States have been passing legislation that legalizes cannabis for medicinal and recreational use, and the producers and retailers in this industry have been growing. Accounting and financial professionals are now tasked with navigating the often contrary state and federal laws. With cannabis being classified as a Schedule 1 controlled substance under the Federal Controlled Substances Act of 1970 and subject to federal prosecution, but allowed to be sold in an increasing number of states, what are the major accounting and tax issues (federal and state) that impact this industry? This course will provide the basic guidance that accounting professionals need to know to offer services in the cannabis industry.
Learning Objectives
Participants will be able to:
• Recognize state reporting rules for a cannabis business
• Recognize federal reporting rules for a cannabis business
• Properly account for a cannabis business
• Identify and implement appropriate internal controls for a cannabis business
• Differentiate federal income tax issues between ordinary business and a cannabis business
• Use knowledge of IRC Section 280E to determine what deductions are not allowed for a cannabis business
• Identify and apply various state and local tax issues that apply to the sale of cannabis
Major Topics
• Types of cannabis-related businesses
• Risk considerations for services offered in the cannabis industry
• Recognizing what costs are and are not considered the cost of sales under IRC Section 280E
• Recognize if the entity conducts a business separate from the cannabis sales that may allow some deductions aside from the cost of sales
• State and federal tax differences
• Cash-based business audit considerations
• Financial reporting considerations
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