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the possible options available without recourse to bankruptcy. Smith provided insight into several key court decisions and their impact on businesses and the professionals that service them.

J.P. Holyoak, a dispensary owner/ operator, provided valuable insight regarding challenges faced by businesses including hiring and employment, banking, accounting/tax and regulatory compliance. He discussed merger and acquisition activity and a dispensary owner/operator’s perspective of the current state of industry regulation.

Ross Dietrich discussed cannabis tax compliance matters and IRS Code Section 280E and its impact on clients and CPAs. 280E, “does not allow a deduction or credit for any amount paid or incurred during a taxable year in carrying on any trade or business if such trade or business consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substance Act), which is prohibited by Federal Law or the Law of any State in which such trade or business is conducted.” Dietrich discussed the challenges faced in the preparation of audited financial statements and tax returns and recent IRS efforts in conducting their examinations/audits.

The panelists also discussed Arizona’s hemp program. The Arizona Department of Agriculture (AZDA) oversees the state’s hemp program, which opened up hemp processing in 2019. Under Arizona law, growers, nurseries, processors, harvesters and transporters are required to obtain AZDA licenses. Notably, the AZDA doesn’t regulate retailers. Like in any other state with regulated hemp, there are fees, compliance rules and penalties for non-compliance. The level of regulation is not even close to what we see for cannabis/marijuana (www.cannalawblog.com June 2019). In January 2020, the Arizona Marijuana News reported that 40% of Arizona’s hemp crops had to be destroyed due to too much THC (the psychoactive substance in cannabis).

The panelists provided their 2020 predictions for the overall industry and the impact to the Arizona economy in the future. The push for adult-use in Arizona is a matter of time. As CPAs and other professionals serving clients in the cannabis and hemp industries, we need to be educated and informed.

If you are a member of the ASCPA and would like to be part of the Cannabis Special Interest Section or have recommendations for upcoming event topics or speakers, we welcome your input. Check us out on the ASCPA’s Connect Cannabis and Hemp Advisory site at www.ascpa.com/cannabis.l

Josephine Giordano, CPA, is a director with BeachFleischman PC and chair of the ASCPA’s Cannabis Special Interest Section. Giordano has extensive experience as a financial professional, with a diversified background that encompasses internal audit, banking, tax, business valuation, forensic accounting, bankruptcy and restructuring, court-appointed receiverships, court-appointed Special Master and Compliance Monitor, and other litigation support services. She can be reached at jgiordano@beachfleischman. com or (602) 792-5981.

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