June 30, 2023
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Marijuana
I live in Colorado, the first state to legalize recreational marijuana. It’s been technically legal here since 2014, which seems like a long time now. Still, other states are just getting around to either passing legislation to legalize it—Delaware and Minnesota were the two most recent—or putting it on the ballot. (Oklahoma voters recently rejected recreational use.)
Anyway, I bring it all up because society’s broad acceptance of marijuana1 and the many forms for partaking in it have come up as a workplace thing, so employers, sooner or later, will have to deal with it. Here’s the Wall Street Journal:
More Americans are using marijuana. Their employers are trying to decide how much that matters.
One in six American adults now says they smoke marijuana, a share that has eclipsed the number of cigarette smokers, according to recent Gallup data, and expanding legalization of the drug has led more companies to scrap employee drug-testing. Instead, many are leaning on managers to spot signs that workers are impaired on the job and determine what to do when they are.
For one thing, some companies say being high at work isn’t necessarily a fireable offense.
Alright, alright, alright. More people are using marijuana, and many employers are desperate to keep the workers they have, plus hire more, and so some are chilling out a bit. On marijuana, that is. Not on marijuana, you see—oh, never mind. You get it. This is tricky ground, though, and many businesses could probably use some professional help tiptoeing through this particular minefield.
Here’s where I typically say, “Accounting firms are well positioned to help because they deal with stuff that’s complex and scary for their clients all the time,” and that many accountants have been or are evolving into business advisors who businesses turn to for advice on these things.
Now, I know that many accounting firms are antsy about serving businesses in and around cannabis because it is still technically illegal at the federal level. Plus, there are plenty of other ways to make money, not to mention plenty of work to go around—so why delve into a nascent industry with avoidable risks? I get it.
This has allowed a relatively small number of firms that have decided to serve cannabis businesses—despite the federal ban—to dominate the space. It gives them a legitimate niche that comes with a built-in economic moat. That moat may not always be there, but for now, it’s working out pretty well.
What I don’t know—and what I asked a couple of cannabis-focused firms about—is whether these firms are currently advising on cannabis workplace policies for regular businesses. (I didn’t hear back from anyone.) It stands to reason that if your firm specializes in cannabis, you’d be well positioned to advise regular businesses on the subject matter. But then again, maybe not? It’s an extraordinarily complex area, and it’s all pretty fluid as more jurisdictions change their laws.
Which then has me turning back to the cannabis-oh-no-thank-you firms. Their clients aren’t in the cannabis business, but those non-cannabis businesses might still need cannabis policies. Any accounting firm that has embraced people advisory services or has an HR practice as part of their service offering could potentially help in this regard and probably won’t be running afoul of any federal law, but wowee, that is not legal advice.
There’s almost no chance that attitudes about marijuana will reverse course. Cannabis businesses are making money, state governments are collecting taxes, and most people who like using marijuana recreationally or for medical purposes are unlikely to stop using it. This means that many employers will likely, at some point, decide how they approach its use by their employees, especially as state and maybe even federal law changes. Perhaps accounting firms could help them figure out what to do?
COVID relief fraud
The pandemic was arguably the worst of times. Unless, of course, you were looking for a good opportunity to commit fraud, and then it was arguably the best of times. A recent report from the Small Business Administration’s Inspector General has a new estimate of just how good.
A new analysis from the agency says that of the $1.2 trillion in federal aid disbursed, $200 billion was potentially fraud—17 percent.
The report, called “COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape,” details how the rush to make the money available made it easier for fraudsters to apply for loans to keep non-existent businesses afloat, and then have those loans forgiven and covered by tax dollars.
“The agency weakened or removed the controls necessary to prevent fraudsters from easily gaining access to these programs and provide assurance that only eligible entities received funds,” the report says. “However, the allure of ‘easy money’ in this pay and chase environment attracted an overwhelming number of fraudsters to the programs.”
A shameless (but relevant) plug: I do a podcast about fraud (sure, a “fraudcast”) with my friend Greg Kyte and we recently put out our second episode on PPP fraud. In that episode, we discussed how a previous study from the SBA’s Inspector General found that fraud in the Paycheck Protection Program was potentially $64 billion. This is only $1 billion shy of the paper losses from Bernard Madoff’s Ponzi scheme, the largest in history.
Madoff’s fraud had roughly 37,000 victims and was relentlessly covered by the media. But what’s a little weird is that PPP fraud has millions upon millions of victims—U.S. taxpayers—and while there’s been some media coverage, it’s meager compared to the wall-to-wall coverage of Madoff and the resulting fallout. Part of the reason for that, I think, is that Madoff became the face of his fraud. He was the perfect villain who we could all point to and vilify endlessly.
But whose face is the face of PPP fraud? There isn’t a single one, as far as I can tell. The pandemic aid fraud stories trickle out one by one, and the money adds up. There’s no kingpin or mastermind. It’s just a bunch of regular people who made some colossally bad choices during the worst of times.
Fresh from Gusto (and friends)
- What You Need to Know About California’s R&D Tax Credit
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Webucation
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Read with Gusto
- KPMG let some people go.
- Accountants have soured on crypto.
- The fastest accountant in the world.
- Something a carbon accountant says: “That’s the lowest-emissions salad at Sweetgreen.”
- “Complaint about the wrong grade of copper.”
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1 Twenty-three states, Guam, and the Northern Mariana Islands have all legalized marijuana for recreational purposes. The total goes up to 38 states when you include those that have legal medical marijuana. That feels pretty broad.
