Client: Elevation Cannabis
Industry: Cannabis Cultivation & Retail
Location: Missouri
Engagement Focus: Sales and Use Tax Refund
Key Results: Over $120,000 in refunds and substantial ongoing annual tax savings
Background
The cannabis industry in Missouri has seen rapid growth since medical cannabis legalization in 2018 and recreational legalization in 2022. However, cannabis operators face unique tax burdens, most notably the punitive effects of IRS Code Section 280E and aggressive state-level sales and use tax audits. Unlike other industries, Missouri cannabis businesses are under compounding financial pressures from taxation.
Elevation Cannabis, a Missouri-based cultivator and retailer, found itself navigating these treacherous tax waters after undergoing a management transition. Recognizing the potential risk and opportunity, their leadership sought external expertise to ensure sales and use tax was historically accurate and maximize recovery of any overpayments.
The Challenge
Unknown Overpayments: Internal CFO realized there could be potential overpayments for sales and use taxes and needed expertise to audit past invoices, payments, and tax filings effectively.
Resource Constraints: With only a small internal team, there was no bandwidth to manage a comprehensive review or handle filing for refunds and audit defense independently.
The Solution
Elevation engaged our team, well-trusted in Missouri for our sales and use expertise, specifically in industries facing complex tax challenges like cannabis.
What We Did
- Conducted a refund and exposure review on past sales and use tax transactions.
- Identified non-taxable transactions that had been incorrectly taxed.
- Handled all filings and correspondence with suppliers and the Missouri Department of Revenue.
- Created a Sales Tax Exemption Certificate system for Elevation’s suppliers.
No upfront fees: Only paid on the savings that were identified and secured.
End-to-end service: We managed documentation, filings, and negotiations, minimizing Elevation’s internal workload to roughly half a day.
The Results
- $120,000+ Recovered: Refunds from both the Missouri Department of Revenue and direct supplier credits.
- Volume Growth Supported: Systems put in place scaled alongside Elevation’s rapid growth without additional tax risk.
- Ongoing Savings: Thousands of dollars saved monthly on exempted expenses and supply purchases.
- Audit Risk Mitigation: Proactive strategies to minimize penalties and exposure during Missouri’s targeted audits.
Industry Insight: Cannabis Tax Challenges in Missouri
Cannabis businesses in Missouri face unique tax hurdles:
- 280E Federal Limitations: No standard business deductions allowed, increasing taxable income.
- Complex Sales and Use Tax Rules: Varying taxability of cultivation equipment, grow supplies, and retail items.
- Increased Audit Frequency: Cannabis was explicitly targeted by Missouri’s Department of Revenue for audits in 2023–2025.
Elevation’s proactive partnership with experts provided an essential competitive advantage in this volatile regulatory environment.
“The Brennan Group made the entire process seamless. Without them, it would’ve taken us weeks to even start identifying overpayments, and we probably would have missed most of them. They truly know the cannabis industry’s unique tax pitfalls in Missouri and handled everything for us—from refund claims to providing documentation for ongoing savings year after year.”
— Jim Mozena, CFO, Elevation Cannabis
In the fast-evolving Missouri cannabis market, understanding and managing indirect taxes isn’t optional — it’s essential for survival and profitability. Our specialized expertise delivered immediate financial recovery and sustainable improvements to Elevation Cannabis’ bottom line, ensuring they could focus on growth instead of tax burdens.
Is a six-figure refund worth 15 minutes of your time? Get in touch with one of our tax experts for a free consultation.
