The following draws on ideas developed by Mary Gentile in the Giving Voice to Values (GVV) curriculum, which is designed to help individuals learn to recognize, clarify, speak and act on their values when conflicts arise. This Case in Point offers only a portion of ideas on how the protagonist could address the complex situation. For more details and discussion, please see the case and teaching note Taxes and the Cannabis Business (Darden Business Publishing), by Mary Gentile, Steven Mintz and William F. Miller.


Many U.S. states have legalized the supply and consumption of medical marijuana or, in some cases, its recreational use. However, it remains illegal under federal law. Being labelled under the Controlled Substances Act puts the plant on a legal par with such harmful narcotics as heroin. That means those dealing in cannabis — a market worth $9 billion in sales — are largely cash businesses; only 30 percent have a bank account, as banks servicing marijuana businesses face possible criminal prosecution for aiding and abetting a federal crime and money laundering.

Because of this, there is no audit trail for transactions, which can make verifying the accuracy of reporting cash sales from marijuana companies difficult for accountants.


Central Coast Cannabis (CCC) grew and distributed the plant in a U.S. state where the sale of marijuana for medical and recreational purposes was legal. Hailey Delaney, a certified public accountant (CPA), sent the tax return that she prepared for her firm’s client CCC to Harry Johnson, the manager of her firm’s tax department.

CCC’s president complained to Johnson about Delaney’s insistence that the firm report the company’s cash sales on the 2019 tax return. The president wanted to hold back 25 percent of that amount. Though this would be a fraudulent action, he believed it would not come to light; as CCC didn’t have a bank account, there was no audit trail for the transactions.

Johnson wanted to appease the client and ignore 25 percent of the cash revenue because his firm intended to court other clients in the marijuana business. CCC was a lucrative client and could open the door to additional compliance services and consulting arrangements.

When Johnson asked Delaney to meet with him and the partner in charge of the tax practice, both of whom were CPAs, Delaney suspected the partner was on board with Johnson’s position.

Delaney felt strongly she should not go along with the tax manager’s request to ignore 25 percent of the cash revenue but was worried that refusing to do so would negatively affect her future with the firm. She wondered what the consequences might be if she refused to get on board. She also considered the consequences of violating the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct.

How could she best prepare for this potentially tense meeting?


First, Delaney should prepare for the arguments Johnson and the partner may make for not reporting the revenue. Among them: Retaining client business is an important element of being promoted to partner. She may be expected to follow superiors’ orders or put her career at risk. The omission may also be positioned as standard operating procedure. Publicly airing concerns could jeopardize employees who previously went along with the fraudulent practice. And there was always the chance Johnson and the tax partner would assume responsibility for the decision, minimizing Delaney’s guilt. 

Additionally, Delaney should rehearse what she will say at the meeting. She should stress the possible consequences of omitting revenue. Their actions will not only jeopardize their position but that of the firm, too. Intentionally underreporting the income on a tax return is a felony and subjects the client and culpable members of the CPA firm to both criminal and civil liability. Delaney needs to get these points across, but not in a self-righteous or accusatory manner.

She needs to research the relevant state and federal laws ahead of the meeting and use relevant cases as examples so as to come off as an authority on marijuana sales tax to make her position more convincing. Different states and cities have their own rules regarding gross receipts tax on revenue collected, for example. Some charge a tax on the total of gross receipts reported, others per ounce on flowers and leaves.  

Delaney should also focus on how to use the firm’s own polices and code of ethics to strengthen her position. There could be an additional level of review, such as a compliance partner who ensures all relevant rules and regulations have been followed. Delaney could ask Johnson if they could approach the compliance officer together, so he doesn’t feel like she is going behind his back.

Reframing the issue is another potentially effective move. Delaney can concentrate on discussing the firms’ core strengths, industry knowledge and reputation. The firm will not want to gain a reputation of bending to the will of a client. Delaney should also emphasize the importance of building a reputation for trust in the controversial cannabis industry to attract the right (honest) clients through responsible behavior.

The way she approaches the matter might also influence her superiors to reverse their position. Rather than being argumentative, Delaney should strengthen her position as an expert in tax standards while using noncombative phrases such as “I believe” and “I am uncomfortable.”


Many of us will face situations at work that bring our values into question, when what we believe is the right thing to do seems at odds with the demands of supervisors and the organization. Cognitive dissonance theory suggests that we have an inner drive to hold all our attitudes and beliefs in harmony and avoid disharmony.

The Giving Voice to Values (GVV) methodology used above — preparing scripted comments to counteract the reasons and rationalizations for unethical behavior — helps build “moral muscle,” or the skills needed to recognize, speak and act on our values when conflicts arise. Rather than focusing on ethical analysis, we should instead examine the questions: What if I were going to act on my values? What would I say and do? How could I be most effective?

This article is based on the case and teaching note Taxes and the Cannabis Business (Darden Business Publishing), by Mary Gentile, Steven Mintz of California Polytechnic State University, San Luis Obispo, and William F. Miller of the University of Wisconsin, Eau Claire.

Learn more about preparing for values conflicts in this Darden Business Publishing case