Cannabis Compliant Accounting + Tax | Nesteggg Accounting

Make Good

Back in August, online marijuana advertising giant Weedmaps pledged to stop advertising unlicensed cannabis shops and now apparently, as of the beginning of the year they have expunged some 2,700 unlicensed shops from their site. A boon to licensed operators who put in the time, effort, and capitol to become part of the legal market. Unlicensed shops do not pay for a license, or state and local excise tax, thus not passing those costs along to their customers. This pricing undercut has been a problem for licensed dispensaries state-wide.

Loopholes remain however in Weedmaps filtering system. Apparently, the company only requires a listing report the license number or the operator sign an agreement stating the shop sells only CBD products. Weedmaps currently does not have a mechanism to verify the validity of a license number or check a shops offerings.

Remaining on the site as of the beginning of January were nearly double the amount of listings as the number of licensed cannabis shops in California. Even still, some cannabis retailers say they have noticed an uptick in sales since the beginning of the year.

Clean Declaration

Eureka based cannabis company Papa & Barkley has announced a commitment to what it is calling “clean cannabis”.

Many companies tout their product as “organic”, is this the next step in the natural products wave of eschewing chemicals and using chemical processes in manufacturing, or perhaps a simple attempt to set their products apart from the ever growing CBD market. Or a counter to the vape crisis of 2019. One thing is certain, the cannabis industry will continue to grow apace in 2020 and we may see other cannabis companies making similar declarations or perhaps quietly following suit. As the industry remains under scrutiny companies will continue to attempt to pull ahead of the pack.

Papa & Barkely’s core “clean” commitments:

Organic and regenerative farming practices – Choose trusted farm partners in the U.S. who use native soil, organic and regenerative farming practices when growing both cannabis and hemp plants.
Solventless – Avoid solvents and chemical extraction methods that yield isolates or distillates; employ a solventless whole plant infusion process that maintains the integrity of the plant and creates more effective products.
Whole plant infusion – By infusing the whole plant, it maintains the full spectrum of cannabinoids, terpenes, chlorophyll and valuable phytonutrients; naturally infused into products without the use of chemicals or adding terpenes.
Clean ingredients – Supporting ingredients such as carrier oils, essential oils and beeswax are clean, conscientiously sourced and made with no residual chemicals.
Triple-tested by third-party – To ensure the product is clean throughout the process from soil to shelf, its crucial to test the product at three stages – the input cannabis plant material, the infused oil and the final blended product.

State of Legal Cannabis

Libertarian candidates for President don’t normally get a lot of press but they can change the conversation. Former Rhode Island Governor Lincoln Chafee has just filed as a Libertarian candidate for President. One of his messages during his press conference to announce his candidacy was that of decriminalization of drugs, siting the “war on drugs” as a failure.

Meanwhile, the Senate has yet to schedule a vote on the Secure and Fair Enforcement (SAFE) Banking Act which passed the House late last year. While there has been some speculation about the Republican controlled Senate moving instead to re-schedule cannabis. All bets are probably off though until the matter of impeachment is settled.

For now legal cannabis is coming to the U.S. on a state by state basis. The scale is tipping however now that over half the States allow sales of either medical marijuana or recreational or both. And even in a few states like Nebraska and Mississippi, though the pendulum has not swung to legal sales as yet, there are moves to decriminalize or reduce penalties for marijuana possession.

Illinois Cannabis Boom?

In it’s first full week of legalized cannabis sales several recreational cannabis dispensaries in Illinois were closed Monday. Some dispensary owners saying strong demand has caused a shortage in supplies and led to staff exhaustion. But other speculation was that there was a shortage of state-approved employees.

Illinois begins legal sale of cannabis Jan. 1, 2020

The legal sale of recreational cannabis began Jan. 1 in Illinois, with customers spending about $3.2 million on the first day and more than $10.8 million over five days. By comparison, Michigan, which made recreational marijuana legal on Dec. 1, generated $3.1 million in the first two weeks of sales.

Illinois had allowed medical sales of marijuana since 2014 and essentially decriminalized marijuana possession in 2016.

Take Stock?

For the first time the SEC, the Sacramento Bee reports, has approved an American cannabis grower to issue a public stock offering.

Cannabis companies being publicly traded

Santa Cruz-based Goldenseed is selling shares starting at $100.

Americans previously could buy stock in Canadian growers, such as Tilray and Aphria, as well as American marijuana retailers like MedMen. This marks the first time that the American public can buy stock in an American cannabis grower.

Cannabis remains a new industry among publicly traded companies. Investment analysts still can’t predict a company’s trajectory as the markers are still in part unknown for the industry.

