Fee-for-service revenue, not a product sale
A Colorado Transporter license is structured differently than the distributor licenses used in some other cannabis states: a Transporter moves regulated marijuana between licensed premises for a fee, but never takes title to the product it hauls. That distinction should drive how revenue and cost of service get booked — as transportation fee income, not as a sale of cannabis — because treating it like a reseller model overstates the portion of the business exposed to Section 280E and misstates gross margin to anyone reviewing the financials.
Getting this structural distinction right on the front end, in the chart of accounts and revenue recognition policy, avoids a much more painful cleanup later if a lender, investor, or the IRS questions why a pure logistics business is reporting cost of goods sold on product it never owned.
Where 280E does and doesn't reach a pure logistics business
IRS guidance and case law extend 280E to businesses that traffic in a controlled substance, and a company that provides only a transportation fee service for someone else's licensed product sits in territory that needs a documented, defensible position rather than an assumption in either direction. The specific facts — does the Transporter ever hold inventory risk, does it handle any product beyond secure transit, how is the fee structured — all factor into that position.
We document the 280E analysis specific to each Transporter client's actual operating agreement and fee structure, so the position is grounded in the business's real facts if it's ever questioned.
Per-run and per-mile costing across Colorado's geography
Fuel, driver wages, vehicle depreciation, insurance, and secure-transport equipment all need to be allocated to routes and individual runs so that per-run or per-mile pricing actually covers the true cost of the trip — which varies significantly between a short Denver metro run and a long haul out to Grand Junction, Pueblo, or through mountain corridors with seasonal weather risk.
Route-level profitability reporting turns raw fleet expense into a pricing tool, showing which lanes are genuinely profitable and which are being subsidized by others.
- Per-mile and per-run cost models covering fuel, labor, insurance, and depreciation
- Route-level profitability reporting across the state's regional geography
- Documented 280E position specific to the transportation fee revenue model
Manifest reconciliation and chain-of-custody documentation
Every transport run has to be manifested in METRC with departure and arrival times, route, and package detail, and that manifest data needs to reconcile against both the Transporter's billing records and the receiving licensee's intake records. A mismatch between what was manifested, what was billed, and what was received is one of the more common findings in a MED compliance review of transportation operations.
