How US Accountants Are Serving a $70bn Cannabis Market
Andrew Hunzicker and Naomi Granger co-founded Dopee CFO. Together, they have built a national cannabis accounting/bookkeeping training program to help accountants in over 40 US states navigate and thrive in the rapidly developing cannabis industry.
They are world leading experts in cannabis startups, providing CFO services, turnaround and high-growth strategies, capital sourcing, mergers. exits and wealth protection. In the US, cannabis is legal in 31/50 states, with 9397 legal cannabis growing licences and a predicted $70bn economic impact by 2021. So this is a massive growth area for accounting services. Shownotes:
- The reactions being 'in cannabis and accounting' gets at dinner parties and networking mixers
- Big mistake many accounting firms make is thinking they can serve everyone
- Cannabis is approaching legality in all 50 US states
- Shifting cannabis from black market status to legal has positive benefits for higher employment, lower crime and tax revenue
- The cannabis industry brought 211,000 new jobs to the US in 2018
- The power for accountants to pick one niche and become an expert in it
- Accountants are losing out due to increased competition and technology, and so are being seen as a commodity
- The accountant's role has become more remote over recent years, with more and more obstacles to accountants actually spending time with clients
- Accounting fees are being squeezed both ends with compliance and also the competition for advisory work from business coaches and others
- The many knowledge areas accountants can help their clients in and be a trusted partner
- Generalist accountants don't have the insight and knowledge that comes from going deep in a particular area of expertise
- The cannabis journey from seed to end user - it's so much more than smoking pot these days
- Why cannabis companies (and those in any niche) need a trusted accounting advisor to navigate the tech, the legislation and the opportunities
- The VIP model of becoming a stand out accounting expert in any niche
- What a world class accounting education program looks like
- The role of mindset and motivational coaching with any education al program for accountants
- Why the cannabis niche is lucrative and underserved so their accounting advisors are running very profitable practices
- Guidelines for picking a good niche for your accounting practice
Background on cannabis and accounting: Accounting in and of itself is a challenge because software is truly lacking and doesn’t cater to the specific needs of cannabis businesses. Quickbooks and other accounting software do no have a chart of accounts tailored to cannabis entities for example. There are four sub-industries in cannabis: farming, food production, chemical manufacture, and retail, and many cannabis companies involve all 4 of these. Additionally, most set up complex multi-entity structures, use cost and consolidated accounting, and have complex inter-company transactions.
To serve them well, a bookkeeper or accountant needs to understand these industries, cannabis, the state/federal issues, and have a good work papers. In addition, there are even more industry issues such as lack of banking, complex software, state seed to sale tracking, cash management issues, investor reporting, GAAP accounting and inventory management. Larger accounting firms at this point in time are not heavily involved in cannabis, meaning these multi-million dollar operations must find smaller firms that are willing to help them with their accounting.
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