I've got a short article in the AICPA Tax Insider today about the CCA and its meaning - here.
A few more observations beyond the article: While the CCA basically says that the UNICAP rules do not allow a seller of a controlled substance, such as marijuana, to treat more costs as inventoriable, there seems to still be some leeway for a producer. Producers have been subject to the Reg. 1.471-11 full absorption rules since before UNICAP. These rules require treating direct materials and labor as inventoriable and then specify how to deal with indirect costs, which the regulation separates into three categories:
- Production - expenses that are clearly part of inventory.
- Selling - expenses that are clearly not part of production
- Other - treat the same as you treat for books.
If you are not familiar with Section 280E, read the article - it also has links to the tax rules cited above.
What do you think?
Photo from http://www.nlm.nih.gov/medlineplus/marijuana.html.