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BAP Ep. 1 - The Executive Order Heard ’Round Cannabis: What Happens Next? with Bruce Andersen
47 Plays2 hours ago
Rescheduling could be the biggest tax shake-up the cannabis industry has ever seen—but the hype may be ahead of the facts. In this interview, CPA Bruce Andersen explains what President Trump’s recent executive order actually does (and doesn’t do), why 280E relief isn’t immediate, and how operators should plan spending, depreciation, and estimated payments while the industry waits for agencies—and potentially Congress—to act. You’ll also hear what “protective claims” really mean, why “federally legal” is a myth, and how hemp policy could complicate the path forward.
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Transcript
Introduction & Guest Introduction
00:00:09
Speaker
Welcome to another episode of the Becker Accounting Podcast. My name is Naomi Granger, founder and CEO of the National Association of Cannabis Accounting and Tax Professionals. Today's guest is Bruce Anderson of CannabisCPA.tax.
Impact of Executive Order on Cannabis
00:00:26
Speaker
Due to the recent executive order, which was signed by President Trump on December 18th, 2025, to reschedule cannabis, we wanted to invite Bruce in to discuss the implications of this order on the cannabis industry.
00:00:42
Speaker
Welcome to the session today, Bruce. Thank you so much for joining us. Well, thank you for having me. This would be fun. Can you tell us a little bit about yourself? Sure. So I've been a CPA for a number of years.
00:00:56
Speaker
ah This specifically, this topic is, of course, cannabis related. And so from that standpoint, I'll mention that oh I got into the business in 2018 when cannabis was legal at the recreational level.
00:01:13
Speaker
Prior to that, then my son was involved for a number of years. So I watched some sidelines for quite some time. um We've historically been California based, but then joining a couple of national organizations, then we found that our tax services were transportable across state lines.
00:01:34
Speaker
And so now we're doing business in about 20 different states. um And also, I do do need to do a plug for Becker. I am a Becker alumni. And so, um you know, thank goodness for Becker helping me out. And I'm a CPA. So there you go.
00:01:52
Speaker
Awesome, thanks so much. And i thank you for joining us.
Misconceptions & Clarifications Post-Order
00:01:55
Speaker
I wanted to bring you in on this topic because if anybody has been looking at the cannabis industry, they'll know that there was some big news. And it actually hit, I was on a flight headed to Australia And my phone was ringing. I was getting all these emails. I was getting all these text messages and all the headlines said Trump reschedules cannabis, Trump reschedules cannabis. And I know you were around. I think I even may have gotten a phone call or or text from you as well. So what is is that what actually happened on December 8th when they signed the executive order?
00:02:31
Speaker
So on the 18th, what happened is Trump basically signed an executive order. And what it said is um the um agencies ah should start to put this at high priority.
00:02:48
Speaker
And so that's all that happened is basically ah DOJ was given notice to get moving on this thing. And that's The extent of it.
00:03:00
Speaker
ah Details, nothing. a Timetable, nothing. So therefore, we're in limbo. ah But basically, Trump has raised the flag saying he thinks cannabis may be OK.
00:03:15
Speaker
So is this the first time an announcement like this was made? Well, it's a first for Trump. And ah prior to that, then, it was quite interesting, a year ago, um when ah it's actually been two now, ah Biden was really close to pushing us over the finish line.
00:03:36
Speaker
And what happened there is that this thing rolls around among several ah federal agencies, DEA, FDA, ah DOJ, and so forth, all the alphabet soup stuff.
00:03:49
Speaker
And what happened is ah two years ago in in um in the spring, then basically DEA was kind of caught with ah we have some concerns about how we can move this forward. And so it got kind of stonewalled at that point and didn't move any further.
00:04:10
Speaker
And so that's where we got stuck with this.
Tax Law Changes & Section 280E
00:04:12
Speaker
The last go around. Yeah, absolutely. So now when this happened on December 18th, what types of conversations or calls were you getting at that time? Like, what are some of the common misconceptions that you immediately start saw start to arise? Well, so it's it's fascinating where people.
