Up in Smoke, Conflicts in Accounting Practices for Legalized Cannabusiness

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Abstract

The legalization of cannabis at the state level in the United States has rapidly grown since California became the first state to legalize medical cannabis in 1996. Colorado and Washington recognized recreational cannabis as a legal business in 2012 propagating the adoption by a majority of the states. Only 18 states remain where cannabis for any consumption remains illegal. As with any new industry accounting policies, controls, and procedures need to be in place. Conflict and confusion in banking and accounting practices arise when accounting rules at the federal and state level are not in congruence. Given this emerging business model, there is a demand for accounting skills that can navigate banking and accounting practices where a majority of the states have legalized medicinal and/or recreational cannabis yet the federal government considers cannabis as a Schedule I controlled substance. Research is limited on how to traverse cannabis accounting and its conflict between state and federal banking and accounting laws and regulations. This paper intends to serve as an exploratory investigation into the current conflicts in banking and accounting reporting for the legalized cannabis industry.

Author

• Christa Haifley, SUNY Potsdam