
Common triggers that cause the IRS to audit cannabis dispensaries, including 280E issues, cash discrepancies, payroll mistakes, and underreported income.
If reported revenue does not match bank deposits, the IRS may investigate.
Example:
Your return reports $2M revenue. Bank records show $2.6M in deposits.
Mismatch triggers review.
Improper COGS allocation or aggressive expense classification increases audit risk.
Large swings in taxable income year-to-year also raise flags.
Repeated underpayment penalties can increase scrutiny.
Large unexplained cash variances between POS and deposits increase audit exposure.
Unpaid payroll taxes are a major enforcement priority.