NOTE: When forming a legal entity it is best that all parties involved seek experienced, informed legal counsel. Preferably a tax AND corporate attorney that can help guide you in making legal decisions.  

At the inception of a Cannabis or CBD company, one of the most important first steps is to decide on the entity structure, where the client will be deciding how the business will be taxed, how equity will be dispersed when investors come on board, and how to protect the assets of...

Cannabis startups are much more complicated than traditional startups. They face a set of unique challenges that require accountants to be clear on state licensing rules and federal regulations regarding controlled substances, making Cannabis companies 10x more likely to fail than non-Cannabis.

We’re not talking about not being successful in business -- we mean getting audited and paying massive fines, criminal charges against CEOs for illegal market activity, loss of licensure, and...

Cannabis accounting software is hard to come by, and options that do exist are abysmal at best. Most vendors won’t come near the federally illegal industry. Also, the software that is available tends to be buggy and won’t typically integrate well with your clients’ existing accounting software. 

Without efficient “out-of-the-box” software solutions in place, you’d have to resort to pen and paper and archaic spreadsheets. Not only is that method...

If you’re a Cannabis accounting professional, or are working towards learning how to serve clients in this space, you may have already experienced the frustrations of trying to reach out to Cannabis clients, only to be told that you’re not needed because they “already have an in-house bookkeeper” and that they’re sure their current accounting system is just fine. Until Cannabis CEOs understand that their practices are often inaccurate and self-damaging (as they...

Cost accounting is essential for proper Cannabis and CBD/hemp accounting and tax; however, if you are not doing cost accounting correctly (or at all), your clients could be missing some benefit under IRC 471-11 and paying too much in taxes. On the other hand, if you claim a significant amount of costs allocated to inventory (and eventually COGS) incorrectly, your clients could end up in hot water when audited, and potentially owe thousands of dollars in back taxes, interest, and...

2021 is already shaping up to be a historic year for Cannabis, on the heels of the huge growth and developments the industry experienced in 2020. From skyrocketing sales amid the pandemic to five new states welcoming legalized Cannabis in the November elections, the industry is poised for big changes on the horizon.

Now, with the recent Senate power shift and the House voting on the MORE (Marijuana Opportunity Reinvestment and Expungement) Act, Cannabis may finally be removed from its...

Cannabis companies are springing up across the country, and for good reason. There is a huge opportunity for growth in this market and businesses are just scratching the surface. However, it’s your job to be the expert on the numbers and the complicated rules to stay ahead of the game and keep your clients moving forward.

Despite the many opportunities in the industry, Cannabis companies face certain challenges due to its federally illegal status, especially in regards to tax...

Properly quoting accounting fees is complicated in any industry, but establishing a pricing policy for the wily Cannabis and hemp/CBD niches can be especially challenging and overwhelming. 

If you find it hard, or even scary, to price your Cannabis and hemp/CBD accounting services without undercutting your value, you are not alone. 

Many accountants struggle with raising their fees beyond low hourly rates. Learning how to package your services, create clear offers to reflect your...

To say that Cannabis and hemp/CBD accounting is like the Wild Wild West, is a bit of an understatement. High regulation, unusual tax codes and penalties, cash handling issues, lack of reliable software, merchant services availability, and complex reporting and compliance needs make Cannabis accounting ridiculously complicated. Never mind the fact that Cannabis is still federally illegal, so businesses must adhere to 280E, which stipulates deductions can’t be taken (for the most part)....

What is the first thing you think of when you hear the word “Cannabis”?

Did your thought(s) lean negative or positive?

The stigma surrounding the Cannabis plant often prevents seasoned accounting professionals from entering the Cannabis niche. There is sometimes a fear of not maintaining professionalism or damaging their reputation when they sign Cannabis clients, or a resistance to working with a federally illegal product and the accompanying tax complications.

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