00:04:38
Speaker
People don't realize this is just another tax consideration. And yet, oh, wow, it's the end of 2015. I'm sorry, 2025. And so therefore, gosh, maybe that's going to affect our 2025 tax year.
00:04:54
Speaker
ah And so that was kind of the and some of the some of the quick guns were were asking those kinds of questions. Those with a little bit more presence of mind were saying, OK, well, it's 2025 is Trump is getting on the bandwagon. But how long is it going to take to get this pushed through?
00:05:15
Speaker
and then people realize that for 2025, probably not much change, but they're very anxious to get things moving. um you know, operators for the 2026 year.
00:05:28
Speaker
And so, of course, that's premature as well. um ah But it's it's always so much anticipation because it's such a costly industry to be in for taxes.
00:05:41
Speaker
And with ah with this passage to move to Schedule 3, it should very likely ah eliminate the 280EE constriction on the industry.
00:05:56
Speaker
So it's going to be a huge, huge a cash flow issue for all the operators. Can you tell us a little bit about this 280E thing for anybody who does who had never heard about that? Why does this particular executive order, if it does pass and this guidance does pass, what happens to 280E and why? So two a e e is is a very short ah code section for the Internal Revenue Code, and it specifically addresses any trafficking of drugs.
00:06:30
Speaker
So it isn't just a cannabis specific. It's ah any kind of drugs, um cocaine, heroin, you know, anything you want to bring up that's that's a serious kind of drug factor.
00:06:43
Speaker
ah We'll touch on this to A.D.E. e to A.D.E. says the only thing you can deduct from your sales line is a direct cost goods sold, which is basically product for resale.
00:06:59
Speaker
um So now you take a look at anybody's profit and loss statement in any industry and you say, OK, fine. so I'm going to go ahead and eliminate my cost of goods sold from the equation.
00:07:14
Speaker
You have all sorts of things that are still ah ah expenses you're paying for all the payroll, all the advertising, all the marketing, all of the professional fees and all that kind of stuff.
00:07:29
Speaker
Those are all under a 280E kind of restriction, non-deductible. So therefore, It's it you're paying tax on those dollars, even though on one hand you're spending the money.
00:07:41
Speaker
On the other hand, you're not getting the tax ah ah expense right off. So that's where it's such a a painful experience for the cannabis operators. OK, awesome. And then just it going to schedule three means no more to eighty e So 280E gets eliminated and there's been a lot of controversy with regards to what all does that mean? Does that mean that it's going to be applying to medical only? is it medical recreation?
00:08:13
Speaker
Effectively, it's if if cannabis as a as a product is now not subject to ah two ae because now it's rescheduled, then it's any cannabis product.
00:08:28
Speaker
So therefore, it's a huge, huge, huge break.
Planning for Tax Changes
00:08:32
Speaker
And so what types of things, like how are you planning for your clients? Do you have any ideas if this if this does happen? Does that mean this applies to all tax years historically? Does that mean that it applies to 2026?
00:08:46
Speaker
twenty twenty six does it it mean it it applies to somewhere in the future What is what what do you anticipate? Sure. So there's a few steps to the process. Number one is ah generally there's never a tax bill that's retroactive.
00:09:02
Speaker
So therefore, whenever they get around to passing it, it's it's going to be a ah date that it was passed and then it's going to have an effective date. I mean, a very good example is what happened last summer where Trump pushed a bill through on July 4th.
00:09:21
Speaker
And ah pretty much everything was going to be effective then ah January 1 of 2026. So therefore, that was a six basically a six month window to plan.
00:09:34
Speaker
um There's other situations, for example, state of California, adopted ah the uncoupling of 280E. ah That happened October 19th of 2019. It was effective January 1 of 2020. That was a very short window, 60 days or thereabouts.
00:09:55
Speaker
But generally, it's going to be whenever they get around to passing it. ah it's It's an election year, so therefore this very easily could be um ah motivated by some political timetables and so forth.
00:10:11
Speaker
But for all intents and purposes, what what professionals have been telling their clients is kind of think about January 1, 2027 as effective date. as the effective date and let's hope that something gets passed in 2026.
