorney, please feel free to reach out to [email protected].