CPA INSIDER

New marijuana laws create opportunities, risks for CPAs

Initiatives in eight states expanded recreational and medical use, but federal ban remains.
By Lindsay Patterson

Voters approved marijuana initiatives in eight of the nine states where the issue was on the ballot Nov. 8, allowing for the creation of new businesses that will need CPA services. However, because marijuana remains illegal at the federal level, CPAs will need to carefully consider potential risks associated with businesses operating in this industry.

California, Maine, Massachusetts, and Nevada approved the use of recreational marijuana, although voters in Arizona rejected a similar measure. Medical marijuana remains legal in that state, however. On the medical side, voters in Arkansas, Florida, and North Dakota approved legalizing medical marijuana, while voters in Montana approved expanding the state's existing medical marijuana program. Nationwide, 31 states and jurisdictions now have legal marijuana in some capacity.

Businesses in this industry are increasingly seeking CPA services, with some states—such as Arizona and Minnesota—mandating that marijuana retailers undergo an annual audit. At the same time, however, most state boards of accountancy have not issued official guidance as to whether providing services to these businesses would constitute a violation of the board's rules of professional conduct. Thus far, only state boards of accountancy in Arizona, Colorado, Connecticut, Florida, Maryland, Nevada, Oregon, and Washington have issued guidance.

Generally speaking, each of these boards has determined that providing accounting services to state-legal marijuana businesses is not itself an act discreditable. However,  a board could pursue disciplinary action against a licensee found guilty of a criminal act involving marijuana. A listing of each board's specific guidance is available here.

The AICPA has also developed resources for CPAs considering offering services to state-legal marijuana businesses, including the paper An Issue Brief on State Marijuana Laws and the CPA Profession, which will be updated in early 2017. AICPA Insights also published a recent blog post on the issue, and more tools are available on the AICPA website.

Lindsay Patterson is the AICPA's senior communications manager for state regulatory & legislative affairs. To comment on this article, contact Chris Baysden, senior manager of newsletters at the AICPA.

SPONSORED REPORT

2018 financial reporting survey: Challenges and trends

Learn the top reporting challenges that emerged in a survey of more than 800 finance, accounting, and compliance professionals across the world, and compare them with your organization's obstacles.

PODCAST

How the skill set for today’s CFO is changing

Scott Simmons, a search expert for large-company CFOs, gives advice for the next generation of finance leaders and more, including which universities are regularly producing future CEOs and CFOs.