00:10:28
Speaker
So that's a timetable to deal with. Now, what else can you be doing other than just hoping? Well, There's going to be a variety things where all of a sudden with 280E being pushed to the wayside, not applicable, that there's a whole bunch of code sections which now open up as well.
00:10:50
Speaker
So a lot of those are associated with tax, sorry, assets, of of a variety, either accelerated depreciation, 179 expense write offs, changing the timetable. Sorry, the length of of the asset as far as what its useful life is.
00:11:11
Speaker
We have a lot of varieties for those kinds of things, which are just basically assets. We have some other considerations as well, but let's this focus back on the asset side.
00:11:24
Speaker
And this is a biggie because it takes a lot of money to run a cannabis operation. And there are a variety things that continually need to either be enhanced, upgraded.
00:11:37
Speaker
we bought another license going into another facility somewhere. So in all those kinds of cases, there's going to be money spent. Now the question is, is this gonna be money that we wanna spend under the under the old tax laws when 280E applied, or are we gonna say, okay, let's let's put out our schedule for when we really need to spend the money And let's see if we can hold off on a lot of these things until we are into the situation where we have new tax law to deal with.
00:12:13
Speaker
If that's the case, there's going to be a lot of money that is going to be saved tax dollars because of this planning tool. Now, what happens with regards to, again, just bouncing back for a moment to the to the timing?
00:12:31
Speaker
ah if if you have ah If you spend the time to do the planning, all that's going to happen is, will the timetable to be effective change?
00:12:44
Speaker
Otherwise, all the planning that you can put into and and spend effort with now is going to be time well spent. um if If it passes sometime this year,
00:12:55
Speaker
effective January 1, 2027, okay, we're in great shape. If somehow or another it passes to the next tax year in some unfortunate situation, well, guess what?
00:13:09
Speaker
Now you're just going to take out that list that you spent time with and now figure out when you need to spend money. And maybe you're not going to get the full pop associated with new tax law, but at least you have scheduled that out so that you have as much time as possible to keep that money in your pocket and put that into operations as opposed to development kinds of things.
00:13:36
Speaker
Okay, so I hear a lot of operators and even maybe some accountants who think that, oh, well, I just don't think 280E is applicable to me and I'm just going to stop doing it now. What is the risk with taking that approach that 280E just doesn't apply and I'm not going to i'm gonna write off all of my expenses?
00:13:57
Speaker
Well, so yeah that's been around for a while. And so now it just has some additional ramifications to it because it seems to get closer and closer.
00:14:10
Speaker
I actually went through a period of time last fall where i really tried to push on, are there any other ways that we can kind of get past this 280E thing? are there Are there ways that we can ah utilize um expenses that were not previously ah written off on the on the federal tax return?
00:14:37
Speaker
And I pushed and I pushed and i pushed on that. The whole concept, can i can i can I do it from this way? Can I can i do it from this way? The problem that I came back to in all cases is a prevailing law says 280 applies.
00:14:56
Speaker
And so is a as a license holder on the professional side of things, whether you're an attorney, a tax preparer, CPA, EA, whatever, then you're held to standards.
00:15:10
Speaker
And one of them is Circular 230. two thirty And so if in fact you are bold enough to wanna participate something like that,
00:15:21
Speaker
then i think it's a very difficult situation to be in. The operators can go ahead and push the envelope any way they like. And in fact, I've actually seen some tax returns that were prepared by others who did not take into account to ade e um You know, I just kind of threw up my hand saying, well, that's nice. I guess that's something for somebody else to pick up and carry forward with because i don't I don't want to participate in that.
00:15:56
Speaker
But from the standpoint of the operators, they're going to be faced with any any bad strokes such as additional penalties, ah interest, all those kinds of bad things that could happen because you're not following tax law.
00:16:13
Speaker
But you also have to be concerned about if you're on the other side being a preparer, you could very easily be in violation of Circular 230 and potentially expose your license.
