With the number of states that have recently approved initiatives for legalized recreational use of marijuana and the laws passed in other states permitting the medical/medicinal use of marijuana, producers, and retailers of marijuana are growing quickly. Accounting professionals and CPAs serving marijuana businesses are tasked with navigating the often ambiguous and sometimes contrarian state and federal legal information that affects this growing niche. In light of the ease of forming a corporation or limited liability company (“LLC”) in Colorado, most cannabis entrepreneurs elect to conduct their businesses via a corporation or LLC. Another option is to form a partnership. In practice, relatively few cannabis businesses are organized as partnerships due to the potential for a general partner’s enhanced liability. Additional considerations for clients, who are encouraged to work closely with attorneys and accountants when incorporating, include the importance of following corporate formalities, organizational document drafting (and potential pitfalls), raising capital, avoidance of undisclosed ownership interests, consequences of violations, IRS Code Section 280E, and income tax deductions.

Learning Objectives:

• Recall recently approved initiatives and state and legal information regarding the legalized recreational use of marijuana


• Identify the use of an LLC versus a partnership to conduct a marijuana business


• Recognize additional considerations for clients incorporating a marijuana business

NASBA Approved

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EA Approved

CPAacademy.org (Sponsor Id#: HURS9) has entered into an agreement with the Internal Revenue Service, to meet the requirements of 31 Code of Federal Regulations, section 10.6(g), covering maintenance of attendance records, retention of program outlines, qualifications of instructors, and length of class hours. This agreement does not constitute an endorsement by the IRS as to the quality of the program or its contribution to the professional competence of the enrolled individual. Credit earned by attendees with a PTIN will be reported directly to the IRS as required of all providers. To ensure your CPE hours are reported, update your profile in My Account to include your PTIN number. Please note: IRS CE is only mandatory for EAs and ERPAs. For all other tax return preparers, CE is voluntary.

CPAacademy.org 1685 S. Colorado Blvd, Suite #205, Denver, CO 80222