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spread­ing, with sales for medic­i­nal pur­poses le­gal in 23 states, and both medic­i­nal and recre­ational mar­i­juana le­gal in 10 states and Wash­ing­ton, D.C.

Cannabis is also unique in the depth of its need for ac­count­ing ser­vices. Ore­gon-based CPA An­drew Hun­z­icker, whose DOPE CFO serves cannabis clients and also of­fers train­ing to ac­coun­tants, re­al­ized this in 2014, when he started fo­cus­ing on the field: “We hear about the cash is­sues and the bank­ing is­sues and the in­sur­ance is­sues, but we don’t hear about the ac­count­ing prob­lems. It’s tens of bil­lions of dol­lars, and thou­sands of com­pa­nies, but there’s no Big Four, there’s no in­dus­try guid­ance, there’s no GAAP guid­ance, and cannabis is very com­plex ac­count­ing-wise.”

Cannabis clients can also af­ford the help they need from ac­coun­tants. “Just a small dis­pen­sary is usu­ally multi-mil­lion in sales, and so they have higher rev­enues — and can pay higher fees,” said Hun­z­icker.

Less risk than you think

For many ac­coun­tants, the con­flict with fed­eral law raises too many red flags.

“As soon as mar­i­juana started be­ing le­gal­ized, we started get­ting calls from even large and so­phis­ti­cated firms about what the risks are: ‘Am I pro­vid­ing a ser­vice to an il­le­gal en­ter­prise? Do I have li­a­bil­ity? Can I be sub­ject to civil RICO charges?’” re­called Stan Sterna, Esq., vice pres­i­dent and risk con­sul­tant for in­sur­ance bro­ker Aon Pro­fes­sional Firms.

Sterna as­sured ac­coun­tants that, first and fore­most, serv­ing the in­dus­try won’t have any af­fect on their in­sur­ance, as the ser­vices firms will be of­fer­ing aren’t crim­i­nal in them­selves. He also sug­gested ac­coun­tants shouldn’t let their fears hold them back, point­ing out that, while the fed­eral govern­ment is stand­ing by its char­ac­ter­i­za­tion of mar­i­juana as a Sched­ule 1 con­trolled sub­stance (the high­est clas­si­fi­ca­tion, putting it on par with heroin and mak­ing it il­le­gal to sell or dis­trib­ute for any pur­pose), “No one hears about the feds com­ing in and shut­ting down dis­pen­saries.”

A num­ber of state boards of ac­coun­tancy have also an­nounced that it is eth­i­cal for CPAS to serve cannabis busi­nesses, and of­fered guide­lines. (For more on that, see the Amer­i­can In­sti­tute of CPAS’ cannabis re­sources page, at­vo­cacy/state/mar­i­juana.html.)

“Your state is likely go­ing to say, ‘Do what you do for all your com­pa­nies — vet your clients, make sure they have good in­ter­nal con­trols and good pro­cesses; do what we all do as a CPA any­way,’” said Hun­z­icker. ”To date, I don’t know of a sin­gle ac­coun­tant, book­keeper, attorney, plumber or elec­tri­cian who’s got­ten in trou­ble sim­ply for serv­ing a cannabis com­pany.”

That’s not to say that the other ar­eas don’t have some risks. Fed­eral law pro­hibits Fdic-in­sured banks from serv­ing cannabis busi­nesses, which leads to a num­ber of com­pli­ca­tions. “Banks are very reluctant to do busi­ness with the mar­i­juana in­dus­try, be­cause they’d be pro­vid­ing ser­vices to il­le­gal ac­tiv­i­ties,” said Sterna. “That lack of bank clar­ity leads to cash is­sues, and is­sues of pub­lic safety. It’s a cash busi­ness — no credit cards, no checks. They have a lot of cash on hand, and ac­coun­tants know the is­sues that go along with lots of cash — a higher risk of de­fal­ca­tion, IRS au­dits, and so on.”

None­the­less, the gen­eral ex­pec­ta­tion is that time, and the mood of the coun­try, are on the side of mar­i­juana. Sterna pointed to le­gal­iza­tion in Michi­gan as an in­di­ca­tor that the gen­er­ally con­ser­va­tive Mid­west is be­gin­ning to shift, and said that sup­port is largely bi­par­ti­san.

Hun­z­icker is even more op­ti­mistic, pre­dict­ing mar­i­juana be­ing delisted from Sched­ule 1 in as lit­tle as 24 months, and that bank­ing is­sues may be re­solved even sooner: “The feds and states get that there’s bil­lions of dol­lars of le­gal cash float­ing around the sys­tem, and we need to get that into the bank­ing sys­tem, so I think they will quickly ad­dress that.”