What states will legalize cannabis in 2020?

Illinois: Democratic Governor JB Pritzker granted more than 11,000 pardons for low-level marijuana convictions on Tuesday, ahead of the state’s official legalization — which the Legislature passed in June — effective on Wednesday.

Illinois is now the second state in the Midwest, following Michigan in 2018, to legalize recreational marijuana sales and use.

Florida: Make It Legal Florida, a political committee, is behind a proposal to legalize recreational marijuana in the state. According to polling, over 65 percent of Florida voters “want to have expanded access to cannabis for 21 and over.”

As of Tuesday, the state had verified 219,290 signed petitions from Make It Legal — just 28% of the total signatures needed by the February 1 deadline.

Minnesota: Democrats in the state are preparing marijuana legislation, the Minneapolis Star Tribune reports. House Majority leader Ryan Winkler (D) has been touring the state on the issue in an effort to ready a bill for the state’s session in February.

The Republican-controlled Senate, however, poses steep odds, as key conservative leaders remain opposed to legalization.

New York: Last year ‘s efforts to legalize cannabis failed. But Governor Cuomo is continuing on a pro-legalization path in 2020.

New Jersey: The state will vote on legalization of recreational marijuana in November, 2020. If the measure passes, New Jersey residents 21 and older will be allowed to use pot recreationally. All sales of cannabis products would be subject to a 6.625% sales tax.

Virginia: Attorney General Mark Herring has called for the “immediate decriminalization” of possession of small amounts of marijuana, and hosted a Cannabis Summit in December to educate state leaders on what steps need to be taken to accomplish that goal.

One piece of marijuana legislation that has been filed for the state’s 2020 session, SB 2, would decriminalize marijuana possession, and would raise the amount needed to be charged with distribution to one ounce versus half-an-ounce. The bill would also allow people to petition to expunge their convictions.

What about federalization?

It all comes down to the proposed banking bill. Lawmakers introduced the Secure and Fair Enforcement (SAFE) Banking Act, which would protect banks who partner with cannabis businesses. Once this business hurdle is jumped then the idea is that federal legalization is not far behind. But the Senate still has not, as of this writing, put the vote on the bill on their calendar.

Cannabis Law Changes In New Year

Legislative changes: These new marijuana laws take effect Wednesday, Jan. 1, some up some down but as always, the only constant is change.

Senate Bill 34 will let licensed businesses donate products for medical marijuana patients in need.

Assembly Bill 37 will let cannabis operators deduct expenses, a standard business practice that’s been blocked due to federal law.

And Assembly Bill 1810 makes it illegal for passengers in limos, taxis and other commercial vehicles to consume cannabis (though they can still drink alcohol), effectively ending any hopes of cannabis party buses. Also on Wednesday, mandated industry tax hikes will hit an already struggling industry.

Notification for Track-and-Trace System Users

MANUFACTURED CANNABIS SAFETY BRANCH

Notification for Track-and-Trace System Users

External transfer functionality will be removed January 15, 2020

Notification for Track-and-Trace System Users

The Track-and-Trace system is being reconfigured to disable External Transfer and Temporary Transporter functionality. This functionality was intended to be used solely to facilitate transactions between annual or provisional licensees who had been credentialed into Track-and-Trace and temporary licensees who had not yet received system access. As there are no remaining temporary licensees in California, this feature will be removed.

Beginning on January 15, 2020, you will no longer be able to transfer cannabis or cannabis products that are not tagged and uploaded as inventory in Track-and-Trace. All manifests for movement of cannabis items will be required to be generated through the Track-and-Trace system. Any pending external transfers must be completed prior to January 15, 2020.

A detailed bulletin about this change is available to system users. To access the bulletin, please log into your Track-and-Trace account and click on the envelope in the upper left-hand corner. Licensees are required to order Package Tags within five calendar days of receiving access to the Track-and-Trace system (§40517). If you have not yet ordered Package Tags, you must do so immediately. After ordering, it takes approximately 10 business days for tags to be delivered. Once you receive your tags, you must use them to document all cannabis inventory held on your premises and record all commercial cannabis activity.

Track-and-Trace System Resources

Detailed instruction booklets for California users of the Track-and-Trace System are available on the Metrc California website, www.metrc.com/california. The California Supplemental User Guide contains the following instructions that may aid you in ordering tags and inputting inventory prior to the removal of the External Transfer functionality:

Ordering Package Tags – page 48
Receiving Package Tags – page 52
Creating Packages from Existing Inventory – page 88

In addition, the California Transition Period Guide contains instructions for new users, including steps for uploading beginning inventory.

