Marijuana’s Drug-War-Era Tax Hits Grow as Legalization Surges

Brothers Rich and Mike Kwesell have avoided some common tax pitfalls since founding their Colorado-based cannabis company Strawberry Fields a dozen years ago.

While they have watched many state-legal competitors quickly expand, only to be audited by the IRS and handed a tax bill for the money they used to grow, Rich Kwesell said his chain of dispensaries came out relatively unscathed from an audit a few years back.

“We don’t take chances,” he told Bloomberg Tax. “We hear often about audits taking place and people having to cut an arm and a leg off because they can’t pay ...