The questions
Twelve Questions to Ask a Cannabis Tax Accountant
1
What exactly is included in your cannabis tax preparation engagement?
- Strong answer
- The provider starts with a written scope that identifies the returns, entities and periods covered, the expected workpapers, the review process, filing coordination, and any post filing support included.
- Weak answer
- “We handle all of your taxes.” That leaves uncertainty around bookkeeping cleanup, planning, amended returns, notices, payroll filings, state sales or excise work, and representation.
2
Which entities, returns and jurisdictions are in scope?
- Strong answer
- Before work begins, the preparer identifies the legal entities, federal returns, applicable state or local filings, filing periods, and separate obligations included in the engagement.
- Weak answer
- The provider relies on a generic checklist without confirming how your structure, activities and jurisdictions affect the engagement.
3
How do you determine whether our books are ready for tax preparation?
- Strong answer
- Before full preparation starts, the preparer reviews the trial balance, major reconciliations, prior year information, material balance sheet accounts, inventory and COGS support where relevant, and unresolved issues.
- Weak answer
- Return preparation begins while material bookkeeping differences remain unexplained, and cleanup becomes a tax season surprise.
4
What records and access do you need from us, and when?
- Strong answer
- You receive a practical request list and timeline that covers the books, prior returns, entity information, notices, requested schedules, relevant inventory or COGS support, and the people who can answer follow up questions.
- Weak answer
- The preparer says it can “figure everything out” without asking for complete records or confirming material facts.
5
How do you review inventory and COGS support before filing?
- Strong answer
- The preparer asks how inventory records were maintained, what supports purchases and cost flows, how material differences were resolved, and which records support the amounts used in the tax workpapers.
- Weak answer
- The provider promises to “maximize COGS” before reviewing the accounting records, facts or applicable rules.
6
How will you analyze Section 280E and current federal Cannabis scheduling for our specific period and facts?
- Strong answer
- The preparer starts with current law, confirms the relevant tax year, activity and licensing facts, and documents how those facts affect the return.
- Weak answer
- The provider says either “280E applies to every Cannabis business” or “280E no longer matters” without establishing the facts and period involved.
7
How do federal, state and local Cannabis tax obligations fit together?
- Strong answer
- The provider separates federal return work from state and local requirements, then explains which jurisdictions and filings are included, which are handled elsewhere, and which require separate specialist input.
- Weak answer
- The provider discusses “Cannabis taxes” as if federal and state treatment were identical everywhere.
8
Who prepares, reviews and signs our return and what credentials and representation rights do they have?
- Strong answer
- You know who prepares the work, who reviews it, who signs as the paid preparer, what credentials they hold, and what representation rights apply if an IRS issue arises later.
- Weak answer
- The firm advertises a credential but cannot explain who will actually prepare or review your return.
9
What happens after filing if we receive a notice or need representation?
- Strong answer
- The engagement explains whether routine post filing questions are included, who reviews notices, when a separate engagement is required, and whether the person involved has appropriate representation rights and authorization.
- Weak answer
- “We support you year round” is the only explanation of post filing service.
10
How do you handle incomplete books, prior year returns or possible amended returns?
- Strong answer
- The provider identifies missing records and prior year issues, explains whether cleanup or return review is needed, and scopes amendment work separately before making conclusions.
- Weak answer
- The provider promises an amended return refund or tax reduction before reviewing the books, prior filings and documentation.
11
What is outside the engagement, and what triggers additional scope or fees?
- Strong answer
- The engagement addresses boundaries around planning, bookkeeping cleanup, amended returns, notices, representation, payroll filings, sales or excise work, historical cleanup and broader advisory services.
- Weak answer
- Routine preparation is defined broadly while every exception is left to open ended “additional services” language.
12
What does onboarding, review, approval and filing authorization actually look like?
- Strong answer
- The provider can describe the sequence: document request, readiness and issue review, preparation, reviewer check, taxpayer review, authorization, filing and contracted post filing support.
- Weak answer
- Records are uploaded and the next meaningful interaction is a signature request.
