IRS Criminal Investigation and DEA Launch Joint Cannabis Tax Fraud Task Force

## Overview IRS Criminal Investigation (IRS-CI) and the Drug Enforcement Administration (DEA) have formalized a joint task force targeting cannabis operators who allegedly combine state-license cannabis trafficking with federal tax evasion. The task force focuses on operators who underreport cannabis revenue, falsify COGS documentation to inflate deductions, or use off-the-books cash transactions to evade both federal tax and state licensing requirements. ## Scope of the Task Force The task force is distinct from the LB&I Cannabis CEP, which addresses civil tax compliance. The joint IRS-DEA task force focuses on criminal tax violations — specifically willful failure to report income, fraudulent deductions, and the use of unreported cash transactions. Targets are identified through: (1) Currency Transaction Reports (CTRs) filed by financial institutions, (2) DEA investigation referrals, and (3) IRS whistleblower complaints. ## Why This Matters Criminal tax prosecution in the cannabis context creates a convergence risk: an operator can simultaneously face DEA enforcement (civil and criminal), IRS criminal investigation, and state licensing sanctions arising from the same underlying conduct.