00:16:26
Speaker
So That's a that's a tough situation to be in to may have to make that kind of decision. Okay, now I guess I would like to know if you could walk us through, like I know everybody is asking these questions, when, when, when, do you happen to know the process of what has to happen next? Now we know that we had an announcement made about three years ago by Biden that we need to look into this. The next step was the Department of Health and Human Services. They did their review. They came back with their recommendation for Schedule 3.
00:17:01
Speaker
Now it pushed it was pushed over to DEA. Now we're in a holding period with the DEA. But now that it's been expedited, what exactly has to happen next for this to actually pass?
Rescheduling Process & Agency Roles
00:17:15
Speaker
So it's a very difficult question to ask. Because at one point I had someone describe this, this has been a few years ago, and they came up with 11 different ah federal agencies that this thing should go through.
00:17:34
Speaker
What we typically hear about are the the biggies, the the um the DEA, who holds the key to ah the actual schedules associated with ah the CTA.
00:17:52
Speaker
You have HHS.
00:17:56
Speaker
which also ah weighs in on some of the um administrative side of things and so forth. And you've got DOJ, who really is going to write the eventual law.
00:18:10
Speaker
um And so there's there's the biggies that come out. And then there's also these little guys that also have issues that that they may raise their head and say, I've i've got a question, let's let's resolve that before move forward.
00:18:26
Speaker
um What I'm concerned about, and I think so many so many of us are, is is this ah Trump ah just opening the gate ah to rescheduling and not having the details put together and to have any of these major agencies, DEA, FDA, and so forth, that then don't not necessarily stonewall, but basically take their time at getting the this rescheduling through their agency.
00:19:02
Speaker
So if everything goes extremely well and everybody's happy, happy, then it could be that something happens in 2026. But it could be that there's there's just disagreement, there's ah consideration about some outside groups that are gonna file ah lawsuits and so forth, that this stuff could be a year, two years down the line, which I'm always very sensitive to saying that because people get very hopeful about this.
00:19:37
Speaker
And we in the in the industry, Follow the the product itself, follow the plant. And we know that there's lots of good things about it.
00:19:48
Speaker
And so we continue to shake our head saying, why does it take so long? Yeah, absolutely. And OK, so and we've been talking a lot about 280E, which we know that's definitely one thing that will change. um But what are some of the other things that you're hearing that people think might change, but probably won't or definitely won't change? Like a lot of people are thinking, oh, Schedule 3 means it's federally legal. um What are your thoughts on that?
00:20:18
Speaker
Well, so Schedule 3 does a lot of great things. um But yet, you know, if you if you list out some other of those activities that are other drugs that are that are still part of the Schedule 3, you're going to have ketamine.
00:20:34
Speaker
You're going to have ah ah Tylenol with codeine. ah You've got a variety, which we all know are still with a doctor's a note to be able to get those those drugs issued.
00:20:49
Speaker
um It's just odd that we have cannabis, which we have a series of of retail shops that ah can distribute um medical grade ah cannabis and so forth. So it's very odd that it it takes a departure from everything else that's in schedule three, which is you have to have a doctor's a note for this.
00:21:14
Speaker
um But along with the Schedule 3, it isn't just everything open. um We're going to have considerations for banking, which is not totally defined as far as what's going to happen there.
00:21:31
Speaker
ah Do we have interstate commerce that all of a sudden is going to immediately open and so forth? it's it's pretty narrow with regards to what we're going to get out of it. It's just that 280E is such a big thing and hits everybody's pocketbook that we're ah so happy that we hear that that's the biggest part of this rescheduling activity.
00:21:54
Speaker
But there's a lot of things that are just going to not be moving um at at any rate at all. um So those are going to be things that are going be have that will have to be dealt with um separately.
00:22:10
Speaker
um And hopefully he goes through Congress because Congress is is the big the big deal. if If Congress says it's done, it's a done thing with all the activities that go on through this rescheduling and so forth.
00:22:25
Speaker
Very frankly, if that's as far as we get, all those activities could be reconsidered. Now we're back to 280 still apply.
00:22:35
Speaker
So that's one of the worst parts of this whole deal is if Congress is not involved in in the actual um rescheduling of cannabis, then it may not be a permanent situation.
