Imagine if you had a business client who could not take any deductions or credits connected to any expense that arose from building and maintaining that business. What would that look like? What would their tax bill look like? Well, imagine no more, because this is exactly what's playing out in states that have legalized recreational marijuana, according to Forbes. The issue is the federal tax code's section 280(e), which says that people cannot take any credits or deductions for any amount paid in carrying on a business in a controlled substance, which for the purposes of federal law, marijuana still is. Well, almost none: they can still deduct for cost of goods sold, though Forbes said this is rather limited compared to the other deductions and credits other businesses get. Legal marijuana businesses, and the CPAs that employ them, are finding it consequently very difficult to minimize the tax bill on what has been, so far, a booming industry that has netted the state of Colorado, for example, $43 million in tax revenue so far. 

The Forbes piece also explores whether CPAs working for legal marijuana companies might, themselves, run afoul of their respective state boards of accountancy--a CPA must be of "good moral character" and, so far, state boards have been silent as to whether working for an industry that is legal in certain states but illegal on a federal level falls within those bounds. The AICPA, in astatement, advised CPA firms to consult an attorney before taking on such clients, just to be on the safe side.