Cannabis Industry Information
The CBA realizes that many licensees have been approached about providing accounting services to cannabis-related industries. Many licensees have reached out to the CBA to determine if the CBA has issued a position statement on providing accounting services to the cannabis industry. Position statements are legal opinions. Because the CBA cannot issue legal opinions, no position statement will be issued on this topic.
For information regarding recently passed cannabis legislation (Assembly Bill 1525), please read through the FAQs below. You may also explore the links to various state and federal regulatory agencies and professional societies that provide information regarding the cannabis industry.
CANNABIS FAQS
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What is the new California law about cannabis that just passed?
The Governor signed Assembly Bill (AB) 1525, taking effect January 1, 2021, which provides “safe harbor” under state law for licensed individuals or firms that practice public accounting if they render services to licensed commercial cannabis businesses. The bill also states that authorized persons or businesses do not commit a crime, under California law, if they receive deposits or provide specified transportation or financial services to persons licensed to engage in commercial cannabis activity. Such authorizations may be rescinded by the licensee.
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Can we accept a Licensed Cannabis Business as a client?
As of January 1, 2021, the passage of AB 1525 provides that individuals practicing as a Certified Public Accountant in California in good standing will not be deemed to be committing a crime for offering services to licensed cannabis businesses.
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What are the potential risks of providing services to a Licensed Cannabis Business?
While adult-use of cannabis products from state-licensed businesses is considered “legal” within California and more than half the other individual states, it remains illegal at the federal level. Under federal law, any entity that supports illegal activity or knowingly accepts fees derived from illegal sources arguably engages in federal racketeering and stands in violation of a host of federal laws. This presents obvious risks for CPAs, accounting firms, banks, financial institutions, and insurance companies, so consulting legal counsel before entering into such an arrangement may be advisable.
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Any other factors to consider when choosing to accept a Cannabis client?
In August 2016, when a federal government “hands-off” policy with regard to people in compliance with state marijuana laws was in effect, a U.S. appeals court ruled that the federal government cannot prosecute people who grow and distribute medical marijuana under state laws. The decision rested in part on the fact that Congress has banned the Department of Justice from spending money in ways that prevent states from implementing their own medical marijuana statutes. U.S. Appeals Court Ruling.
With the existing differences remaining between state and federal laws, and even within the federal government itself, Certified Public Accountants across the country are looking at how to mitigate risk. Professional liability insurance is a key part of that, and Certified Public Accountants need to pay close attention to what is specifically included and excluded in their policies.
The information contained in this page is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this page without seeking legal or other professional advice.
- California Cannabis Portal
- Bureau of Cannabis Control
- California Department of Justice – Guidelines for the Security and Non-Diversion of Cannabis Grown for Medicinal Use
- Department of Food and Agriculture-CalCannabis
- Department of Public Health-Let's Talk Cannabis
- California Department of Tax and Fee Administration-Tax Guide for Businesses
- Franchise Tax Board – Cannabis Industry Information
- Employment Development Department-Cannabis Industry Payroll Tax Reporting
- State Treasurer
- Internal Revenue Service
- United States Department of Justice
- AICPA Whitepaper-Providing Services to Businesses in the Marijuana Industry
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