As President Trump takes office, cannabis companies are likely to continue to face significant legal challenges given that federal policy regarding the sale, distribution, and use of marijuana
has not changed.
However, state laws are changing with California’s recent legalization of recreational marijuana during the November 2016 election. To ensure that cannabis companies continue to operate their businesses legally, they’ll need to take some extra steps to ensure compliance over the next president’s term.
Here are the steps that cannabis companies can take to improve their compliance under the
1. Get Audited Financials Statements
Hiring an auditor to help your business produce cannabis audited financial statements can
provide significant benefits for your business. An audit requires requires understanding and
evaluating all significant aspects of an organization and performing detailed procedures, which
will uncover valuable insight. This will be discussed privately in the course of the audit.
First, it will allow you to identify potential risks and areas for improvement. Auditors may also
identify risks of fraud, abuse, or non-compliance with government regulations that were hidden
beneath the surface.
In addition, auditors serve a greater purpose than just the simple preparation and review of your
company’s financial statements. In fact, management and the owners of your company can
discuss, in confidence, their business issues and strategies with the auditors.
2. Periodically Check Federal, State, County, and City Requirements
In addition to the legalization of recreational marijuana at the state level, California cities have
also passed a number of local ordinances that are designed to tax marijuana cultivators,
manufacturers, distributors, and retailers. As a result, it is important the periodically check
federal, state, county, and city requirements to ensure that your business is always in
3. Reduce Violations, Penalties and Fines
As with any legal procedure, there is always an appeals process. If you feel that a violation,
penalty or fine was wrongly assessed, it may be in your best interest to contest it before the
statute of limitations for an appeal expires.
In some cases, you may even be able to reduce violations, penalties, and fines as a result of
making a good faith effort to remain in compliance. This highlights a major reason why you
should implementing compliance training in addition to eliminating sources of future violations
and fines for your cannabis business.
4. Train Employees on Compliance Requirements
Compliance training is the process of educating your employees on how to comply with the legal
and tax requirements of doing business. These concerns range from taxes and licensing to
inventory and financial data and records and labeling, packaging and product safety.
As the cannabis industry matures, it is likely to become one of the most heavily regulated
industries in the world. As a result, you need to put compliance programs in place to ensure that
every employee at your company is properly trained with regard to compliance concerns that
will impact their day-to- day job duties.
5. File Your Taxes
Many cannabis businesses are still failing to pay their taxes because of uncertainties about the
legality of their businesses under federal law. However, with the legalization of recreational
marijuana in the state of California, there is no longer any excuse not the file your taxes.
Whether or not you believe that you are responsible for paying your tax liabilities, the tax
agencies are likely to audit you and assess back tax amounts, in addition to penalties and
interest, which can be significant. Failing to file your taxes may also put your business at risk of
being in noncompliance with the licensing and permit provisions that you are required to follow
in order to keep your business in operation.
Instead of risking incurring thousands and thousands of dollars of tax liability, as well as your
operational licenses and permits, start filing your taxes today and get your business up to date.
It’s never too late to start filing your taxes and this guide can help you get back on track.