There’s a lot of buzz around the cannabis industry lately as legislation for medicinal and recreational cannabis is changing rapidly.
Emily Burns, the founder of Legally Burns LLC, shared a lot of the details pertaining to the cannabis industry and why it is important for accountants to arm themselves with the knowledge specific to the industry, but she also shared a lot of the background as to why the accounting laws are as complex as they are. As of the podcast recording in September 2019, 49 states and the District of Columbia have passed laws relating to the possession of cannabis. As of now, nine states allow recreational use. With the changing laws, there have been a lot of cannabis businesses pop up. This is a booming section of the industry for accountants to take advantage of, but only if they are trained on the ins and outs.
For example, did you know that you could receive a 10-year jail sentence and fined up to $250,000 just for leasing to a cannabis business? Yup. That can happen even if you don’t know and are not involved in business operations. Emily dropped that major piece of information in the intro to the podcast.
While the podcast is a great place to start, there are a lot of intricacies to learn about if you want to branch into this up and coming industry.
First being, there are big differences between CBD accounting and THC accounting. According to a Dope CFO blog post, CBD hemp is legal under the 2018 Farm Bill and is not subject to 280E. This means that a CBD business can deduct their COGS. You can read all about the differences in their blog post here.
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