What Every Cannabis Business Needs To Know About IRS Form 8300

By Dean Guske, CPA

I have received a number of emails and phone calls over the past couple of days regarding the article posted in MJ Biz Daily on Tuesday.  I was actually contacted last week by the author who wanted to know if I was seeing any audit activity in Washington and Oregon in this regard and I indicated that I had not.  He was curious as to why there was so much activity in Colorado around this issue as well.  It’s my understanding that there are quite a few IRS audits in progress in Colorado and that activity has been going on for a while.  I think this is due in part to several cannabis businesses there not following 280E when filing their federal income tax returns.  280E is unfair but unfortunately it’s the law we have to deal with for now.  At some point this will be behind us.

The 8300 audits were news to me and so far seem to be concentrated in Colorado.  My thought is that because of all the other audit activity in Colorado that this is just a follow on audit to make sure these businesses are compliant with ALL reporting requirements.

I have include a copy of Form 8300 with instructions here for your reference. I have also attached an overview of the penalties associated with not filing the form as well.

The bottom line is this.  If you any person in a trade or business receives a payment of $10,000 or more in any single transaction or series of transactions they are required to file a form 8300 within 15 days of receiving the cash.  Please note that a “person” includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate.  You should also be aware that “cash”  includes cashier’s checks, money orders, bank drafts and traveler’s checks.

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.

Filing form 8300 isn’t something anyone should be afraid of. Not filing the form is much worse.  If you have any questions or need any additional information, please feel free to call..


Have a great weekend.

Federal Reports Target Colorado Marijuana Money

COLORADO: The federal government is stockpiling hundreds of “suspicious activity reports” that could provide federal agents with sufficient evidence to shut down any state-legalized marijuana business.

While it may appear that federal authorities have taken a wait-and-see approach to marijuana legalization in the 23 states that now allow medical or recreational use, these reports are poised like a blade over the budding industry should federal laws be enforced.

This risk of federal prosecution has led some cannabis companies to literally launder their money.

“You used to be able to just smell it,” said Jennifer Waller, vice president of the Colorado Bankers Association, speaking of the cash from marijuana shops. “But now they are using Febreze a lot, putting the money in dryers, a lot of different things to try to disguise the scent because marijuana has such a distinct odor.”

That distinct odor is considered a red flag by federal authorities who require banks to file a suspicious activity report for every transaction that might be associated with illegal activity, including selling marijuana, even for state licensed businesses.

Colorado Lawmakers Shy Away From Pot Bank

COLORADO:  A Colorado plan to set up the world’s first financial system for marijuana survived less than 24 hours before state lawmakers changed course Thursday night and shelved the idea.

The proposal would have allowed state-licensed marijuana businesses to create a financial co-op, sort of an uninsured credit union.

The measure was introduced late Wednesday and cleared a House committee on Thursday. But a few hours later, another House committee gutted the plan by amending the bill to say that Colorado will continue studying the problem of marijuana businesses having a hard time accessing banking services.

Lawmakers from both parties expressed reservations about whether the financial-services plan would work.

“Let’s take some time to have this properly vetted,” said Rep. Kevin Priola, R-Henderson, who sponsored the amendment to study the matter.


Department Of Justice Paves Way For Banks To Work With Pot Shops, Citing Public Safety

DISTRICT OF COLUMBIA: Financial institutions and other enterprises that do business with marijuana shops that are in compliance with state laws are unlikely to be prosecuted for money laundering or other federal crimes that could be brought under existing federal drug laws, a senior Department of Justice official said Thursday. [Read more…]