“Cannabusiness” is booming and obnoxious cutesy phrase aside, it’s a $25 billion-and-growing (heh) industry with more potential than a fresh cart of Blue Dream on a Saturday night. Clever CPAs who get in on the ground will not only open themselves up to nearly unlimited billing potential (yay), they’ll be helping cannabis businesses navigate the as-yet murky waters of legit marijuana business.
As of right now, 19 states have legalized marijuana, with several more having decriminalized and/or allowed for medical use. Add to that, the 2018 Farm Bill opened up a massive opportunity in the hemp space, allowing for legal sale of non-psychoactive CBD and various cannabinoids except in a handful of states as long as these products do not contain more than 0.3 percent THC (THC is the stuff that gets you high for the squares out there). The CBD market alone was worth $12.8 billion in 2021 and many of the 66 known cannabinoids can be delivered to your someone who isn’t you’s house — legally — with just a click. CBD laws can vary though, Leafly has a good overview if you’re interested in learning more. The growers and sellers of these products, having been empowered to do so in daylight rather than the shadows of your nearest high school parking lot, are just as in need of skilled CPAs as any other business.
What prompted us to mention this other than a shower thought brought on by a lungful of Strawberry Cough? This recent Journal of Accountancy article. One CPA on the forefront of cannabis as a specialization has some sage advice for accountants looking to break in to this market:
“This niche is in its infancy. In my 40-year career, I can think of two massive opportunities, one of which was the birth of the internet. I think we’re going to see a similar thing in cannabis,” said Andrew Hunzicker, CPA, co-founder and partner of Dope CFO, which offers cannabis training programs for financial professionals.
So how do CPAs get into this niche? Much to our chagrin Mr. Hunzicker does not suggest you get blazed on dabs all day however familiarizing yourself with the business of marijuana is a good place to start:
“If you are a new CPA coming in [to cannabis], investing your time into the niche and becoming an expert will better your career,” he said. “You’ll provide more value to your clients, they’ll pay you more, and it’s less stressful than generalist accounting, too.”
Working primarily in a niche can help you dedicate your resources to productive areas.
Hunzicker recommends approaching the cannabis niche with a broad knowledge base, including a full understanding of “cannabis science, medicinal uses, software tools, and business operations, then layer in accounting — GAAP, cost accounting, the tax codes and the court cases.”
Hunzicker thinks federal legalization isn’t too far off, more good news for those CPAs who establish a foothold early. “I tell everyone, 7 out of 10 Americans want legal cannabis. When 7 out of 10 of us actually agree on something, it will likely happen,” he said.
There are tons more tips for getting into the cannabis business in the Journal of Accountancy piece if you are at all interested in this niche. Unlike crypto it’s unlikely to crash any time soon. Oh and also, the AICPA & CIMA are hosting the Cannabis Industry Conference Aug. 8–10 in Denver (or online), details here for those looking for technical guidance on a cannabis practice such as procedures around financial statement preparation and the SAFE Banking Act, small firm practice and key court case review, cost accounting, and a whole bunch more.
We’ve certainly come a long way from a CPA thinking they might end up in prison on RICO charges if they take on a legal marijuana client eight years ago. You love to see it!
Exposure Drafts: A Chronic Problem for Accountants New to the Marijuana Industry
CPA Firms Going to Pot: Is There an Opportunity in the Retail Marijuana Industry?
Running a Marijuana Dispensary Isn’t Really All It’s Cracked Up to Be Once You Remember That Tax Compliance Is Kinda Important