A former IRS tax attorney warned of a coming "tsunami" of audits related to industry-hated tax rule 280E. Speaking to MJBiz, the attorney said changes in IRS policy could cost larger cannabis companies millions in unpaid taxes and penalties.
Nick Richards, whose clients now include cannabis companies, said he's heard from his former colleagues at the IRS that unsuccessful court challenges to 280E by Harborside and Alternative Healthcare Advocates expanded the scope of 280E in a "big, big, big way"
The four men indicted for campaign finance violations in Nevada include two associates of Rudy Giuliani and Ukraine-born Andrey Kukushkin, an officer in a Sacramento dispensary owned by the city's "de facto pot king," Garib Karapetyan. Karapetyan controls eight Sacramento dispensaries, far more than anyone else in the city.
The Sacramento Bee also reports that months before the October indictment, the FBI had been investigating whether local cannabis business have bribed public officials for favorable treatment. No connection between the Sacramento investigation and the Nevada indictment has been established.
Following the indictment as well as concerns over testing standards and a departed regulator accused of getting too cozy with license applicants, Nevada is cracking down on the industry. A new task force performed surprise inspections at testing labs this week and the state announced an indefinite freeze on the sale and transfer of business licenses.
Las Vegas Review-Journal
The federal indictment says the four men "took steps to hide" the identity of an investor in their Nevada cannabis business. Last week, I had a scoop which raises questions about similar practices in Colorado. Colorado authorities have repeatedly refused to discuss the issue and are on track to loosen cannabis investing rules in November.
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Business Insider reports the biggest banks on Wall Street, including Credit Suisse, Citigroup, JPMorgan and Goldman Sachs are dipping their toes in the water by assisting on cannabis related deals and IPOs. The fees thus far are relatively modest, but the banks want to build relationships in the industry before federal legalization.
Meanwhile in Washington D.C.: Senate Banking Committee Chair Mike Crapo (R-Id.), whose support is essential for a cannabis banking bill to pass the upper chamber, outlined his priorities: 1) Health and safety; 2) Money laundering prevention; and 3)"The interstate banking application." (Whatever that is.)
The cannabis market seems to have absorbed the brunt of the vaping crisis. But the New York Times has a not for the squeamish report on the near-death of a 22-year old college student, a heavy user of illicit THC vapes. It begins:
Gregory Rodriguez thought he had the flu when he went to the emergency room on Sept. 18, feeling feverish, nauseated and short of breath.
He woke up four days later in a different hospital, with a tube down his throat connecting him to a ventilator, and two more tubes in his neck and groin, running his blood through a device that pumped in oxygen and took out carbon dioxide. The machines were doing the job of his lungs, which had stopped working.
"I was basically on the verge of death," he said.
Also in the Gray Lady:
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National legalization in Canada turned one this week. So far the experiment has delivered mixed results for companies and consumers, but is also a source of pride for many Canadians.
In a MacLean's article called "How not to legalize weed," Kate Robertson calls legalization an "utter disappointment," with the illegal market outperforming the legal in virtually every aspect of customer satisfaction.
This week in California business news:
The Democratic governors of New York, New Jersey, Connecticut and Pennsylvania met to coordinate REC legalization. Together they represent a market of roughly 30M adults.
Years into the legalization experiment, Politico says the conflicts between state and federal laws aren't getting any more manageable.
Mexico's Senate will reportedly vote to legalize REC in coming days, a major step towards full legalization in a country where violent drug cartels have long had outsized influence. Mexico's leftist President Andres Manuel Lopez Obrador has indicated he supports legalization.
A non-public U.S. Army document notes between 2017 and 2018 there was an 18% jump in soldiers testing positive for THC at nine bases in or near legal states.
Task & Purpose
CannabCo Pharmaceutical, a Canadian company awaiting a production license, says it has a technology which nearly eliminates the odor from cannabis. It envisions the product being useful for people living in apartment buildings and other close quarters.
On Twitter at least one wag suggested Canada's licensed producers have perfected the technology already.
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