The Certified Public Accountant should have attended specific industry training or completed continuing professional education (CPE) courses. The CRB should consider how much CPE and how recently the Certified Public Accountant attended the CPE. The CRB should consider how many other cannabis clients the accountant already serves or will take on.
- Seven CRB participants and three Certified Public Accountants who currently serve the industry made a point to note that regardless of the service to be provided, Certified Public Accountants must have in-depth knowledge of the industry.
- The only way to ensure financial compliance is to understand its importance and make it a top priority for your business.
- Fortunately, you’ll be able to navigate this intricate landscape with the right approach.
- Also, they work in processing, so I pay them for that as well.” The IRS may well deem all the salary costs to the Dispensary, where labor IS NOT a part of Cost of Goods, therefore, not reducing the revenue of the dispensary.
- Four CRBs identified alternative ways to bank including setting up management accounts to handle the cash through a bank, though these often were closed once the bank discovered the transactions were from a cannabis business.
Understanding the Chart of Accounts (COA)
Finding participants for the study was difficult as many of those invited declined to participate. The convenience sample drawn could have introduced some level of selection bias into the study. Those who declined participation may have had different views of the industry than those that agreed to participate. In addition, interview responses may be influenced by the interviewer’s presence and some participants may not be “equally articulate and perceptive” (Creswell and Creswell 2018, p. 188). While questions were asked in a neutral tone and data was analyzed without intentional bias, unconscious bias could be present in the study.
IRS campaign to focus on Puerto Rico Act 22
Because when you grow cannabis, it grows, you know, and you have trim and flower. And in the old days you trim the flower off and dry it out, and you’d sell that. All the dispensaries in Colorado had drive-through lanes with the bud-tenders. Those are the people like a bank teller, the people actually sell you the cannabis and check your ID. They were doing it at car windows, under rules and protocols that were prescribed by the local jurisdictions.
Cannabis and CPAs: The business opportunities and risks
Since everything including the laws and guidelines are new; technology, best practices, and guidelines haven’t caught up to the needs of the Cannabis industry; making it incredibly difficult for accounting professionals to properly serve these businesses. Quantitative studies could be designed to obtain data from a larger sample size than is possible with a qualitative study. For example, Certified Public Accountants could be surveyed to determine their level of agreement with the theory identified herein that the greatest risk in Certified Public Accountants providing services to CRBs is the risk of federal prosecution. Another quantitative study could be conducted to further explore the motivational or ethical factors as to why Certified Public Accountants choose to serve this industry or not.
New IRS 199A Risk vs Reward
Your client can soon say hello to affordable banking while you smile ahead at the new realm of possibility for their future. An accountant can help with cash handling procedures that protect their bottom line. To begin reaching out to awesome accountants in cannabis, see Ganjapreneur’s verified list of accountants and bookkeepers above!
- Next, requests for participation were posted on LinkedIn and Facebook and requested through conversations with colleagues to identify and recruit potential CRB owners in both states.
- Three central research questions were the focus of the study with sub-questions asked to narrow the focus as the interview was conducted.
- Although accounting can be a complex practice if you’re operating in the medical marijuana market, some tools can help you record financial transactions to ensure compliance.
- The cannabis industry remains in limbo with state laws in conflict with federal law.
- But what’s happened is, each jurisdiction, each state, and each municipality defined what access is, where you can have a dispensary and what hours the dispensary can be open.
From staying compliant with complex regulations to tracking KPIs and staying alert for signs of embezzlement, running a cannabis operation involves wearing many hats. This index of the financial accounts in your general ledger saves time and stress when tax season rolls around. Next, come up with a monthly fee you would charge this client for all the services they need, including cleanup. For example, if you name your total fee at $2,500 per month and cleanup will take 18 months, you’d charge them $1250 per month or $22,500 total. Also, think about what the client would pay an in-house professional bookkeeper. If you work remotely and can take on other clients, you should make an offer 10 to 20 percent less than what they would pay in-house.
Ten participants expressed knowledge that most banks will not serve the industry and that those that do charge high fees. Eight participants acknowledged security issues related to having a cash-intensive business. Seven of ten CRBs indicated they had accounts closed at multiple banks and had to find new ones.
Expenses Vs Assets (General FYI, not specific to cannabis, but important)
All ten of the CRBs had Certified Public Accountants that did their federal income tax filing. Five described their relationship with their Certified Public Accountant as being like an out-sourced CFO. Interview transcripts were broken down into similar concepts or codes (Belotta 2018; Creswell and Creswell 2018). The codes were used to identify common themes medical marijuana accounting in the data (Creswell and Creswell 2018). Where repetition was identified in the data, themes became apparent (Savin-Baden and Major 2013). Comparison, or triangulation, between themes identified in the CRB owner interviews and themes identified in the Certified Public Accountant interviews helped to ensure reliability of the research (Merriam 2009).
