The legalization of cannabis, both medical and recreational, in individual states has caused an explosion of cannabis related businesses, leaving entrepreneurs looking for competent and available legal and accounting help. Unfortunately, many accountants are wary of servicing the cannabis industry, because their cannabis clientele would be engaged in a federally illegal activity. They fear that they will be dragged into legal issues, or worse lose their license all together. The fear is understandable, but the cannabis industry is in desperate need of more accountants that are willing to work with them.
Because of the convoluted state of cannabis, taxes that are complex to the untrained mind become even more complex. This causes a lot of dispensaries, cultivators, etc... to make crucial mistakes on their books and tax returns that put their businesses at risk. Some owners may not even know they need to fill out certain tax forms, like Form 8300.
Accountants can help guide these businesses, and make sure that they conform to Section 280E. Keeping good clean records can be arduous. An accountant can provide services to these businesses to ensure organized records are kept, so that when the IRS audits, or the bank audits or the city/county/state audit - the business will have an easy way to prove they are not breaking any tax laws.
Accountants are essential for these kinds of businesses to grow, and maintain.
While there are plenty of opportunities in this industry for the accountants who can overcome their fear, cannabis businesses should be looking for accountants who have the correct specialized knowledge to help their cannabis clientele. Full knowledge of Section 280E and its applications, how to support audits of this business from the banks, the feds and corresponding state tax codes are a must. In order to be a competent accountant for these kinds of businesses, accountants will need to spend long hours fully understanding the ins and outs of this advanced tax code. For the ones who put in the effort, the rewards are limitless !