Rev. Proc. 2024-15: IRS Clarifies §471(c) Small Business Inventory Election Procedures

## Overview Revenue Procedure 2024-15 provides long-awaited procedural guidance for IRC §471(c) — the small business taxpayer inventory method election that has become the primary §280E tax mitigation strategy for eligible cannabis operators. ## Key Provisions The revenue procedure clarifies: (1) the election statement required to be attached to the timely-filed tax return, (2) the documentation requirements for books-and-records COGS consistency, (3) automatic consent procedures for first-year adoption and future method changes, and (4) a safe harbor for operators whose accounting software does not perfectly map to IRS inventory categories — provided certain reconciliation schedules are maintained. ## Who Qualifies The §471(c) election is available to "small business taxpayers" — those with average annual gross receipts of $29M or less (adjusted for inflation) for the three preceding taxable years. This threshold encompasses a large portion of single-state cannabis operators and mid-size dispensary groups. ## Significance for Cannabis Operators Prior to Rev. Proc. 2024-15, practitioners were uncertain about the exact procedural mechanics for making and maintaining the §471(c) election in the cannabis context. The guidance reduces practitioner risk and provides a defensible path for operators who elect the method going forward.