Cannabis

Client is a prescriber of cannabis in a state where medical use is legal under state law. They do not produce, package or dispense marijuana. Their activity is limited to evaluating patients and prescribing as appropriate.

Does anyone see possible risk in preparing the tax return of this client?

The biggest risk I see is in ensuring that you get paid in the green stuff of your choice.

As far as I know, cannabis is illegal at the Federal level. The consequences of Federal vs State will be seen as time passes. Now, there are no a lot of precedents to base decisions.

Under the authority of the Controlled Substance Act (“CSA”), the Drug Enforcement Administration issues registration numbers to qualifying doctors who become authorized to dispense Schedule II, III, IV, and V controlled substances.[1] Doctors may not issue prescriptions for Schedule I substances. Cannabis in nearly every form, including low-THC varieties and extracts, is classified as a Schedule I drug and therefore may not be prescribed. A physician who engages in conduct against the public interest

I don't see any more risk than that which exists in preparing any doctor's tax returns.

Their activity is limited to evaluating patients and prescribing as appropriate.

Does anyone see possible risk in preparing the tax return of this client?

Really? What pharmacy fills these "prescriptions" you so loosely refer to?

Paid preparers prepare tax returns for law breakers all the time, why would this case be any different?

Gibson, TC Memo 2018-83

The Tax Court has held that taxpayers were precluded under Code Sec. 280E from deducting any business expenses related to their legal Colorado medical marijuana dispensary business.

If, however, the substance is not marijuana, there is a argument that 280E is inapplicable. That would apply to Industrial hemp under the 2014 Farm Bill.

OP says client does not dispense the stuff. They prescribe it. There are many legal dispensaries; they are not pharmacies. makbo, why the skepticism?

They prescribe it. There are many legal dispensaries; they are not pharmacies.

I'm pretty sure that recommending someone for a medical marijuana card is not considered writing a prescription under any law, hence my reference to pharmacies. My response was partly in reply to Dennis2 in post #4. "Prescription" does not apply here from what I can tell.

"[Prescription] often refers to a health care provider's written authorization for a patient to purchase a prescription drug from a pharmacist." [Wikipedia]

I'm frankly surprised at the question in the first place. Maybe it's the taxpayer who would be taking a risk by hiring this practitioner to do their return!

If a preparer discriminates against a drug dealer by refusing to prepare the dealer's income tax return, is there a lawsuit waiting to happen?

If a preparer discriminates against a drug dealer by refusing to prepare the dealer's income tax return, is there a lawsuit waiting to happen?

Only in a sanctuary city where they are protected

"...where they are protected."

Where who is protected from what and by whom (or by what)?

Despite the fact that I am adamantly opposed to marijuana usage and voted against every proposition legalizing it in any form, I have represented 2 extremely prominent marijuana purveyors. My feelings about the business have nothing to do with how I represent my clients which is zealously and to the best of my ability.

Doctors may not issue prescriptions for Schedule I substances.

I just took a CPE class on this today. Very interesting in how the different sections can conflict. 280E specifically says "consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act)"

So is "trafficking" considered writing prescriptions? If yes, then any section 162 expense related to writing illegal prescriptions will be denied at the federal level. All the case laws presented in the CPE I took related to actual dispensaries but this is an interesting view point.

As the preparer, you should also consider your states ethical and professional guidelines for working with a client who may be breaking federal law.

Very interesting in how the different sections can conflict.

Or not.

So is "trafficking" considered writing prescriptions?

Who is writing any prescriptions in this scenario? Wouldn't prescriptions have to be filled at a licensed pharmacy, to be considered prescriptions?

The IRS talks openly about representing taxpayers in the marijuana business. There is no ethical or legal problem in doing so.

On a related topic, there is a politician here in CA who strongly promotes her CPA credential: "Fiona Ma, CPA for California State Treasurer 2018"

Despite that, she also openly advocates implementing state-level work-arounds to federal restrictions on banking for cannabis job-creating industry in this very recent article:

https://www.thecannifornian.com/cannabi ... s-angeles/

So if she isn't worried about this federal crime tainting her CPA career, why would anyone else be?

Who is writing any prescriptions in this scenario? Wouldn't prescriptions have to be filled at a licensed pharmacy, to be considered prescriptions?

It's in the OP. Filling a prescription is different than writing one. And at the state level it's a legal prescription but an illegal one at federal.

So if she isn't worried about this federal crime tainting her CPA career, why would anyone else be? . I agree with your implication that no one else would worry about tainting Fiona's career.

So is "trafficking" considered writing prescriptions?. Don't think so:

From Black's:

TRAFFIC
Commerce; trade; dealings in merchandise, bills, money, and the like. See Iu re Insurance Co. (D. C.) 96 Fed. 757; Levine v. State, 35 Tex. Cr. R. 647. 34 S. W. 960; Feople v. Hamilton, 17 Misc. Rep. 11, 39 N. Y. Supp. 531; Merriam v. Langdon, 10 Conn. 471.

and

TRAFFICKING
The carrying on of an illegal commercial activity such as selling drugs or substances that are banned.

Who is writing any prescriptions in this scenario? Wouldn't prescriptions have to be filled at a licensed pharmacy, to be considered prescriptions? No, that's a way too restrictive use of the word. From a regular dictionary:
PRESCRIPTION

a : a written direction for a therapeutic or corrective agent; specifically : one for the preparation and use of a medicine
b : a prescribed medicine
c : something (such as a recommendation) resembling a doctor's prescription prescriptions for economic recovery

And, nothing to do with this thread but I came across it and it comes up on TPT once in a while:

TREASURE-TROVE
Literally, treasure found. Money or coin, gold, silver, plate or bullion found hidden iu the earth or other private place, the owner thereof being un- known. 1 Bl. Comm. 205. Called in Latin “thesaurus inventus;” and in Saxon “fyn- deringa.” See Huthmacher v Harris, 38 Pa. 490, SO Am. Dec. 502; Livermore v. White, 74 Me. 450, 43 Am. Rep. 000; Soveru v. Yoran, 10 Or. 209, 20 Pac. 100, 8 Am. St Rep. 293.

And at the state level it's a legal prescription but an illegal one at federal.

That's where I disagree. What state are we talking about? I'd be interested to see a cite of either state or federal law that backs up what you are saying with regard to a state-issued medical marijuana card.