Cannabis and hemp/CBD accounting is overwhelming for CEOs and seasoned accountants alike. At times, both niches can seem impossibly complex and leave you, the accounting professional, with a headache as you sift through state and federal rules and regulations.
Your clients’ success hinges largely on you unraveling the tangle of rules and regulations and implementing the necessary processes required to keep Cannabis companies compliant. Few standard procedures and controls have been set in this emerging industry, but you can still provide exceptional accounting services that allow your clients to run profitable and sustainable businesses. With proper training and resources, along with an understanding of your clients’ pain points, you can learn to navigate the common issues in Cannabis and hemp/CBD accounting, gain a competitive edge, land more clients, and help CEOs who are desperate for your services.
Proper cost accounting is essential for all Cannabis and hemp verticals, but it gets particularly tricky when you're dealing with cultivation. From the moment a seed is planted in the ground to the harvest of the crop, high-level accounting procedures are mandatory to keep cultivation companies compliant.
Cannabis growers tend to be uninformed as to the importance of proper accounting. Often focusing more on the science and passion of growing, they have little patience for numbers. Because the growers take such pride in their operations (and need to be educated on the processes and regulations required to keep those operations compliant with the IRS), you may have to work harder to prove the necessity of sound accounting practices.
Cannabis and hemp both require different approaches to monthly accounting and year-end taxes. Cannabis is federally illegal, although more than 30 states have licensed businesses to sell legal medicinal and/or recreational marijuana. Hemp has...
Cannabis accounting is a complex, ever-changing niche due to the plant’s federally illegal status (regulations and rules vary from state to state). One key (but extremely complicated) aspect of Cannabis accounting is seed to sale tracking and compliance. Cannabis business owners can easily flub these complex accounting and compliance processes without the help of a trained Cannabis accountant on board. Even worse, inaccurately inputting seed to sale data can lead to significant penalties or even loss of license.
Because the seed to sale processes are complex, difficult to understand, involve several sub niches, and are a veritable maze for Cannabis CEOs and accountants, it takes some skill and understanding to fulfill state and federal accounting and tax requirements. As an accountant, you are in a powerful position to add significant value to a client’s company by expertly navigating the seed to sale process....
$8.1 billion of capital was raised by Cannabis companies in 2019 alone and, as more states move toward full legalization, that amount will only continue to grow. Additionally, industry experts are seeing that these niches appear to be recession-resistant (even “virus-resistant”) with many states experiencing recent record sales, mainly since Cannabis and hemp/CBD markets have been deemed essential during the pandemic.
However, even recession-resistant companies can experience challenges when finding capital for funding or seeking investors. Many Cannabis companies have been looking to debt and creditor solutions for capital growth, but that’s not the only solution business owners should take into consideration.
Beyond putting a company further in debt just to raise capital, Cannabis CEOs need solid, non-resource-draining solutions to build capital. From startups to founders of established companies, the following nine tips can help you significantly boost...
Now that most of the nation is holed up under shelter-in-place guidelines, Cannabis and CBD are considered essential (in most states) and sales have been increasing, While other companies are on lock down and laying off their employees, there is truly no time like the present to build your own 100% remote Cannabis or CBD accounting firm.
But how do you even get started? What is the actual process to transfer from a full-time job at a corporate accounting firm to running your own remote accounting practice in a fast-pace niche like Cannabis?
One DOPE CFO student, Tammy L., quickly built her own remote Cannabis accounting firm with hard work and guidance from the DOPE CFO program a little over a year ago. Even when Tammy was laid off a few weeks ago due to coronavirus shutdowns, she still had her remote business and a 6-figure client to help her thrive during these uncertain times.
Tammy made it happen -- all while still working a full time job! This is her...
As with any other major industry, access to quality insurance coverage is of the utmost importance for Cannabis companies. Most big-name insurance carriers, however, won’t come near the Cannabis industry due to the plant’s classification as a Schedule 1 drug, which also makes it federally illegal. With so many vertical moving parts, Cannabis companies need insurance for equipment, employee benefits, E&O, and various other aspects of their operations.
There are, however, plenty of insurance companies that will write policies for Cannabis businesses, and it appears that there isn’t a whole lot that they won’t cover (for a price, of course).
The first step in getting the coverage that companies need is finding an insurance agent that is knowledgeable in the Cannabis industry’s needs and requirements, and having them tailor a policy package that suits your business’ vertical structure. By consulting with an experienced agent, the Cannabis...
The Cannabis industry is booming, and trained and knowledgeable accounting professionals are in extremely high demand. Although federally illegal (for the time being), Cannabis is now legal for medical use in 33 states and 11 states recreationally, and is responsible for some $20 billion of revenue in the legal market. With around $70 billion still lurking in the illegal Cannabis market, business owners in the industry are constantly searching for ways to turn those who still purchase on the illegal market into repeat customers. Constant legislative changes and increased auditing keep accounting professionals (and attorneys, for that matter) in the Cannabis industry on their toes, and business owners need help.
There are major accounting issues surrounding Cannabis businesses related to taxation, software, banking, and merchant services. Accounting for Cannabis is also complicated, as...
With Halloween just around the corner, we decided to speak to a certain kind of horror… specific to the accounting industry. The mention of the word “cleanup” is enough to scare any seasoned accountant. We’ve all heard horror stories from our peers about leftover financials that were too tough to tame. Although most of those stories end with the accounting professional saving the day, the path to a successful cleanup can be a bumpy one, to say the least.
Cleanup is the concept of needing to go ‘back in time’ into a new client’s records to clean them up and “fix” all the errors. And rarely does a cleanup involve a few errors; in most scenarios, there are many, many errors. In order to create a rock-solid set of books, the cleanup will have to go back several months but can also need to go back several years.
Understanding the difference between CBD & THC, hemp and cannabis is vital if you’re entering into the realm of cannabis accounting.
In our recent podcast, we talked with Summer Wilkinson, co-founder of Leap Books, about the differences between them all, and how she got into the industry.
CBD can be extracted from the hemp or marijuana. Hemp plants are cannabis plants that contain less than 0.3 percent THC, while marijuana plants are cannabis plants that contain higher concentrations of THC.
THC is the primary psychoactive compound in marijuana that gives the high sensation. It can be consumed by smoking marijuana, or extracting the THC and putting it in some form of edible or topical delivery.
The plants themselves look identical to an untrained eye, making it a bit challenging to identify, as the real difference lies in the chemistry of the plants.
Under the 2018...
So you’ve decided that you want to take the plunge and dive into cannabis accounting. Great!
While these are new and exciting times, it is completely understandable if you have concerns about promoting your business within your personal and professional networks.
People have their opinions about the cannabis industry; some good, some bad. But don’t let that get in the way of promoting your business and becoming an expert.
The truth of the matter is that in order to be seen as an expert, you have to put yourself out there and dive in completely in order to maximize your efforts in this industry. So if you’re hiding out for fear of judgment, we’re here to help.
1. Have an updated LinkedIn profile.
When you’re first getting started with marketing your cannabis accounting business, you don’t have to have it all figured out. You don’t need to build a fancy website or order business cards right away. Over the past few years, LinkedIn has become an...