Increased legalization of marijuana at the state level has led to the rapid growth of marijuana production and distribution companies. These companies have to deal not only with the normal federal tax consequences of running a business but also with the unique federal tax consequences of running a business that is technically illegal under federal law. As a result, these companies require sophisticated tax guidance. However, it would likely be a crime under the Money Laundering Control Act of 1986 (the “Act”) for a tax practitioner to receive payment for providing a company that produces and sells marijuana in the United States with legal advice or representation in connection with non-criminal matters. The Act therefore has a chilling effect on the ability of marijuana companies to receive the robust legal advice and representation they require. In this article, we explain how the Act works as applied to civil tax advice and representation and consider avenues that might allow practitioners to advise or represent state level marijuana companies without running afoul of the Act.
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Please note that this article is a TAXES – The Tax Magazine publication.