Report: Cannabis Industry Has Opportunities and Potential Pitfalls for Accounting Firms

With new industries comes the need for financial expertise that only CPAs can provide. The cannabis industry is no different, offering CPAs a bevvy of prospective new clients. But the nature of the industry also opens to door to several potential challenges and pitfalls of which CPAs need to be aware.

Several states have legalized marijuana use for recreational or medical reasons, creating a burgeoning industry of growers, distributors and retailers. Revenue from medical and recreation cannabis is estimated to reach $12 billion this year. The accounting profession, similar to the legal profession, can offer its expertise to clients in the cannabis industry, such as auditing and taxation services, as well as expert guidance for avoiding fraud or theft.

With these opportunities come serious downside, as marijuana remains illegal at the federal level. As a result, few banks are willing to deal with players in the industry, leaving it largely a cash operation. CPAs providing business advisory or other accounting services to clients in the cannabis industry need to navigate the nuances of Federal and State law and to avoid being charged criminally under the Racketeer Influenced and Corrupt Organizations Act or other federal drug laws, potentially resulting in fines, jail time or the loss of their license.