5 Must-Know Insights for Cannabis Tax Court and Audit Preparedness

As the cannabis industry regains momentum after several turbulent years, businesses are focusing on stability and growth. But with that progress comes increased scrutiny from the IRS. Federal authorities are ramping up their auditing efforts across the cannabis space, especially for operators subject to IRC Section 280E. This section disallows ordinary business deductions for cannabis businesses, often resulting in higher tax liabilities. The consequences of noncompliance can be severe: large penalties, back taxes, interest, and in extreme cases, criminal charges.

That’s why Cannabis Tax Court and Audit Preparedness is not just helpful—it’s essential. Whether you’re a business owner, accountant, or advisor, understanding how to prepare for a federal audit can mean the difference between success and serious setbacks.

While being audited can feel overwhelming, it doesn’t have to be a nightmare. With the right preparation and guidance, cannabis businesses can protect themselves and respond to audits strategically. The first step? Knowing your options, having a plan, and working with professionals who understand the cannabis regulatory landscape.

To provide clarity and tools for success, attorneys Nick Richards and Matthew Schiller of Greenspoon Marder LLP will lead a live session titled, “Cannabis Tax Court Updates & Audit Preparedness.” Their combined legal expertise in cannabis taxation makes this event a must-attend for professionals seeking to stay compliant and confident during audits.

Why Cannabis Tax Court and Audit Preparedness Matters Now

The IRS considers the cannabis industry high-risk for underreporting income and misclassifying expenses. Because cannabis businesses cannot deduct most ordinary expenses under 280E, audits often result in disputes over deductions and cost allocations.

This makes Cannabis Tax Court and Audit Preparedness crucial—not just during an audit, but as part of your ongoing business strategy. Staying informed about tax court decisions, documentation requirements, and audit trends can greatly reduce your exposure to financial and legal risks.

What You’ll Learn in This Session

This session offers more than theoretical legal advice—it delivers real-world strategies. Key insights include:

1. How to Communicate with IRS Auditors

You’ll learn what your CPA should handle and when an attorney needs to step in. Clear, effective communication can prevent common audit mistakes.

2. Audit-Ready Recordkeeping

Proper documentation can be your strongest defense. Discover the best practices for maintaining audit-ready books and records tailored for cannabis businesses.

3. Avoiding Costly Penalties

Proactive planning and thorough compliance reduce the risk of fines. This session will show how to structure your operations to minimize audit exposure.

4. Are WIP Adjustments Still Viable?

Get the latest updates on work-in-process accounting and whether these strategies are still applicable during cannabis audits.

5. A Deep Dive into Lord v. CIR

This recent tax court case has significant implications for cannabis operators. You’ll learn how the court’s decision could influence IRS enforcement and audit outcomes going forward.

Putting It All Together

Cannabis Tax Court and Audit Preparedness is about more than just checking boxes—it’s about building a resilient business that can withstand federal scrutiny. The insights shared in this session will help you identify weaknesses in your compliance practices and strengthen your defense before the IRS comes knocking.

Whether you’re preparing for a potential audit, navigating a current one, or advising cannabis clients, this presentation is your chance to get ahead. Understanding the nuances of Cannabis Tax Court and Audit Preparedness gives you a competitive edge in an industry where the rules are constantly evolving.

Nick Richards & Matthew Schiller

GREENSPOON MARDER LLP

Nick Richards is a partner and chair of the Cannabis Law practice group at Greenspoon Marder LLP. He represents individuals and businesses in tax audits & trials, M&A, in managing tax debt, and he advises cannabis companies, owners and investors regarding tax and regulatory compliance matters. Mr. Richards has been a tax attorney for more than twenty years beginning his career with the IRS where he was a leading trial attorney, a Chief Counsel advisor, and a Special Assistant United States Attorney.With his broad experience and understanding at all phases of the tax system, from reporting and assessment through appeals, court, and tax debt resolution, Mr. Richards achieves successful legal solutions tailored to his individual client’s needs. Mr. Richards also teaches tax attorneys and CPAs throughout the US and he is an Adjunct Professor of Law at the University of Denver, Graduate Tax Program, where he teaches State and Local Tax and Civil and Criminal Tax.Taxes can be stressful and Mr. Richards’ clients find relief in his broad experience in the IRS and in representing taxpayers large and small. He understands the tax system, provides informed advice, and protects taxpayers from the mistakes and missteps of those less experienced. Several years after leaving the IRS, he represented a Colorado cannabis company in one of the first IRS audits in the legalized industry. Since that ground-breaking case, he has gone on to successfully represent companies in many cities, states, courts and before the federal government. In addition to tax audits, trials and collections, he is widely recognized as a leading cannabis industry attorney and has extensive experience in IRC Section 280E and BSA cash reporting requirements. His knowledge of the tax system is essential when advising business owners and investors, particularly in mergers, acquisitions and entity formation.Nick Richards is a father of two young children, a proud husband, a music fan, and he enjoys the outdoors when not fighting for his clients.

Matthew Schiller is an associate in the Tax practice group at Greenspoon Marder LLP. He focuses his practice on representing individuals and businesses with unpaid tax liabilities before the Internal Revenue Service and state taxing authorities.Before joining Greenspoon Marder, Mr. Schiller founded and led his own tax firm, concentrating on Internal Revenue Service and state representation, including tax debt management and resolution, entity formation issues, and ongoing compliance for individuals and businesses. Before starting his entrepreneurial venture, Mr. Schiller was a consultant for several tax consulting firms resolving tax collection cases for businesses and individuals nationwide, providing ancillary tax and consulting services, and monitoring future tax activities to anticipate and address compliance issues.Mr. Schiller earned his Juris Doctor from the University of Denver Sturm College of Law. He also received his Bachelor of Arts Degree in political science from the University of Northern Colorado.