Cannabis Growing Facility Cost Segregation Case Study

Maximize Your Cannabis Grow Facilites Tax Strategy

What is Cost Segregation
Cost segregation is an effective tax planning strategy that helps businesses and individuals involved in constructing, purchasing, expanding, or renovating real estate reduce their tax liabilities by accelerating depreciation deductions, which allows for the deferral of both federal and state income taxes.

Cannabis Grow Facility
Cannabis grow facilities, with their unique requirements for specialized systems like lighting, HVAC, electrical infrastructure, and security features, are particularly well-suited for cost segregation. These components can be depreciated over shorter periods, allowing owners to maximize tax savings and optimize the financial benefits of their investment. This approach helps cannabis facility owners leverage the full potential of cost segregation, improving both short-term cash flow and long-term investment returns.

Practical Example

This case study highlights the benefits of accelerated depreciation, showing how cannabis growing facilities with specialized infrastructure can optimize depreciation for tax efficiency, reducing taxable income and improving cash flow for owners and operators.

Building information

○ Building Type 🡪 Cannabis Grow Facility
○ Property Type: 🡪 Commercial
○ Building Size: 🡪 88,778 SF
○ Study Scope: 🡪 Acquisition
○ Condition: 🡪 Good
○ Filling Year: 🡪 2023
○ Date Placed in Service: 🡪 2018
○ Purchase Price less Land or Total Construction Cost: 🡪 $23,999,000
○ Tax Rate: 🡪 30%
○ Return on Investment Factor: 🡪 8%

Summary of Benefits

○ 25% Additional Tax Deductions in First Year: 🡪 $8,279,998

○ RNPV Over Remaining Life of Property: 🡪 $2,270,199

○ Net Present Value (NPV) Over 10 Years: 🡪 $243,0638

Building Allocation After Study

5 Year Property

Depreciable Basis: $1,919,920 at 8%

7 Year Property

Depreciable Basis: $479,980 at 2%

15 Year Property

Depreciable Basis: $1,656,794 at 7%

39 Year Property

Depreciable Basis: $19,942,305 at 83%

Total

Depreciable Basis: $23,999,000 at 100%

At Leyton USA

We help companies unlock millions in funding through R&D tax credits, energy incentives, state, and local tax programs. Our experts partner with finance and executive teams to identify overlooked opportunities, improve cash flow, optimize tax positions to reinvest savings into innovation and sustainable growth.

Learn About Us arrow_outward arrow_outward

Industries Served

Years of Experience

Tax & Technical Experts

Cost Segregation Case Study – Cannabis Grow Facility