Your side
What the Client Has to Bring
A tax preparation engagement is easier to manage when each responsibility has a clear owner. The provider can organize and prepare the tax work, but management still owns the underlying facts and records. That division of responsibility becomes especially important when a tax position depends on information only the business can substantiate.Business retains or provides
- Complete and timely accounting records
- Entity, ownership, license and jurisdiction facts
- Prior returns, notices and relevant correspondence
- Access to books and requested schedules
- Support for material balances, including inventory/COGS where relevant
- Management decisions and factual representations
- Review of draft returns and filing authorization
Tax preparer can perform when contracted
- Readiness review of the tax file
- Preparation workpapers
- Federal and state return preparation within scope
- Preparer/reviewer workflow
- Identification of missing information or technical questions
- Filing coordination and electronic filing steps within scope
- Post filing support specifically included in the engagement
Before expanding
Structure a Readiness Review Instead of a Leap
For a new provider relationship, a bounded readiness review can show whether the records, scope and communication process actually work before a more complex engagement expands.1
Pick one defined scope
Start with one entity and one filing period, with the expected federal, state and local scope identified as clearly as possible.2
Review readiness
Inspect the trial balance, prior return, major reconciliations, relevant inventory/COGS support, tax liability accounts and material open items.3
Write the issue and responsibility list
Write down missing records, cleanup requirements, technical questions, exclusions, responsible parties and timing dependencies.4
Confirm scope before full preparation
Agree on deliverables, review responsibilities, authorization steps, filing coordination and any additional services before the engagement expands.A useful tax preparation engagement makes the handoffs explicit before preparation begins: records, cleanup, technical questions, review, taxpayer approval, filing and post filing support. When those handoffs are clear, it is also easier to distinguish routine preparation from work that needs a separate decision.
Questions
Questions Cannabis Business Owners Ask About Tax Preparation
Typical preparation can include reviewing tax ready books, assembling workpapers, preparing in scope federal and state returns, coordinating review and authorization, and filing. Cleanup, planning, amended returns, notices, payroll or sales/excise filings, and representation should be identified separately if they are not included.
Have current books, prior returns, entity and ownership information, relevant notices, requested reconciliations and schedules, and support for material balances such as inventory and COGS where applicable. The preparer should provide the final request list after scope is defined.
No. Paid federal return preparers generally need a valid PTIN, but they can hold different credentials. CPAs, enrolled agents and attorneys have unlimited IRS representation rights; other preparers may have limited or no representation rights. Ask who will prepare, review and sign the return and what rights that person has.
Tax preparation focuses on preparing and filing returns for a completed period using the business's records and applicable law. Tax planning evaluates choices and future actions. They can be related services, but one should not be assumed to include the other.
It should be analyzed using the tax year, the business's activity and licensing facts, Section 280E itself, and current federal scheduling rules. The April 28, 2026 final rule changed federal treatment for FDA approved marijuana products and qualifying state medical marijuana licensees, but it does not determine every taxpayer's liability.
Separate cleanup from return preparation. Identify unreconciled accounts, missing support, inventory or COGS issues, open tax liabilities and other material gaps, then agree on who will resolve them and how that affects timing and scope.
Sources & Further Reading
- U.S. House of Representatives, 26 U.S.C. §280E: uscode.house.gov
- U.S. Department of Justice / Drug Enforcement Administration, April 28, 2026 marijuana scheduling final rule: federalregister.gov
- Internal Revenue Service, PTIN Requirements for Tax Return Preparers: irs.gov
- Internal Revenue Service, Understanding Tax Return Preparer Credentials and Qualifications: irs.gov
- Internal Revenue Service, Topic No. 254, How to Choose a Tax Return Preparer: irs.gov
- Internal Revenue Service, Publication 583 Starting a Business and Keeping Records: irs.gov
- Internal Revenue Service, Power of Attorney and Other Authorizations: irs.gov
Disclosure: CrownGlobe provides business tax filing and accounting services and therefore has a commercial interest in this topic. Use the questions in this guide to evaluate CrownGlobe and other providers against the same scope, records, credentials, review and post filing standards.
General information disclaimer: This article is for general informational purposes only and is not legal, tax, accounting, investment or regulatory advice. Requirements and tax treatment can vary by entity, activity, license, jurisdiction, tax year and facts. Consult appropriately qualified professionals for advice specific to your business.