00:22:50
Speaker
So you mean to tell me that it can get rescheduled and then Congress can come back and say, OK, but 280, I don't care. 280 applies to marijuana no matter where it is on the schedule. Congress has a lot of weight with regards to what all they can do and and what kinds of consideration it can make for this.
00:23:09
Speaker
So the best approach would be to have Congress pick this up and run with it. But at this stage, you know, they're they're letting they're letting Trump's, you know, executive order kind of play itself out. So it's a it's it's a very disappointing situation.
Protective Claims in Cannabis Industry
00:23:31
Speaker
Okay, so I've been hearing the term protective claim being thrown out there for cannabis operators and a lot of tax preparers are doing this. Now, what is a protective claim? And do you think that that's going to help based on where the rescheduling conversation is going?
00:23:48
Speaker
So protective claim is a pretty cool concept. ah The difficulty with it is that it is a taxpayer by taxpayer basis.
00:23:58
Speaker
So therefore, there isn't something that says we're going to do protective claims across the board for all taxpayers that are in cannabis business. Each one has to make that determination individually.
00:24:12
Speaker
And what happens with this protected claim is is is that the taxpayer takes a look at any laws that are that are ah expected to be changed.
00:24:27
Speaker
It can be because they now are going through ah Supreme Court. It could be a ah a a regional a circuit court, any of those kinds of things that now is going to change the law.
00:24:41
Speaker
And so what happens is, is the taxpayer this case, we're talking exclusively about cannabis, is going to write a letter to the IRS s and basically state that ah they believe that their tax situation is to be changing.
00:25:00
Speaker
And so therefore, they want to um submit a protective claim that says that they can. And now we have this dot, dot, dot kind of arrangement because What are you going after? Are you going after two ae for old tax years?
00:25:20
Speaker
Are you going for what years in particular? Are there other considerations? And the problem is with the protective claim in in our industry, cannabis, is that we don't have a lot of fill in the blank kind of specifics.
00:25:37
Speaker
So therefore, we have to get as close as we can get. um And then becomes the issue of is this law going to be retroactive? You know, the thought is, is that 280E gets thrown out, ah protective claim steps in and says, oh, wow, 280 doesn't apply. So let me go back umpteen years and request that I can do amended tax returns to go get my money back.
00:26:05
Speaker
And now the question is, how many years can I go back? And so this becomes this kind of loop of conversation, which is, can we actually go back?
00:26:17
Speaker
And if so, how many years? Now, final comment on this is that just think you could do amended returns back for three years without doing a a protective claim.
00:26:29
Speaker
So therefore, it may be that we can newer businesses that are three years and under. And you take a look at some of the newer states, New York, New Jersey, some of some of the newer states.
00:26:42
Speaker
And they're there within three years for doing an amended return without a protective claim. So this is really a cutting edge kind of a thing where it'd be exciting to be able to apply.
00:26:57
Speaker
We just have to have our wits about what we're trying to accomplish, what that letter is actually going to say with as much detail as we can in order for us to actually secure any kind of protection associated with the claim.
00:27:13
Speaker
So now there's been a lot of discussion out there about the the new farm bill.
Farm Bill & Hemp Industry Impact
00:27:20
Speaker
and this is hemp, which is the same plant, but different components are in there, less intoxicating.
00:27:29
Speaker
um You know, that's what they they think it'd be less intoxicating, but there is intoxicating hemp. So How does this rescheduling discussion impact these the hemp industry and how is that going to also, the hemp industry, impact the THC industry?
00:27:47
Speaker
So I think that it's ah it's an absolutely fascinating area where um we have had hemp through the farm bill where we thought, wow, this is a clear signal. we can We can run that out the flagpole. We can develop products.
00:28:06
Speaker
ah We can have interstate commerce, so on and so forth. And now they've made some changes to the most recent farm bill, And some of this has been done on a state level basis.
00:28:19
Speaker
So therefore, now we have some. Some real concern that there will be a complete slowdown in what hemp activity can occur this thing, as a new law comes into place ah next fall.
