How Accountants Are Dealing with Federally Legal Marijuana
The explosion of the marijuana industry has brought an equally explosive flow of money with it. Due to the high taxes, ambiguous regulations, and a flourishing industry, wouldn’t it make sense for accountants to jump all over the opportunities? Sadly, the legality of marijuana creates a huge problem, which has made the industry seem dangerous and risky to work with. Because marijuana is still federally illegal, accountants are not always keen on jumping into the industry head first.
Chris Walsh, vice president and founding editor of Marijuana Business Daily, a major industry publication, estimates revenue from the sale of legal medical and recreational marijuana is in the range of $7 billion to $9 billion. He also predicts "that will more than double, and potentially even triple, in the next five years”. Walsh also explains how ambiguous regulations can cause a company to lose track of their finances. As there is increased acceptance professionalism and getting their books in order should be is a priority.
While the federal government still has control of the scheduling and enforcement of marijuana laws, rarely do they ever actually shut down dispensaries that are legally operating in their state. One problem facing the marijuana industry right now is that banks do not want to deal with cannabis businesses, because federal law prohibits FDIC-insured banks from serving them. Because of this problem, money within the marijuana industry is largely traded in cash. Literally, there are very few credit card transactions or checks used for payment. Because of a lot of cash, the businesses have a higher risk of defalcation, IRS audits, and more. For all these reasons, those in the cannabis industry need to find a knowledgeable CPA.
As time goes on and the mood of the country shifts, legislation will be introduced to make our economy and other industries friendlier towards marijuana.