IRS Cannabis Compliance and Tax Strategies: What You Need to Know

If you’re operating in the cannabis industry, understanding IRS Cannabis Compliance and Tax Strategies is no longer optional—it’s essential. With increased scrutiny from the IRS and evolving regulatory guidance, cannabis operators must stay informed to remain compliant and avoid costly penalties.

In this members-only webinar, we’ll dive into crucial topics that will empower you to take control of your tax position and better understand IRS expectations. Below, we outline what you’ll learn and why it matters now more than ever.

Understanding the Cannabis Audit Technique Guide (ATG)

One of the foundational tools used by IRS agents when reviewing cannabis businesses is the Cannabis Audit Technique Guide (ATG). This guide offers insight into what auditors look for, red flags, and industry-specific risk areas.

Released as part of the IRS’s broader effort to educate auditors and taxpayers, the ATG outlines recordkeeping standards, income reporting practices, and how cost of goods sold (COGS) is evaluated under 280E.

During the webinar, we’ll break down key components of the ATG, including:

• The types of documentation required to substantiate deductions

• IRS expectations for inventory systems

• How auditors evaluate compliance with IRC 471

If you haven’t reviewed the ATG recently, now is the time. Understanding it is central to any IRS Cannabis Compliance and Tax Strategies you implement.

How the IRS Views 471(c) for Cannabis Businesses

The interpretation of IRC Section 471(c) continues to be one of the most talked-about elements of cannabis tax planning. Many operators and their accountants have asked: Can 471(c) really help mitigate the impact of 280E?

Here’s what we’ll cover:

• IRS current stance on 471(c) and how it applies to small cannabis businesses

• Differences in how tax professionals are applying 471(c) in practice

• Risks and rewards of relying on 471(c) for deduction planning

The IRS has not issued definitive guidance specific to cannabis, but they’ve offered clues through tax court cases and private letter rulings. Our expert panel will help you read between the lines and determine how to proceed with confidence using compliant IRS Cannabis Compliance and Tax Strategies.

Is There a Cannabis Audit Number?

Another frequently asked question is: Is there a specific “audit rate” for cannabis operators? While the IRS does not publish industry-specific audit rates, anecdotal evidence and professional experience suggest the odds are higher than average.

We’ll discuss:

• What we know about the IRS random selection process

• Whether state-legal status influences audit likelihood

• How maintaining airtight records helps reduce your audit risk

This section of the webinar will help attendees demystify the IRS audit selection process and fine-tune their IRS Cannabis Compliance and Tax Strategies accordingly.

IRS Perspective on Cannabis Rescheduling

The potential rescheduling or descheduling of cannabis has stirred up significant conversation—particularly about how it could change the IRS’s enforcement posture.

In this session, we’ll examine:

• What IRS officials have said about rescheduling

• How rescheduling may impact 280E enforcement

• Whether current ATG guidance would still apply

Even if federal policy changes, the IRS is unlikely to act overnight. However, forward-thinking operators should begin preparing now. Knowing how your IRS Cannabis Compliance and Tax Strategies could shift is a competitive advantage.

IRS Cannabis Compliance and Tax Strategies are not just about avoiding penalties—they’re about building a strong, scalable, and audit-ready cannabis business. This webinar offers critical insights for operators, accountants, and advisors looking to stay ahead of compliance risks.

Don’t miss your opportunity to hear directly from seasoned tax professionals on the front lines of cannabis IRS audits and strategy development.

De Lon Harris

SB/SE Deputy Commissioner, Examination

De Lon Harris is the Deputy Commissioner, Examination in the Small Business/Self Employed (SB/SE) business operating division where he provides executive leadership and direction in the design, development and delivery of a comprehensive tax administration program to meet the needs of over 57 million small business owners and self-employed taxpayers with business interests having less than $10 million of assets. He provides Operational program support responsible for providing expertise and direction for special projects covering major segments of the assigned organization’s mission: Campus Exam/Automated Underreporter (AUR), Field Exam, Specialty Exam, Legislative Program Coordination Office, Headquarters Exam and Exam Performance & Planning Analysis.

Prior to this assignment Mr. Harris was the Assistant Deputy Commissioner Compliance Integration for the Large Business and International (LB&I) Division of the Internal Revenue Service responsible  for the alignment of LB&I work to its strategic goals through the development and implementation of a comprehensive, integrated strategic research and compliance program, and campaign project management activities. He also previously served as Director Field Operations  ̶  Mid-Atlantic in the LB&I Division, and Director Field Operations  ̶  West in the Office of Appeals.

Mr. Harris began his career in 1985 in Oklahoma City as a revenue agent. He held numerous field and staff positions in Examination until 1994 when he was selected as a Revenue Agent Group Manager in Tulsa Oklahoma. In 2000 he became an Examination Technical Advisor to the Area Taxpayer Advocate in Dallas Texas where he remained until 2002 when he accepted a staff position within the TAS Office of Systemic Advocacy in Washington D.C. In 2005 Mr. Harris completed a one-year fellowship to the U.S. House of Representatives Oversight Subcommittee and in 2006 he joined the IRS Office of Appeals where he held several positions; including, Senior Program Policy Analyst, Project Manager, and Senior Operations Advisor.

Mr. Harris graduated from Southwestern Oklahoma State University with a B.S. in Accounting and received his Master’s in Project Management from George Washington University in Washington D.C. He is a graduate of the 2012 Candidate Development Program.

Scott Irick

Director, Examination in the SB/SE Division

Scott Irick is the Director, Examination in the SB/SE Division where he is responsible for providing executive leadership, shared responsibility and direction in the design, development, and delivery of Examination programs and policies that support comprehensive tax administration programs designed to enhance taxpayer compliance.

Scott previously served as Deputy Director, Examination, Director, Examination – Headquarters, Director, Field and Campus Policy, and Director, Examination Quality and Technical Support in the SB/SE Division, as well as Director, Filing and Payment Compliance, and Field Director, Compliance Services (Andover) in the W&I Division.