Page 12 - CannabisOkMagOnlineMay2019

12 CANNABIS OKLAHOMA | MAY 2019

Questions

You Should Ask Your Accountant

Whether you are a seasoned cannabis cultivator, dispensary owner or just beginning the cannabis journey,
there is little doubt you have heard about the tax complications of the cannabis business. Terms like 280E,
Section 471, and form 8300 are thrown around and many times with little clarity. The difficulties are creat-
ed due to operating in a market that is federally illegal but becoming increasingly less enforced criminally,
while the IRS is stepping up enforcement of their regulations. Making a conscious decision for noncompli-
ance is an incredibly risky roll of the dice.

With the number of cannabis businesses in the United States growing daily the mathematical odds of a
single company being chosen for examination is relatively low. The danger lies in the consequences you may
face should it be your business. The IRS can choose which companies they examine, as well as the grace they
offer those that are not compliant. Evidence has shown the IRS is being aggressive and levying heavy penal-
ties on cannabis businesses found to be out of compliance.

Many taxpayers mistakenly believe dealing with the IRS works like the criminal justice system. In the crim-
inal justice system, the government has the burden of proof; the opposite is true when dealing with the IRS,
the burden of proof lies with the taxpayer. The IRS can disallow a deduction or position that a taxpayer has
taken, and it is up to the taxpayer to defend it. Having an accountant that is experienced and understands
cannabis regulations is vital to surviving an examination. These 5 questions will help in the selection of an
accountant that will be a resource for your business and not just an expense.

#1 What do you know about cannabis products? Ask your potential accountant what they
know about your product, chances are it may not be much. The question has nothing to do
with accounting, it has to do with their interest in the subject and support for the industry.
They don’t have to be an expert on cannabis products, but having some knowledge, and more
importantly, an interest to learn, shows they are interested in their clients. After all, chances are you have
invested a lot of capital into your business and working with someone that has an interest will be more pro-
ductive. Not to mention, they may be able to provide better guidance by understanding some of the specifics
of the cannabis industry.

#2 What certifications do you have? It is incredibly important to understand the qualifica-
tions of the accountant you are interviewing. Some states are incredibly restrictive as to who
can claim to be an accountant. Oklahoma is NOT one of those states. In Oklahoma, it is legal
for anyone to claim to be an “accountant” even without a degree, certification, or experience.
Many people are focusing on the cannabis niche due to the volume of new businesses and the unique needs
of those businesses. Any accountant you hire should be willing to discuss their certification(s) and experi-
ence with you. If your accountant is defensive toward the request, you should not hesitate to move to the
next option. You should also research any certifications your accountant claims to have.