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State Board Report

February 2015

CPAs are being told by the AICPA to check with their State Board of Accountancy when they consider providing services to a marijuana-related business. Beginning this month, Alaska has legalized recreational marijuana for individuals over the age of 21 and Oregon will have a similar law in effect in July 2015. In November 2012, voters in Colorado and the state of Washington approved legalized recreational use of marijuana, and in November 2014 Guam voters did too. However, as the Federal Controlled Substances Act classifies marijuana as a controlled substance, marijuana-related businesses and consumers are subject to federal prosecution. In January, the AICPA released an update of "An Issue Brief on State Marijuana Laws and the CPA Profession." The paper warns: "It is possible that a CPA from a state that allows marijuana use who has provided services to a ‘marijuana business’ could face licensing difficulties if he or she seeks a reciprocal license in a state where marijuana is illegal. It’s not yet clear how State Boards of Accountancy will apply ‘good moral character’ requirements or impose discipline when it comes to supporting marijuana-related businesses, or if they will take a position at all."

The paper goes on to state: "CPAs who are contemplating providing services to marijuana-related businesses should consider whether a State Board would consider it to be an ‘act discreditable’ when a CPA provides services to businesses that violate federal drug laws, even in a state that allows those businesses to operate legally."

AICPA notes that since 1996 some states have allowed medical marijuana dispensaries and CPAs have been questioning whether they may provide services for these dispensaries. The AICPA and some State Boards have advised CPAs considering this area to seek the advice of independent legal counsel.

The updated AICPA issue brief observes: "In the states that have passed laws or referendums allowing medicinal or recreational marijuana use, State Boards of Accountancy have not yet provided any guidance for CPAs looking to provide services to businesses that grow/sell marijuana. This dynamic puts CPAs in a gray legal area. They need to satisfy the requirements of their State Boards of Accountancy for ‘good moral character’ and the ‘acts discreditable’ requirements in their respective states, while at the same time considering the potential business opportunities."

During the upcoming NASBA State Board Executive Directors Conference (March 24-26), "The Impact of Marijuana Laws" will be discussed in a session with State Society chief executive officers. Speakers will include Colorado Society President and CEO Mary Medly and AICPA Vice President of State Regulation and Legislative Affairs Mat Young.

The Nebraska and Oklahoma Attorneys General on December 18, 2014 asked the U.S. Supreme Court to declare Colorado’s legalizing marijuana sales to the general public unconstitutional, because it breaks the supremacy clause that holds federal law trumps state law when a conflict exists between the two. Oklahoma Attorney General Scott Pruitt stated: "The illegal products being distributed in Colorado are being trafficked across state lines, thereby injuring neighboring states like Oklahoma and Nebraska." Nebraska Attorney General Doug Peterson observed, "Federal law has declared marijuana a narcotic, but our current Department of Justice wants to give them a pass."

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