California Cannabis Track and Trace Reporting Requirement

All California License Holders,

All license holders are required to conduct the commercial cannabis activity pursuant to their license within the California Cannabis Track-and-Trace (CCTT-Metrc) System. Failure to conduct your commercial cannabis activity within the CCTT system by January 6, 2020 will result in the suspension of your license.

If you have not yet completed the required Account Manager training, please register for training by visiting: California Cannabis Track and Trace Account Manager Training. Please reference your annual application number.

If you have completed the required Account Manager training, please contact Metrc support at support@metrc.com to complete the credentialing process.

If you are credentialed, but not yet tag enabled, please forward your existing inventory to bcctrackandtrace@dca.ca.gov. Your inventory should contain the following information:

Item Name
Product Type (i.e. vape cartridge, tincture, edible)
Weight Per Unit (i.e. 3.5 grams, 300ml, 10mg)
Quantity
Batch ID

Upon receipt and review of your inventory, the Bureau will increase your tag allotment, at which time you can log into your portal to initiate your tag order.

If you are currently credentialed and tag enabled, you are required to immediately begin working within the California Cannabis Track and Trace (CCTT) system, as well as with those annual/provisional license holders who are also working within the CCTT system.

Failure to conduct your commercial cannabis activity within the CCTT system may be grounds for disciplinary action and the suspension of your license.

Form 8300 and Reporting Cash Payments of Over $10,000

The general rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions.

Form 8300 – Is Your Business Filing the Proper Cash Transaction Forms?

Has your business ever received a large cash payment, and you were not quite sure what your reporting obligations were regarding that large payment? The general rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions.

The Form 8300 provides valuable information to the Internal Revenue Service and the Financial Crimes Enforcement Network (FinCEN) in their efforts to combat money laundering. This is an important effort, since money laundering is a tool used to facilitate various criminal activities, ranging from tax evasion to terrorist financing to drug dealing, to hide the proceeds from their illegal activities.

Filing Form 8300

Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file a Form 8300. Persons includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. Persons must file a Form 8300 with the IRS if any part of the transaction occurs within any of the 50 states, the District of Columbia, or a U.S. possession or territory (American Samoa, The Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico and the U.S. Virgin Islands).

If you are required to file Form 8300, you must do so by the 15th day after the date the cash transaction occurred. A person can file Form 8300 electronically or by mailing the form to the IRS at: Detroit Computing Center, P.O. Box 32621, Detroit, Michigan 48232.

In addition to filing Form 8300 with the IRS, companies need to furnish a written statement to each person whose name is required to be included in the Form 8300 by January 31 of the year following the transaction. This statement must include the name, address, contact person, and telephone number of the business filing Form 8300, the aggregate amount of reportable cash the business was required to report to the IRS from the person receiving the statement, and that the business provided this information to the IRS.

Meeting the proper filing requirement and the requirement to furnish a written statement to each person named on the Form 8300 is very important, because there are potential civil and criminal penalties for failure to file Form 8300. Penalties for violation of the Form 8300 filing and furnishing requirements have been increased by the Trade Preferences Extension Act of 2015. Increased penalties apply to Form 8300 and related notices requiring filing or furnishing after December 31, 2015. In addition, penalty amounts are now adjusted annually for inflation.

Electronic Filing for Form 8300

On Sept 19, 2012, FinCEN announced that businesses may electronically file their Form 8300 using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System. E-filing is free, and is a quick and secure way for persons to file Form 8300. Filers will receive an electronic acknowledgement of each submission. For more information about Form 8300 e-filing, see the FinCEN news release.

Educational Resources

The following educational products have been developed for your use in learning more about why, when and where to file Form 8300:

IRS Form 8300 Reference Guide (PDF)
Motor Vehicle Dealership Q&As
IR-2019-20, IRS urges businesses to e-file cash transaction reports; It’s fast, easy and free
FS-2019-1, Cash payment report helps government combat money laundering

Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) explains key issues and terms related to Form 8300. Publication 1544 can be downloaded in English or Spanish.

Form 8300 Assistance

Call 866-270-0733 (toll-free inside the U.S.) Monday – Friday, 8 a.m. to 4:30 p.m. Eastern for help in completing Form 8300 (PDF). The form is available online at IRS.gov Form 8300 (PDF) or by calling 800-829-3676. Questions regarding Form 8300 can be sent to 8300QUESTIONS@irs.gov.

Contact the BSA E-Filing Help Desk at 866-346-9478 or by email at BSAEFilingHelp@fincen.gov if you have technical questions or need assistance electronically filing Form 8300.

f8300 Download

« Previous Page