We generally recognize that unlicensed cannabis dealers have a potential legal and financial tax liability issue due to unreported income. That tax liability is typically triggered by an arrest for unlicensed sales. Federal and state tax authorities simply tag along after the unlicensed possession and distribution case. While tax collection or prosecution might appear as an ‘afterthought’ in the process, it often lingers longer and causes serious financial problems.

Over the past two years the New Jersey state legislature, the Attorney General and the Governor have taken actions that caused the number of prosecutions of small sellers to drop off dramatically. However, the arrests and prosecutions of larger cannabis dealers has remained at the same level. Published data indicates there may be an average of about 6 of these cases every money through 2023. Only the criminal cases are available as public records. We presume that the majority of tax cases would be private matters. As a tax problem solver, I am more interested in these larger cases that involve larger amounts of tax liability. There are multiple ways to approach the issues, the same as with non-cannabis tax problems.