Cannabis Legislation Remains a Conundrum| |
The legislation here in the United States for the cannabis industry remains a conundrum. It is both confusing, difficult, nuanced and changes like molasses.
Nationally, cannabis is a federal Schedule I substance under the Controlled Substances Act, meaning that it has a high potential for abuse, and no current medical use. In other words, it is treated like heroin, LSD, ecstasy drugs and is in a "bad" neighborhood. There is legislation to move it to Schedule III, which is defined as moderate to low potential for physical and psychological dependence. Schedule III drugs are codeine, ketamine, anabolic steroids, and testosterone.
Over the past 50-60 years, cannabis advocates have slowly chipped away at the reform of federal marijuana laws with success. In 1970, the National organization for the Reform of Marijuana Laws (NORML) was started by Keith Stroup. Today, twenty three (23) states, two territories and the District of Columbia (DC) have legalized cannabis for adult recreational use. Recently, President Biden expanded the marijuana pardon proclamation to include federal cannabis possession offenses.
Also in the pipeline is the SAFER Banking Act, which is slowly moving forward.
280E Might Die
If cannabis is reclassified to Schedule III, then I.R.C. 280E is lifted and subject to "normal" taxation as a business. Also, this classification opens up normal banking services that we take for granted (commercial lending, payroll, credit/debit cards, issuing checks, insurance, etc.).
In addition to banking, other components that we take for granted fall into place like interstate growth and competition. Some western states have already passed legislation permitting interstate commerce if the federal laws change.
Cannabis in All Forms - Well Beyond Smoking
In November 2023, Total Wine started selling cannabis (THC) drinks in some states. While this is the tip of the iceberg, it won't be too long before you see cannabis in Whole Foods and Costco. Granted, it will start selectively in states where it is legalized but gradually spread.
Conundrums Create Opportunity for Accountants
If it has taken 50-60 years to persuade 23 states to legalize marijuana, then one might conclude that this cake is nearly half-baked because 27 states have not.
In other words, the need for accountants who understand the confusing and complicated tax laws will continue for another 30+ years. As some growers within your state start to sell their product across state borders, then it creates another conundrum.
The provincial nature of our cannabis industry within 23 states makes everything difficult. From avoiding QuickBooks online (QBO) to simple payroll to payments (checks, credit cards) also make cannabis accounting and tax difficult.
CPA Firms Capitalizing on Cannabis
While 27 states are still on the sideline, change is coming and provides opportunity for accountants. Will you miss this niche opportunity? For enterprising accountants, Dope CFO has even gotten into franchising for accountants who want to capitalize on this slow moving train.
Many of the regional CPA Firms are either eye balling or capitalizing on cannabis industry. Firms like Armanino, Baker Tilly, Marcum, Crowe, and Citrin Cooperman see opportunity.
Entrepreneurial Accountants Capitalizing on Cannabis, Hemp and THC
Build Your Firm has supported niche development for over twenty (20) years. And specializing in cannabis is just one of nearly forty niches that we support. Here are some examples of accountants who we have worked with:
- Missouri CPA for Cannabis - Caffeinated Accountant
- Value $ Canna CFO - CPA, CFO and CVA for Cannabis Businesses
- Smoky Mtn Cannabis Advisors - Cannabis Accounting and Tax
- Bulletproof Tax and Accounting - California Cannabis
- Kerezman Tax and Accounting - Indiana CPA
- High Knowledge CPA - Texas CPA, CFO and Tax
- Dope CFO - Cassidy McFarland
- Dope CFO - David Lewis
- Dope CFO - Lee Generous
- Dope CFO - Erica Sloan