00:28:40
Speaker
um So what I find fascinating is that on one hand, we've got hemp-based beverages available all over the place. ah a ah There's some major beverage outlets here in California.
00:28:58
Speaker
um There's a whole variety of, ah you know, the convenience stores and so forth in various parts of the U.S. that are offering the hemp-based products. And now we have an issue about, okay, we thought that the next logical step was gonna be to have THC-based beverages just follow right in line.
00:29:21
Speaker
And now that whole activity with the beverages has has really slowed down. So that's gonna be a huge concern about how they unravel that um because that seemed to have a clear signal to to moving that part of the industry forward.
00:29:38
Speaker
Okay. And now with this current rescheduling discussion and people kind of questioning 280E, have you seen increases in IRS tax audits in the industry?
IRS Audits & Practitioner Advice
00:29:52
Speaker
So the whole audit situation has been quite interesting. ah There's a there's a IG group TIGTA is is what it's called, the short short name for it, which um several years ago of kind of you know, got upset with the IRS because they said, look, here's this huge money driver and you guys are not doing anything with it.
00:30:19
Speaker
And so, you know, the result was ah the IRS said, OK, well, we're we're going to go ahead and do some audits. So they selected 50 taxpayers and did 50 audits.
00:30:33
Speaker
And those kind of went kind of nowhere. I mean, You heard that they'd done it. You heard that they then months later were done with their 50 audits.
00:30:45
Speaker
But there was not really any standardization associated with their findings. ah They didn't come out to say at the end of all of this, OK, so now we feel that the ah the ah cannabis industry, we're going to.
00:31:03
Speaker
write this into our internal revenue manual and now have our standard for the way we're going to be auditing and so forth. They continue to take a real standoff approach standard to to standardizing the whole cannabis ah audit routine.
00:31:25
Speaker
um You know, they acknowledge that there's 471C that's out there. They acknowledge that 280E is still a standard in which they are going to do their auditing work and so forth.
00:31:37
Speaker
But with regards to any standard publication comes out, there's not like a market segment guide ah that that they publish so that you know exactly what to do as an auditor.
00:31:51
Speaker
ah That just is not materialized at all. And now recently, um you know, what are they left with? I mean, they've had a tremendous cutback in their their whole staffing.
00:32:04
Speaker
ah And then they find that they have another pocket that the that the government is giving a little bit more money and then they take that away again. So it's been really topsy turvy with regards to what even their budget looks like.
00:32:19
Speaker
The difficulty ah that that other practitioners that I have discussed is that you don't you don't hire somebody into an agency like the IRS and expect them to be audit ready as soon as they have you know gotten their name badge and their business cards.
00:32:39
Speaker
It takes usually two, three years at best, at quickest, in order for them to be useful for an industry like cannabis. So therefore, you continue to have this, you know, a discussion that says, oh, we've got more people that we could throw at this problem. And then we find out they answer the phone.
00:33:00
Speaker
They aren't doing industry specific things. I've not. talk to any practitioner that's had any level of cannabis audits come across their desk to any degree at all.
00:33:14
Speaker
And so that also kind of plays against some of our professional um attitudes about the cannabis industry and how far can we go.
00:33:29
Speaker
ah The last thing we want to do is tell our clients that you know your chance of ever getting an audit is like, you know, X per percent ah and it being a very low number ah because that just puts us more in a hole.
00:33:44
Speaker
We have to play as if this is really serious stuff and And hopefully they'll never be audited, but their chances are still there that they could be. ah But that's some of the difficulties with the IRS and how they're staffing now and the fact that they continue to not offer any kind of standardized audit plans for us to work with.
00:34:08
Speaker
OK, awesome. And so what exactly like what type of advice are you currently giving your clients as far as, you know, we got Q1 estimates coming up, Q2, Q3. Like, how are you handling that at this at this stage?
00:34:24
Speaker
So great question. the The concern I have is that ah anytime you have a business that is making money, they should be doing estimated tax payments.
00:34:36
Speaker
um Should float through the first half of the year and then wake up in the third quarter and say, oh, my God, I should do estimates?
