Despite widespread legalization of medicinal marijuana, many big accounting firms still avoid the cannabis industry and the many legitimate businesses operating within it. Undeterred, the industry continues to grow and mature with some jurisdictions now beginning to allow for recreational use as well. Forward-thinking CPAs and accounting professionals interested in learning the unique world of cannabis accounting could have a significant and lucrative opportunity ahead of them.
Accountants with industry-specific knowledge are quickly becoming the most sought-after professionals in the cannabis market. Operating in one of the county’s most highly regulated industries, cannabis companies must maintain strict adherence to policies while remaining in a constant state of audit-readiness. Faced with complex and rapidly evolving tax, compliance, and banking issues, cannabis execs are finding it impossible to manage the day-to-day stresses of running their business. Expert accountants who are skilled at managing cannabis operations, software, and banking issues are just what today’s cannabis entrepreneur is looking for to join them in the executive suite.
While CPAs are in high demand, the cannabis space is expected to reach $47 billion over the next ten years – this means numerous resources have become available for non-CPAs hoping to make a strategic career move into cannabis accounting. On their own, aspiring cannabis finance pros can start by learning all they can about the cannabis industry and the unique issues faced by cannabusinesses at both the national and local levels.
The American Institute of Certified Public Accountants offers specific information for would-be cannabis accounting professionals to get started. With industry-developed training programs available, finance professionals with the knowledge of the industry can find success even without CPA credentials.
For CPAs looking to grow and diversify their practice, there is a growing demand for those interested in specializing in cannabis accounting. Cannabis is still federally classified as a Schedule-1 drug which creates obstacles for businesses in the marijuana industry. A skilled cannabis CPA with industry-specific expertise can go a long way in helping business owners mitigate the seed-to-sale risks surrounding growing, distributing, and transporting their products. This includes the cash burden faced by cannabis operators struggling to open business bank accounts or secure startup loans.
CPAs heading into the cannabis sector must fully grasp the specific federal, state, IRS, OSHA, and FDA regulations as well as all the operational complexities created as a result. They’ll need to master cost, accrual, and absorption accounting as well as 471 and 280E tax rules.
Tax section 280E, for example, is the federal statute that prevents a cannabusiness from taking tax deductions or credits because cannabis is a Schedule I controlled substance. This means cannabis operators pay taxes on all of their revenue without being able to use business expenses as tax deductions.
In addition to mastering traditional accounting responsibilities, cannabis CPAs need to understand the myriad of available technologies. Most accounting professionals are familiar with off-the-shelf accounting software packages, like Quickbooks, which is an effective accounting tool for many startups. Unfortunately, Quickbooks and tools like it lack specific inventory management, cost accounting, and business insight tools offered by cannabis-specific accounting software. These tools are rarely able to accommodate multiple entities or additional user roles often needed by cannabis businesses as they scale.
Seed-to-sale accounting software, on the other hand, is a cannabis CPAs unsung hero. Offering cannabis companies cloud-based accounting and inventory management controls, seed-to-sale accounting packages come complete with compliance, CRM, and production tools built-in. True cannabis accounting software offers robust and scalable functionalities developed to handle front to back office processes of any cannabis business.
Cannabis CEOs need accounting professionals with specialized expertise in the cannabis industry. Without solid support from large accounting firms, individual professionals have a window of opportunity to stake their claim by understanding issues specific to cannabis companies.
Contact us at e2b to learn more about Sage Intacct. There’s a Reason Sage Intacct is the AICPA’s Preferred Provider of Financial Applications.