Title

An Analysis of the Accounting and Financial Effects of Inconsistent State and Federal Laws on Growth of the Recreational Marijuana Industry

List all Project Mentors & Advisor(s)

Dr. Jeff Osborne

Second Project Mentor & Advisor(s)

Randall Bunker

Presentation Format

Event

Abstract/Description

There is limited information available concerning the recreational marijuana industry due to its first state legalization occurring in only 2012. As such, much is still being discovered about the industry and the various state and federal laws addressing it. These laws can affect both the medical and recreational marijuana industries, which are often intertwined, and have raised numerous questions as to how to conduct business in an environment of legislative and legal uncertainty. In the current study, the accounting and financial effects of the inconsistent state and federal laws regarding the recreational marijuana industry are examined from the following perspectives: banking and financial institutions, marijuana dispensary business owners, and certified public accountants (CPAs). It has been argued that the lack of federal action in regards to the discrepancies between state and federal legislation is hindering growth of the emerging industry, even in states that have legalized marijuana for recreational use. The results of this study support the view that various financial and accounting aspects of legislative ambiguity are impeding the growth of the recreational marijuana industry. Marijuana businesses are facing high effective tax rates, financial institutions are hesitant to form relationships with businesses in the industry, and CPAs are faced with many uncertainties when considering to offer services to marijuana businesses.

Location

Barkley Room, Curris Center

Start Date

April 2016

End Date

April 2016

Affiliations

Honors Thesis

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Apr 21st, 12:00 PM Apr 21st, 1:00 PM

An Analysis of the Accounting and Financial Effects of Inconsistent State and Federal Laws on Growth of the Recreational Marijuana Industry

Barkley Room, Curris Center

There is limited information available concerning the recreational marijuana industry due to its first state legalization occurring in only 2012. As such, much is still being discovered about the industry and the various state and federal laws addressing it. These laws can affect both the medical and recreational marijuana industries, which are often intertwined, and have raised numerous questions as to how to conduct business in an environment of legislative and legal uncertainty. In the current study, the accounting and financial effects of the inconsistent state and federal laws regarding the recreational marijuana industry are examined from the following perspectives: banking and financial institutions, marijuana dispensary business owners, and certified public accountants (CPAs). It has been argued that the lack of federal action in regards to the discrepancies between state and federal legislation is hindering growth of the emerging industry, even in states that have legalized marijuana for recreational use. The results of this study support the view that various financial and accounting aspects of legislative ambiguity are impeding the growth of the recreational marijuana industry. Marijuana businesses are facing high effective tax rates, financial institutions are hesitant to form relationships with businesses in the industry, and CPAs are faced with many uncertainties when considering to offer services to marijuana businesses.