00:34:47
Speaker
Or should they. For ah estimated tax purposes. um get some estimates that are a part of that tax um package that professional tax preparers have available, pay their first quarter, pay their second quarter,
00:35:09
Speaker
estimates and then see how they're doing, because if they've not paid those two estimates the front half of the year, they're going to it's going to cost them a lot in regards to ah interest.
00:35:22
Speaker
um So therefore, they need to get on board to be doing that side of it. If they if things lighten up and we may know. um by mid-year where we are with regards to this rescheduling situation.
00:35:37
Speaker
So therefore they can back off the second half of the year for their estimates, or they may have to continue to run them through the end of the year, but at least do those first two ah estimates.
00:35:49
Speaker
And let's say we are halfway through the year and see if we can better get an idea about timing for the rescheduling activity. Okay. And then alternatively, what type of advice would you give to other practitioners, other tax preparers in the industry um to make sure that they're not doing anything that's going to get them in trouble, that they have they're taking defensible positions and that they're you know including the proper documentation when it when it comes to handling this this topic? Okay.
00:36:24
Speaker
So it's it's super important that um that there's a very ah serious approach taking to the tax preparation in this industry.
00:36:37
Speaker
Cannabis is not the first industry that that any of us had come up against that's kind of like, well, you know, how do we how should we take this and that with regards to this industry that's a little soft in one particular fashion or another?
00:36:52
Speaker
It's just super important that ah documentation is managed, that we have a reason for everything that we're that we're doing.
00:37:03
Speaker
um from several standpoints. Number one is, ah God forbid that your client is the unlucky one that that does get audited, then to make sure we have good substantiation.
00:37:17
Speaker
We've got payroll. Are we splitting it correctly between cost of goods sold and general administrative? If we've got rent, utilities, insurance, are those things allocated correctly? So as much as we can, we push a component of that into cost goods sold.
00:37:36
Speaker
Wonderful situation. But do we have a reason for doing that, that we can that we can substantiate. The other issue is going to come up is, oh, wow, now we have a rescheduling activity.
00:37:50
Speaker
So how much are we going to get out of that rescheduling? And and how do we nicely blend that into the next year's tax return with some history of how we used to do it and how we're doing it now going forward?
00:38:05
Speaker
So there's a lot of of delicate situations to be to be taken in consideration in doing this year's tax return and the next year as well.
00:38:16
Speaker
Got it. And just to wrap up, what is like maybe one sentence or one statement that you want to leave the audience with to help them really understand, like what exactly the December 18th executive order has done for the industry?
Conclusion & Next Steps
00:38:33
Speaker
So we're going to look for two things. We're going to look for one. it's going to be a long sentence. One is going to be when is it going to officially pass and when and then a comma.
00:38:45
Speaker
And then the second part is going to be when is it going to go into effect? And based upon those two components, then you can plan your year and you can probably probably plan your next year as well.
00:38:58
Speaker
But those are the two timetables. It's super important to get really well put together and understanding this. Any other kind of numbers and dates, you know, DEA says this.
00:39:14
Speaker
DEA is going to have some hearings. such All that stuff is nice conversation. It's very cool if you're going to have an after dinner, you know after hours drink with somebody just to show you're up to date.
00:39:30
Speaker
But as far as the absolute, how you're going operate and do the best for your client, you've got to know what that effective date is. Okay, awesome. Well, thank you so much for being with us today.
00:39:42
Speaker
It's great having having a chance to to to be on and hopefully we've got some ideas about direction to go and keep keep the movement in a positive direction and go overboard.
00:39:59
Speaker
That's a big thing and not going too much overboard on how we're going to deal with this situation. Thank you for joining us today. That was our session with Bruce Anderson, founder and principal CannabisCPA.Tax.
00:40:14
Speaker
In this session, we discussed rescheduling and how it will impact Section two eighty e taxes, implications for the hemp industry, the rescheduling process, as well as what to do next if you are a cannabis operator or if you have clients who operate in the cannabis industry.
00:40:34
Speaker
For CPE credits, make sure you follow the link in the description below. We will see you next time on the Becker Accounting Podcast.