By David Smith, CPA, MBA, CM&AA
As the cannabis industry continues to flourish in Missouri, a significant opportunity has emerged for businesses to achieve substantial tax savings on their energy and utility bills. Recognizing this potential, MoCannTrade reached out to my team at Smith Patrick CPAs and Jeff Kelley of Kelley Energy Management, drawing on our combined experience in the cannabis sector to shed light on these cost-saving opportunities.
With Jeff’s extensive background in utility and energy savings, combined with my tax expertise as an accountant and the treasurer of MoCannTrade, we’ve collaborated to provide valuable insights tailored for the marijuana industry.
Identifying Cannabis Utility Tax Savings
Cannabis companies, especially those operating extensive cultivation and manufacturing facilities, stand to benefit significantly from exemptions on state and local taxes on their utility bills. Here’s a step-by-step guide to assess and capitalize on these opportunities:
- Examine Your Utility Bills: Look for state and local sales tax charges. These could indicate untapped savings.
- Necessary Documentation: Complete the Missouri Department of Revenue Form 149, focusing on Section 144.054, RSMo. This includes detailing the Purchaser’s Manufacturing Percentage (commonly 100% for cultivation facilities) and the facility’s total square footage used for cultivation/manufacturing.
- Expert Advice: It’s recommended to seek advice from an accountant or specialist is crucial for ensuring accuracy and maximizing potential savings.
Potential Savings: Insights from Experts
Drawing on Jeff Kelley’s expertise, we estimate that savings could range from 4.221% to 10%, varying with local tax rates. Additional savings can be realized from local tax exemptions.
For example, a cannabis company spending $100,000 monthly on energy can save approximately $4,221 each month at the state sales tax rate.
Refunds on Past Taxes
Since January 2, 2023, cannabis licensees have been eligible to request refunds on previously paid taxes. At Smith Patrick, we recommend reaching out to local utility providers to manage these refunds.
Who Qualifies for the Cannabis Industry Utility Exemption?
This exemption is tailored for cultivation and processing facilities, not for dispensaries. According to Missouri Department of Revenue’s guidelines, cannabis manufacturing facilities are eligible for the same tax benefits as other manufacturers in Missouri.
Essential Documentation and Contacts
- Missouri Form 149 – Sales and Use Tax Exemption Certificate Form
- Section 144.030 RSMo – Exemptions for electrical energy in manufacturing
- Mo Department of Revenue FAQs page
Local Utility Contacts
To start the process, view your utility bill and contact that utility company to send in Form 149. Log in to see the full article with utility contact recommendations at MoCannTrade.org.
Energy Exemptions: Win-Win for Business and Community
As professionals dedicated to the advancement of the cannabis industry, we encourage operators to explore these savings opportunities. Reducing utility bills through energy exemptions is a win-win for businesses and the community at large.
For more comprehensive assistance and personalized guidance, Jeff Kelley and I are available to support cannabis companies in navigating these financial opportunities effectively.
Jeff Kelley aids businesses in optimizing energy consumption and securing significant rebates as the owner of Kelley Energy Management (KEM). The company, based in Brentwood, Missouri, specializes in indoor agriculture cultivation incentives. Since 2019, KEM has secured over $30 million in rebates for its clients in more than 10 states. By creating advanced energy models, the company is committed to securing the highest possible rebates for cannabis companies.
View the original article at MoCannTrade.com.
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David Smith
David Smith helps businesses and individuals develop smart business practices for tax and accounting advantages as the president of Smith Patrick CPAs. He is involved in the cannabis industry in Missouri through MoCannTrade and other organizations, helping cannabis operators with their tax and accounting needs.
About Smith Patrick CPAs
Smith Patrick CPAs is a boutique, St. Louis-based, CPA firm dedicated to providing personal guidance on taxes, investment advice and financial service to forward-thinking businesses and financially active individuals. For over 30 years, our firm has focused on providing excellent service to business owners and high-net worth families across the country. Investment Advisory Services are offered through Wealth Management, LLC, a Registered Investment Advisor.