Category: Financial market

October 5, 2018

How Amazon and eBay could post major profits for the online cannabis market

Amazon and eBay are two; of the largest retailers in eCommerce, and they are positioned to profit from the expanding CBD market, which is also showing marked sales growth.

In a new study, the products that contain CBD, which has no THC that won’t end up getting you high, actually has become really diverse through different channels.  This has started to grow in profits, with the retail sales for this estimated to go all the way to $16 by 2025, and this is based on more conservative assumptions, and spending of less than $2 per customer.

CBD supplements are growing. About 7% of 2500 US adults who were surveyed used this, and the retail sales are only going to increase. Ecommerce is becoming the key distribution channel for these kinds of products. That’s because, they do fall into the categories of personal care and beauty products, along with vitamins and food supplements, all of which seem to have to accelerate online sales and are predicted to only grow.  What’s spurning this is the rising jurisdictions that are being repealed, and where there aren’t prohibitions of marijuana.  That, in turn, has caused the growth of CBD compounds as well. It is a powerful compound too, with many health benefits.

This compound is used for many people for different things, from autism, PTSD, anxiety, autoimmune disorders, and even insomnia and stress. This is a game changer for medical marijuana, since this is safe for anyone to use, and it doesn’t have the psychoactivity that marijuana does, so there is no argument for it to be illegal.

So what does this mean for investors? Well, it is pretty significant. It doesn’t contain THC, which is that compound that causes psychoactive effects in the mind and body, and the “high” sensation that marijuana gives you.  CBD, however, has many of the same components that marijuana does, which means that it’s effective for treating pain, appetite loss, nausea, and other problems in the body as well. This is a subject that’s been ever increased in terms of studies, and there are many that are looking into just what CBD can do for a person.

CBD is becoming a major part of ecommerce, and the category called consumables has major growth.  This is still a highly underpenetrated part of the ecommerce vertical, which means that while it still hasn’t been fully tapped into, this will end up growing over time.  In 2018, the sales during this were $51 billion which means that it was 11% of the total category.  By 2023, it’s expected to have figures that could easily exceed double that or so much more, which means that up to 20% of the market will be this, respectively.

For Amazon investors, this means that it could be a field day for profits. What that means in a lot of cases too is that there could be even more sales for those who invest in it, since a lot of people do buy vitamins and personal care supplements.

Amazon is also working with Whole Foods, and that’s another potential place to sell CBD products, and the company’s only planning on expanding this too. Whole Foods has two hour delivery in a lot of cities, and also curbside pickup. While CBD may appeal in those physical channels, this does mean that there are some potential markets to work into.

With that being said, it’s imperative to consider looking into CBD as a potential growing market. There is a lot here that it has to offer, and many who are looking into getting into CBD investment may see a marked growth in terms of this over time due to the new outreach that comes from that.

June 26, 2016

What is the Employee retention Credit?

The CARES act used to help businesses during the coronavirus has an employee retention credit, which is a refundable tax credit for those “qualified wages” that were paid to workers that are kept between March 13 and December 31.  The purpose of this is to encourage these employers to keep the people on payroll, even if not working because of the effects of the coronavirus.  Here is what you have to know about it.

This offers a 5K refundable credit for every employee that you keep on payroll between now and December 31, 2020.  You can qualify if you were ordered to fully or even partially shut down, and the gross receipts fell below 50% in that same quarter during 2019.  If you claim your credit, you reduce the payroll taxes that are sent to the IRS.  If you exceed this, you can get a direct refund from the IRS itself.  You should compare this however with the PPP since you can’t do both of these.  But, since the PPP applications are suspended due to the lack of funding, this is definitely something to consider.

How does this work? Well, for example if you’ve got a restaurant that was ordered to close to sit down customers but allowed for other operations, this does give qualify you for the credit since it was a partial shutdown. You are qualified for any quarter during this is applied, up to each of the quarters in 2020.  This decline in gross receipts is a test that applies to the business and whether they were affected. A qualified period does begin in the quarters where the receipts are less than 50% of the receipts that are in the same quarter, and it ends the first calendar quarter after which the gross receipts were higher than for that quarter in the previous year.

Basically, what this means is that you qualify if the business does do less than the previous quarter of 2019.

Self employed people, those who work for the government, or any small business that did get a PPP loan aren’t eligible for this. the wages that you received for the tax credit for paid sick and family leave that was under the Family First Coronavirus Response act also don’t qualify. Any wages that you count for this can’t be counted as part of the credit for medical leave or paid family. Any employee who was granted a work opportunity tax credit also isn’t qualified.

This also doesn’t apply to any part-time employees, just the full time ones.

In order to get this, you need to advance payment the balance from the IRS, depending on the total amount of the credit. You should look at the credit for the quarter and from there reduce the form 941 by that amount.  For example, if the credit was 10K in Q1 2020, then the amount that you should do is 15K. however, you reduce that by 10K to 5K and from there, you account that to the credit.

From there, if the Q1 exceeds the amount withheld, then you can receive the advance payment, and you can do so in the form called form 7200. 

You can’t take advantage of the PPP and this one, however. But, since the PPP is tapped out, this might be a good option, and this could help you figure out the choices to make in all of this.