April 01, 2017 Features

Tax Due Diligence in Serving Clients in the Marijuana Industry

By Annette Nellen

Distributing marijuana is a federal crime involving a controlled substance.1 This statement is made at the start of this article to help frame what might otherwise sound like a mundane topic—tax due diligence in serving business clients. The increasing number of states allowing some type of marijuana use make it more likely that tax practitioners will have existing clients expand into this market and that the number of new marijuana-related businesses (MRBs, a term used by the U.S. Treasury Department) will increase, thereby increasing the numbers needing tax assistance. However, the federal crime taint of MRBs raises ethical and professional licensing concerns for these tax professionals in serving this market or in considering to do so.

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