FOCUS
is an instructor and assistant MBA director at Southeastern Oklahoma State University in scholarships, is currently working on her
Rhonda Richards, CPA, Southeastern Oklahoma She is currently serving on the OSCPA Professional been a member for 14
Cody Bogard, JD, is an assistant professor in business at Southeastern Oklahoma State
in Oklahoma
T
he marijuana industry in the U.S. has seen a massive upsurge as many states have chosen to legalize its use for medicinal
and/or recreational use. Te industry, considered to be the fastest-growing labor market in the U.S., has an estimated $19 billion in projected sales for 2020 with an estimated $30 billion by 2023.1
While, as of this writing, 33 states have
legalized marijuana for medicinal purposes and an additional 11 have legalized it for both medicinal and recreational use,2
marijuana remains illegal—
for all intents and purposes—at the federal level. Tis division between federal and state has created a moral and ethical dilemma for accounting professionals with respect to providing services to businesses operating in the marijuana industry. For an accounting professional to obtain
or renew a license to practice, he or she must possess good moral character and not partake in any activity that would be considered an “act discreditable” to the profession.3
Of concern is
whether providing services to businesses operating in the marijuana industry would be considered an act discreditable. To help CPAs address this concern, the American Institute of Certified Public Accountants (AICPA) has provided some limited guidance. In its publication, “An Issue Brief of State
Marijuana Laws and the CPA Profession,” the AICPA advises all CPAs and CPA firms interested in providing services to marijuana businesses to review full guidance offered by the U.S. Department of Justice.4
businesses will have on their malpractice insurability, the likelihood of discipline, sanction or loss of license, as well as to ensure they have procedures and policies in place to strengthen client understanding of the laws related to the cannabis industry. Moreover, CPAs should also review the AICPA Code of Professional Conduct in respect to Responsibilities, Serving the Public Interest, Integrity and Due Care. In addition to the AICPA’s guidance, the
AICPA acknowledged accountancy boards in 14 states had also released additional guidance with many more states to follow. At the time of the AICPA’s 2019 report, the Oklahoma Accountancy Board (OAB) had yet to release any guidance apart from an excerpt in its July 2018 Bulletin. In the bulletin, the OAB indicated it planned to address the legalization of medical marijuana in the fall of the same year.5
However, it would be
early fall, 2019 before the OAB would issue any further guidance on the matter. On Sept. 20, 2019, the OAB issued its policy
regarding CPAs providing services in the legal medical marijuana industry. In the policy, the OAB stated it would not take action against CPAs unless criminal activities were involved.6
However,
it also strongly suggested CPAs seek legal council to understand the uncertainty of the law, the anti- money laundering rules and how this relates to the Internal Revenue Code (IRC). At the time of this writing, there are more than 2,000 dispensaries in the state of Oklahoma,7
all Te issue brief also
recommends CPAs consult with their state boards of accountancy for further guidance on how each individual board defines “good moral character” and “acts discreditable” and the impact assisting clients in the marijuana industry will have on these. Furthermore, the AICPA suggests CPAs consider, prior to accepting clients who operate marijuana businesses, to first seek legal counsel to discuss the position of state boards and legal risks, including the risk of prosecution. Tey also recommend CPAs consider the impact that providing services to clients operating marijuana
8 CPAFOCUS July/August 2020
of which are likely to need advice and services to accurately prepare tax returns that follow federal and state guidelines for the cannabis industry. Te discrepancy between the federal and state regulations pose unique challenges for CPAs, and the ethics boards at the state levels are reluctant to advise. From an attorney’s perspective, there are two views to take: Traditional—offer passive advice only to clients—or broader—counsel the client and assist with income tax returns and business planning.8 With the increase in usage, the terminology related to marijuana is important when discussing
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