The Retail 280E Squeeze
A standalone Retail Marijuana Store or Medical Marijuana Center has the narrowest COGS eligibility of any license type — essentially the invoice cost of inventory purchased for resale, plus limited direct handling costs. Budtender wages, retail rent, marketing, and security guard payroll are all non-deductible federally, which makes precise inventory costing under IRC 471 and 263A one of the most important accounting exercises a dispensary can run.
Reconciling POS, Sales Tax and Excise Layers
Colorado retail transactions carry multiple simultaneous tax layers: the 15% retail marijuana sales tax on adult-use sales, 2.9% state sales tax on medical sales, applicable local marijuana taxes such as Denver's, and — one step up the supply chain — the 15% excise tax already embedded in the wholesale cost from cultivation. A dispensary's point-of-sale system needs to separate these correctly by transaction type, and the accounting system needs to reconcile collected tax against what is actually remitted each period.
- Reconcile daily POS Z-reports against bank deposits and recorded sales tax liability.
- Segregate medical versus adult-use sales given their differing sales tax treatment.
- Track local marijuana tax obligations separately by jurisdiction if operating in multiple Colorado municipalities.
Inventory Costing for Retail-Only Operators
Since a standalone dispensary purchases finished inventory rather than producing it, its COGS calculation is comparatively simple but still requires a documented costing method — typically invoice cost plus allocable inbound freight and handling — applied consistently, with adjustments for shrinkage identified through METRC reconciliation.
Financial Reporting for Multi-Location Retailers
Operators with stores in more than one Colorado city need consolidated reporting that still preserves location-level detail, since local tax rates, foot traffic economics, and staffing costs vary meaningfully between a Boulder storefront and one in Pueblo. Location-level P&Ls, layered on top of a consolidated 280E position, give ownership the visibility needed to make expansion decisions.
