How To Choose The Right Excise Tax and Compliance Partner In 2022
By Michael Adrian
Companies selling cannabis-derived and nicotine-based products are turning to partners for help when navigating complex regulations.
With each new year comes new opportunities and new challenges. This is especially true for 2022 as jurisdictions large and small across the United States prepare to enforce recently enacted legislation like the PACT Act, new excise tax rules, and more.
Yes, it can be challenging keeping up with all of the new and changing regulations. But you don’t have to do it alone! There are a couple of compliance partners to choose from who can benefit you and your business both now and in the future. To some, this may appear to be a daunting task. That’s why we put together this guide to help you get started.
Follow the money.
The fastest way to get caught in a non-compliance trap is by not paying your taxes. As long as you are paying your taxes on time and accurately, you will often find some flexibility in other non-compliance situations. Start by acquiring the licensing necessary to collect sales and excise taxes from your buyers to help protect your margins. Then ensure you have a way of accurately calculating and collecting those taxes on all of your orders. Finally, find an efficient, repeatable method for producing your tax reports and remitting payments. Usually, outsourcing all or part of this to your compliance partner(s) makes this easy, so long as they are reliable.
Get your papers in order.
Anytime reporting is required to a government agency, the reporting needsto be timely, accurate, and comprehensive. While this includes the tax reports previously mentioned, it also includes any other reporting required by law, like the monthly ATF PACT Act reports for vaporizer products. Whether you are in wholesale or retail, if you are selling vaporizers or any component related to them, you likely need to report to just about every state you are selling into. Since this reporting is required to be completed each month at the beginning of the month, it can quickly take much of your time and it is easy to fall behind or off track. Save that time and stay current by outsourcing it to your compliance partner(s).
Mind the gaps.
Licenses, taxes, and reports are critical components for operating in compliance, but there is more to it than that. For vape and hemp-based products, there are other requirements to consider, like age verification (for retailers) and packaging (for manufacturers and wholesalers). Make sure you have the appropriate people, partners, processes and more to comply with these regulations as well.
Your time is valuable and limited, so you’ll want to partner with as few vendors as necessary to meet your compliance needs
Less [vendors] is more [value].
Working with a partner takes time, especially if the partnership is to succeed long-term. Your time is valuable and limited, so you’ll want to partner with as few vendors as necessary to meet your compliance needs. Why? So you can spend less time scheduling and participating in meetings! Also, the more compliance solutions your partner(s) can provide, the more expertise they will have in supporting you. And most businesses offer discounts for bundling their services together, so you also get the most bang for your buck.
Already have a partner and it isn’t working out? It’s ok, you’re allowed to “break up” and “start dating someone new.” Are you behind on your reports? Speak with potential partners not only about how they can help you going forward, but how they can help you catch up as well. Haven’t started yet? That’s ok too! It’s better late than never, and 2022 is a great time to get started.
When researching potential partners, it’s important that you do your due diligence. The more information you provide them, the better conversation you will have, which can help you be successful in the partnership early and often. To help you get started, here is a quick breakdown of the top three businesses offering compliance solutions to the vape and hemp-based products industries.
Now is the time to get compliant. Make it your New Year’s resolution for 2022 and use this guide to identify the best partner for you.