What Cannabis Company Leaders Should Know About Form 8300
By Tony Manfredi, Senior Accountant, Assurance Services
Today, most cannabis-related transactions are paid with cash and most financial institutions refuse to engage with companies selling federally illegal products. That means it is imperative that business owners operating in the U.S. cannabis industry familiarize themselves with IRS Form 8300, which must be filed by businesses that receive more than $10,000 in cash in a single transaction. This requirement only applies to transactions taking place within the United States and is only required of those receiving funds.
The IRS defines a “single transaction” as the sum of any transactions that occur between two parties within a 24-hour period. However, the IRS also considers any transactions between two parties exceeding a 24-hour period to be a “single transaction” if the recipient knows, or has reason to know, that there will be a series of connected transactions. This means contracts exceeding the $10,000 threshold also require Form 8300 if they are paid in cash.
Note that the IRS defines “cash” as coins and currency from the United States or foreign countries. The IRS also considers cashier’s checks, bank drafts, traveler’s checks, and money orders to be cash, so long as they are less than or equal to $10,000 on an individual basis. Therefore, any personal checks, cashier’s checks, bank drafts, traveler’s checks, and money orders that exceed the $10,000 threshold are not considered “cash” and may not necessitate filing Form 8300.
All businesses engaged in such transactions must file Form 8300 within 15 days of receiving the funds and are penalized if they fail to do so. The form requires the recipient to disclose the name, address, and contact information of the entity that received the cash, the entity that sent the cash, and the individual on whose behalf the transaction was conducted. This means that, along with information regarding the two entities involved, the receiving company must also disclose the name, address, and contact information of the employee handling the transaction. Additionally, Form 8300 requires the recipient to describe the nature of the transaction, the date funds were received, and the payment method. Business owners should start by reviewing the detailed list of instructions and insights at the end of Form 8300.
Finally, the IRS now allows companies to file Form 8300 by mail, online, or through a tax professional. It is highly recommended that companies file with the help of a tax professional because the information required is often sensitive and complex. For any other questions or concerns, business owners may visit the IRS or Financial Crimes Enforcement Network websites at IRS.gov and FinCEN.gov, respectively.