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Issue:
Chapter 28 of Title 36, Public Health and Safety of the Arizona Revised Statutes (“ARS”), entitled Arizona Medical Marijuana
Act, legalizes in the State of Arizona the sale and use of medical marijuana which such sale being authorized through
registered nonprofit medical marijuana dispensaries. Title 9, Health Services, Chapter 17, Department of Health Services
Medical Marijuana Program of the Arizona Administrative Code, authorized by ARS 36-2803 provides regulations that medical
marijuana dispensaries must abide by. Rule R9-17-308 (B)(4) states that to renew the license of a medical marijuana dispensary,
such entity must provide, “A report of an audit by an independent certified public accountant of the annual financial statements
required in subsection (B)(3).”
However, the sale of marijuana, whether for medicinal purposes or recreational purposes, is
still illegal under United States Federal Laws. Consequently, Arizona CPA’s have questioned whether the provision of the
aforementioned audit services as well as other accounting services by Arizona CPA registrants would be considered an act
discreditable should they provide such services to such entities. For purposes of this white paper, the term accounting services
should be considered as defined within ARS 32-701 to mean:
“services that are commonly and historically performed by accountants,
including recording or summarizing financial transactions, bookkeeping, analyzing or verifying financial information, auditing,
reviewing or compiling financial statements, reporting financial results, financial planning, providing attestation or tax or
consulting services.”
Materials Considered by the Arizona Board of Accountancy:
During its considerations of this matter, the Arizona Board of Accountancy has considered the following materials:
1. An Issue Brief on State Marijuana Laws and the CPA Profession, Issued May 16, 2013 and last updated January 5, 2015 which was
issued by the American Institute of Certified Public Accountants and the Colorado and Washington State Societies of Certified
Public Accountants;
2. An Issue Brief on State Marijuana Laws and the CPA Profession, Issued July 24, 2015 and last updated January 8, 2016 which
was issued by the American Institute of Certified Public Accountants and the Colorado and Washington State Societies of Certified
Public Accountants;
3. FIN-2014-G001 Guidance issued February 14, 2014 by Department of the Treasury Financial Crimes Enforcement Network entitled,
BSA Expectations Regarding Marijuana-Related Businesses;
4. State Bar of Arizona Ethics Opinions 11-01: Scope of Representation, 2/2011 regarding legal ethics of a lawyer counselling or
assisting a client;
5. Business Appraisal Within the Cannabis Industry: The ultimate appraisal challenge issued by Ronald L. Seigneur of Seigneur
Gustafson LLP, copyright 2015;
6. Obstacles to Legalizing Marijuana: Resolving the Federal-State Conflict Authored by Wei-Chih Chiang and produced in the
Checkpoint subscription service in May 2015;
7. AICPA: Talking to State Boards About Marijuana Policies: Key Policy Suggestions for State CPA Societies; and
8. AICPA: Providing Services to Businesses in the Marijuana Industry: A Sample of Current Board Positions.
Powers of the Arizona Board of Accountancy
Under ARS 32-741, the Board may revoke or suspend a registrant’s certificate, take disciplinary action or issue a letter of
concern for numerous causes that are enumerated therein and include, but are not limited to conviction of a felony, conviction
of a crime with a reasonable relationship to the practice of accounting, dishonesty, suspension or revocation for cause of the
right to practice before a governmental body or agency and other acts. Further, regulation R4-1-455.03 entitled Discreditable
Acts states that a registrant shall not commit an act that reflects adversely on the registrant’s fitness to engage in the
practice of public accounting which includes violating ARS Title 32, Chapter 6, Article 3 as well as various enumerated rules.
Conclusion:
The authorized sale of medical marijuana is legal in the State of Arizona and the State of Arizona has mandated that such sale
be performed by licensed and regulated medical marijuana dispensaries. Further, the State of Arizona has mandated that to renew
their license such medical marijuana dispensaries must retain a certified public accountant to perform an audit of the financial
statements of such entity. The Arizona Board of Accountancy recognizes that while the state of Arizona has a law that legalizes the
sale of medical marijuana, the Federal Government does not have such a law. As there is a dichotomy between Federal and Arizona law,
the Arizona Board of Accountancy can make no determination of how such a conflict might ultimately affect a medical marijuana
dispensary or any of its service providers. Hence, the Arizona Board of Accountancy has concluded that during the contemplation of
acceptance of any accounting services engagement for a medical marijuana dispensary, an Arizona registrant should diligently evaluate
and address the potential risks and uncertainties associated with providing such services. Registrants should carefully consider the
criteria provided in auditing standards and other professional materials, as well as professional guidance specifically related to
providing services to the medical marijuana industry. Further, the Arizona Board of Accountancy has concluded that merely accepting an
engagement to provide accounting services to a medical marijuana dispensary does not, on its face, constitute an act discreditable to
the profession and it will not pursue independent disciplinary action against an Arizona CPA registrant based solely on such acceptance.
The Arizona Board of Accountancy recommends that Arizona registrants considering providing services to the medical marijuana industry
read the materials referenced herein, professional standards applicable to the professional services to be provided and guidance offered
by State and Federal regulatory bodies, including, but not limited to the Internal Revenue Service, the U.S. Department of Justice and
the U.S. Securities Exchange Commission and any other authoritative materials available that frame the issues contemplated herein.
Issuance Date:
March 28, 2016
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