The CA Cannabis Practice Industry has become a central part of the aBIZinaBOX practice. Our Group has professionals in Evanston, Illinois and Oakland, California. Our group has devoted several years of study to the application of our business reporting and accounting experience and services to the unique requirements of the cannabis industry. We are the right advisor for CA cannabis industry businesses.
The practice of the Cannabis Practice Group of aBIZinaBOX to the California cannabis industry at this time. Given the complexity of the issues facing the California cannabis industry, we have concentrated on the California cannabis industry in order to do one thing well rather than be mediocre at many things.
aBIZinaBOX Cannabis Experience
We have substantial experience and expertise relating to the California cannabis industry in:
- The unique financial record-keeping needs of cultivators, distributors, processors and distributors.
- Experience with the selection of optimal operating structures for each participant in the California cannabis industry.
- Experience in adjusting structures and modifying financial record-keeping to comply with a rapidly evolving regulated California marketplace.
- An understanding of the challenges presented by a long history in this industry of “doing business in cash” and the associated problems.
- A practical understanding of the banking, card processing, and anti-money laundering issues applicable to this industry.
Focused Expertise relating to California’s Cannabis Industry
We have established practices and procedures that address the unique issues of tax reporting and tax collection for California’s cannabis industry relating to the Internal Revenue Service (“IRS”); the Franchise Tax Board (“FTB”); the California Department of Tax and Fee Administration (“CDFTA”); the Economic Development Department (“EDD”), and the Bureau of Cannabis Control (“BCC”).
Our experience includes issues relating to permitting, licensing as well as reporting and paying cannabis excise tax and gross receipts tax at the municipal and county level.
We have developed effective strategies for addressing the onerous impact of the limitation on the deduction of ordinary and necessary business expenses imposed by Internal Revenue Code §280E on businesses engaged in “trafficking” in a controlled substance.
A Leader in California’s Cannabis Practice
We will continue to monitor on a daily basis the evolution of the regulation of California medical and recreational cannabis industry in order to retain our position as a leading service provider with practical expertise. We will retain our position as a leader with regard to financial record-keeping and reporting for California’s medical and recreational cannabis industry by constantly adjusting to the demands of this evolving industry.
Cannabis Illegal Under Federal – Legal Under California Law. The Supremacy Clause of the US Constitution establishes the United States Constitution, federal statutes, and treaties as “the supreme law of the land”.. Pursuant to this clause, any state law which conflicts with a federal law is otherwise preempted. This was affirmed by the U.S. Supreme Court in Gibbons v. Ogden. The Supreme Court has ruled that the federal government has a right to regulate and criminalize marijuana sales and use, even when a state’s laws permit marijuana to be used for medical purposes.
At this juncture, we reach the conclusion that all of the State enabling marijuana legislation is otherwise voided by the Comprehensive Drug Abuse Prevention and Control Act of 1970, the federal law which classifies marijuana as a controlled substance.
Enter the Obama Administration. On October 19, 2009, Deputy U.S. Attorney David W. Ogden issued a memorandum which we now refer to as the Ogden Memo. This document stated that the Justice Department would not make it an enforcement priority to pursue those in “clear and unambiguous compliance” with State medical marijuana laws. Further to the Ogden Memo, on July 29, 2011, Deputy Attorney General James M. Cole confirmed the Ogden Memo.
Cole further noted the “increase in the scope of commercial cultivation, sale, distribution, and use of marijuana for purported medical purposes”. Cole added that the Ogden Memo was never intended to shield such activities from federal enforcement action and prosecution, even where those activities purport to comply with state law. Cole concluded the memo by reminding persons who are in the business of cultivating, selling or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law enforcement of the CSA.
Cannabis Illegal Federal – Legal California Law Contradiction
In light of the continuing State ballot initiatives legalizing marijuana (under state law), Cole released an updated Department of Justice policy memo to all U.S. Attorneys on August 28, 2013, the [“Cole Memo“]
The August 2013 guidance reminded U.S. Attorneys that traditionally the federal government has pursued marijuana cases which were large-scale activities where control lied with a gang, cartel or criminal enterprises. Further, the federal government has traditionally prosecuted marijuana cases involving sale and distribution
to minors, interstate sales, and growth or use on federal lands. Finally, the Cole memo stated that those priorities would continue to guide the federal government’s enforcement of the CSA. Federal enforcement would center on those priorities, regardless of federal law. Otherwise, outside of those priories, the federal government has traditionally relied on the States to enforce the narcotics laws of their states. Essentially, the federal government has defunded the ability of its agencies to prosecute the state-licensed marijuana businesses which are in compliance with the law and the Cole Memo [see Rohrabacher-Farr amendment.
A state-licensed marijuana business, while violating the federal Controlled Substances Act, may operate its business without fear of federal prosecution provided the business, its owners and staff all follow the state law and comply with the Cole Memo.
From Our Blog
Cannabis Practice Group
- Cannabis Practice Group
- Frequently Asked Questions [FAQ’s] – Cannabis
- Client Support Portal
- Accounting Services for Cannabis Businesses
- Income Tax Compliance for Cannabis Businesses
- California Cannabis Resources
Industries We Serve
CPA Professional Services
- CPA Professional Services
- Technology Consulting
- Google Cloud – G Suite, Chrome, Android
- Xero Accounting – and Add-On Market Place