Tax Implications of Reclassifying Cannabis | CLE/CPE Course

BarbriSFCourseDetails

Course Details

Course Information

smart_display Format
On-Demand
signal_cellular_alt Difficulty Level
Intermediate
work Practice Area
Tax Law

Date & Time

event Date
Tuesday, July 30, 2024
schedule Time
1:00 p.m. ET./10:00 a.m. PT
timer Program Length
90 minutes

Credit Information

This 90-minute webinar is eligible in most states for 1.5 CLE credits.
BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$347.00

CLE

CPE

ALL

This CLE/CPE webinar will provide tax professionals guidance on key tax implications of rescheduling cannabis from a Schedule I to a Schedule III drug. The panel will discuss the recent move by the Department of Justice to reclassify cannabis as a less harmful Schedule III drug under the Controlled Substances Act, its impact on federal and state-level taxation, Section 280E, and tax planning methods and reporting requirements for cannabis businesses under current tax law.

Faculty

Jonathan Kalinski

Principal

Hochman Salkin Toscher Perez, PC

Mr. Kalinski specializes in both civil and criminal tax controversies as well as sensitive tax matters including disclosures of previously undeclared interests in foreign financial accounts and assets and provides tax advice to taxpayers and their advisors throughout the world. He handles both federal and state tax matters involving individuals, corporations, partnerships, limited liability companies, and trusts and estates. Mr. Kalinski has considerable experience handling complex civil tax examinations, administrative appeals, and tax collection matters. Prior to joining the firm, he served as a trial attorney with the IRS Office of Chief Counsel litigating Tax Court cases and advising revenue agents and revenue officers on a variety of complex tax matters.

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Ani Galyan

Certified Tax Specialist

Galyan Law, PC

Ms. Galyan is an attorney admitted to practice in California and is a Certified Tax Specialist. She is a certified public accountant admitted to practice in California. Ms. Galyan also holds a Masters in Tax Law (LL.M). She focuses her practice in the area of tax law for federal, state and local tax compliance, tax disputes, and tax crimes. Ms. Galyan has a knack for recognizing emerging industries and becoming a well-informed tax advisor to her clients within the specialty area. She has been in the forefront of representing cannabis operators in the state of California in all aspects of federal, state, and local tax compliance matters. In addition, Ms. Galyan has advised clients on cryptocurrency reporting obligations and navigating the complex reporting requirements for cryptocurrency investors. She regularly speaks, writes, and provides continuing education to other professionals relating to the taxation of cannabis and crypto-currency activities. Ms. Galyan has served on the Board of Directors for California CPA Society-Los Angeles Chapter, and co-chair of the Beverly Hills/Hollywood CalCPA Discussion Group. She is a founding member of Armenian American CPA Society and is a member of the American Bar Association, California Lawyers Association, Beverly Hills Bar Association and other organizations relating to the field of taxation and banking. Ms. Galyan was recognized as Southern California Lawyers "Rising Star" in 2016 through 2023. She was also a CalCPA Women to Watch Nominee finalist in 2015 and 2017.

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Description

The sale and distribution of cannabis for recreational or medical use has become a powerful economic engine with 39 states and the District of Columbia having some form of legalization of the substance. However, the taxation of regulated marijuana businesses can result in hefty tax assessments and penalties under current tax law. Recently, the Department of Justice moved forward with the process of rescheduling cannabis from a Schedule I to a Schedule III drug under the Controlled Substances Act, which significantly impacts the taxation of the cannabis industry.

Cannabis businesses are accounting for and reporting the results of their operations with gross receipts, cost of goods sold (COGS), and other deductions just like other for-profit businesses. However, as long as marijuana remains a Schedule I controlled substance under federal law, these businesses must navigate the pitfalls of complex federal and state tax rules.

Currently, under Section 280E, marijuana businesses cannot deduct rent, wages, and other expenses unless it is for COGS, resulting in a substantially higher tax rate than other businesses on their income. This dilemma has been the subject of recent tax court cases and appeals. Tax counsel and advisers with current or potential clients engaged in any aspect of the cannabis industry must understand the impact of rescheduling cannabis to Schedule III, key tax savings opportunities, and planning techniques to minimize income taxes.

Listen as our panel discusses federal and select state tax rules impacting the cannabis industry, the process to reclassify cannabis as a less harmful Schedule III drug under the Controlled Substances Act, its impact on federal and state-level taxation, Section 280E, and tax planning methods and reporting requirements for cannabis business under current tax law.

Outline

Tax issues in operating a cannabis business under current tax law
Section 280E: impact of rescheduling cannabis to Schedule III
Impact on financing and raising capital
Tax planning techniques to minimize tax liability under current tax law
Impact of rescheduling cannabis to Schedule III on cannabis tax planning

Benefits

The panel will discuss these and other key issues:

Application of current tax rules to the cannabis industry and key planning techniques
Current effect of Section 280E and deduction of the COGS
What are the business and tax implications of rescheduling cannabis to Schedule III?
What's the process for cannabis to be rescheduled to Schedule III?
How would rescheduling affect state tax returns?
What happens to past taxes owed under current tax law?
What happens to pending court cases challenging the constitutionality of Section 280E?
What steps can cannabis businesses take in preparation for the new rules taking effect?

NASBA Details

Learning Objectives

After completing this course, you will be able to:

Understand the IRS' analysis and application of tax rules to the cannabis industry
Recognize the impact of Section 280E on marijuana business operations
Understand the tax implications of rescheduling cannabis from Schedule I to Schedule III
Recognize the impact of rescheduling cannabis on state tax returns
Ascertain key tax planning techniques to limit liability in managing, operating, and investing in cannabis businesses

Field of Study: Taxes
Level of Knowledge: Intermediate
Advance Preparation: None
Teaching Method: Seminar/Lecture
Delivery Method: Group-Internet (via computer)
Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
Prerequisite: Three years+ business or public firm experience preparing foreign tax forms and schedules at mid-level within the organization, supervising other preparers/accountants. Specific knowledge and understanding of current rules for calculating taxable income of corporations and pass-through entities. Understanding of federal and state audit procedures, allocation and apportionment of income.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.