Cannabis Dispensary

[peggysioux]

I have a business owner who has asked me to do payroll and books for cannabis dispensary. I am unsure if I should take on being federal government still sees as illegal, but CA has legalized. Do other tax preparers see a potential for legal risk to engage in legal state marijuana business since it principally refutes federal drug mandates?

Peggy Sioux

[TaxGuyBill]

see a potential for legal risk to engage in legal state marijuana business

For the business, yes, there would be some legal risk.

For you, I think it would be very little legal risk, if any.

Ethically, you need to analyze yourself to see if you are comfortable working with a business that you KNOW is breaking the law. And if that business is willing to break that law, will they be trying to break other laws (including tax laws)?

[Rapid Robert]

do payroll and books for cannabis dispensary. I am unsure if I should take on being federal government still sees as illegal

That you need to ask the question tells me the business owner would be better off engaging with someone else.

[TAXNJ]

There is much information regarding this area for tax preparation and/or representation which seems to be a growing business. Below is some that might be of interest:

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040 or 1040-SR), line 8, or on Sched- ule C (Form 1040 or 1040-SR) if from your self-employment activity.
source: Pub 525

Also see Internal Revenue Code section 280E (regarding expense deductibility)


see article: “Fifth Amendment privilege allows one to report illegal income without revealing its precise source.”
IRS Guidance for Thieves, Drug Dealers, and Corrupt Officials
June 9, 2014
Alan Cole


Tax Preparation Checklist for Cannabis Operators

https://blog.greengrowthcpas.com/tax...abis-operators


The CPA's guide to getting started in cannabis accounting

https://www.accountingtoday.com/opin...bis-accounting

[Rapid Robert]

I'm curious, have cannabis businesses been eligible for PPP loans and EIDLs, or did the laws blocking them from using federal banks effectively lock them out?

[Rapid Robert]

News from California FTB. Now that we have a slightly more representative federal Senate, look for some positive developments this year.

"Federal law may change this year to allow licensed cannabis businesses at least some access to banking services and help them move away from cash-only transactions. The COVID-19 relief package passed by the House of Representatives in October 2020 included the Secure and Fair Enforcement (SAFE) Banking Act of 2020. However the U.S. Senate did not consider the House's legislative package.
[...]
In California, the enactment of AB 1525 in September 2020 provides some new legal protections for tax practitioners and has provisions that could help licensed cannabis businesses secure banking and armored car services. The legislation amended Business and Professions Code section 26260. Now, a person practicing public accounting does not commit a crime under California law solely by providing professional accounting services to persons licensed to engage in commercial cannabis activity. Furthermore, armored car services may do business with licensed cannabis businesses."