None­the­less, ac­coun­tants should not jump in lightly. “There are firms that … don’t feel com­fort­able tak­ing on an en­gage­ment like this — they don’t like break­ing the law,” said Sterna. “If your gut tells you not to do it — don’t do it. Don’t dab­ble.”

That last piece of ad­vice is im­por­tant: One thing ev­ery­one who serves or ob­serves the cannabis in­dus­try agrees on is that you need to know what you’re do­ing.

You can’t fake it

From its bank­ing prob­lems and the ram­i­fi­ca­tions of IRC

Dis­cus­sion No. 3: Mod­ern­iz­ing your tech­nol­ogy stack.

The rate of tech­nol­ogy change is not go­ing to slow. Newer, bet­ter and faster in­no­va­tions will con­tinue to hit our pro­fes­sion. Start this dis­cus­sion in your firm by ask­ing such ques­tions as: What is our po­si­tion on adopt­ing mod­ern tech­nolo­gies? How ag­ile are we in terms of im­ple­ment­ing new apps? Do we have buy-in on mod­ern­iz­ing our tech stack from all part­ners? How badly do we want to be seen as mod­ern and main­tain a dis­tinct com­pet­i­tive ad­van­tage? Sec­tion 280E (which pro­hibits busi­nesses from tak­ing tax de­duc­tions or cred­its re­lated to il­le­gal ac­tiv­i­ties), to the vast and var­ied tan­gle of state rules and reg­u­la­tions, cannabis re­quires se­ri­ous ex­per­tise from ac­coun­tants and tax pro­fes­sion­als.

Ja­son Hoff­man — who built a cannabis prac­tice on his own at a dif­fer­ent firm, and brought it to New York-based CPA firm Janover, where he’s now a se­nior man­ager and leader of their Cannabis In­dus­try Prac­tice Group — warned other ac­coun­tants about the steep learn­ing curve in the field: “Don’t just take a client be­cause it’s there, be­cause you’re putting them at risk. Reach out to other ac­coun­tants who’ve been in this space. Read­ing a few ar­ti­cles is a start, but for me to be com­fort­able with my first client took hun­dreds of hours of re­search, and then spend­ing lots of time with my clients to un­der­stand their busi­nesses,” he said.

That need for ed­u­ca­tion was what led Hun­z­icker and co-founder Naomi Granger to start of­fer­ing train­ing through DOPE CFO. When Hun­z­icker first moved into cannabis, “I had to de­velop my own cost ac­count­ing work­pa­pers, charts of ac­counts — ev­ery­thing you would need for a new in­dus­try, be­cause it sim­ply wasn’t there. You couldn’t Google it, you couldn’t call Deloitte & Touche — you couldn’t call any­body,” he said. Over time, he be­came an in­for­mal guru for other pro­fes­sion­als look­ing to serve cannabis, an­swer­ing ques­tions and shar­ing the re­sources he had cre­ated with who­ever needed them.

“Even­tu­ally the need got so big that we launched a pro­gram, and now we have 140 stu­dents in 39 states — CPAS, CFOS and MBAS that we’re teach­ing the cor­rect cannabis ac­count­ing and tax,” he said.

The train­ing pro­gram is a hy­brid — be­sides ac­cess to a host of work­pa­pers, tem­plates, Ex­cel files, en­gage­ment let­ters and other doc­u­ments, there are also a range of video course ma­te­ri­als de­voted to top­ics like cost ac­count­ing for cannabis busi­nesses, as well as live Q&A calls ev­ery other week. Hun­z­icker and Granger also an­swer ques­tions on Face­book ev­ery day.

Re­gard­less of whether you take the course or not, he said, “If you want to serve this in­dus­try, you want to de­velop your ex­per­tise. Spend at least an hour a day learn­ing not just the tax and ac­count­ing is­sues — you want to learn about the soft­ware is­sues, you want to learn


Change is not easy, es­pe­cially in a pro­fes­sion that moves as fast and fu­ri­ously as ours does. But when you lead with an ed­u­cated mind, it makes im­ple­ment­ing change that much eas­ier be­cause you’ve opened the door to al­ter­na­tive so­lu­tions. Use your ed­u­cated mind to chal­lenge the tra­di­tions of the ac­count­ing pro­fes­sion, to start res­o­lu­tion-gen­er­at­ing dis­cus­sions with those around you, and to move for­ward in achiev­ing the life and busi­ness you want and de­serve!


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