Ah, California. A place synonymous with sunshine, redwood forests, farmland, cliff-lined beaches, Hollywood and cannabis. Since 1996 the cities of San Francisco, Los Angeles, and Oakland have served as consumer hubs for the best-in-the-world marijuana grown in the Emerald Triangle and across the state. There are large high-tech indoor grows producing strains with up to 30% THC content, small family farms cultivating organic, sun-grown flower and vertically-integrated coastal greenhouse grows bringing CBD balanced options to market.
Sales & marketing is not my favorite aspect of being an entrepreneur. When a prospective client schedules a call it’s a victory, that while small, is the first step toward a mutually rewarding professional relationship, or not. Each call is as different as the cannabis executive on the other end of the line. I’ve spoken to owners of edible companies, dispensaries, brands, delivery services, extraction facilities, distribution operations, farms and fully vertically integrated cannabis organizations. Most calls go well even if we don’t move forward with providing services. A few memorable ones have not and that my friends is a story for another day.
I think we can all agree that 2019 has been quite the year. There seem to have been fewer highs and more lows than even the terrible 2018. Doesn’t seem fair, does it? The good news is it’s almost over and 2020 is going to be amazing. Before we can move on there is still some important work to be done in the last quarter of 2019. What gets done between now and 12/31/2019 will ensure a strong year-end and create a foundation for success in 2020.
For a state whose most famous city is known as “Sin City”, Nevada has a not-so-progressive history with cannabis. Having banned cannabis possession and consumption in 1923, Nevada was the only state for which possession of any amount of marijuana was a felony offense until the passage of Assembly Bill (AB) 453 in June 2001.
🌱Business owners are held personally liable when they don’t bother to maintain the paperwork. They do deals with a handshake🤝 ; move money around without documenting for what and where 💰 ; and, fail to file necessary forms with state and federal authorities 📝 The result? Creditors coming after their personal assets, and a court determining that the failure to maintain the limited liability entity properly means it doesn’t exist at all—and thus affords the owners no liability protection 😭
Last month while working my way through the dozen plus cannabis newsletters, emails, event notices, etc. I receive each day, I noticed an blurb about an upcoming pop-up museum in Hollywood. A Museum of Weed produced by Weedmaps. Interesting… Would it be educational? Networking opportunity? Party atmosphere? Tickets were reasonably priced and I had an idea, to combine a quick visit to the museum before or after seeing Once Upon a Time in Hollywood at the Arclight Theater. Tickets were purchased all around with expectations high for the movie and low-to-non-existent for the museum.
In addition to growing Alice & Fran LLC into a premier cannabis accounting & finance firm, one of my goals is, and has always been, educating small to medium size business owners on all things (cannabis) accounting & finance. My first two blog posts, Strong Accounting & Finance - Essential for a Successful (Cannabis) Company and Strong Accounting & Finance? Start Here were “long reads” intended to introduce traditional accounting & finance best practices and efficient processes to cannabis business owners. Many executives and founders in the industry are in leadership roles for the first time in their careers. They might not have a deep understanding of the day-to-day accounting function or the importance of financial management to exit strategy, expansion plans and audits.
Cannabis, unlike 99% of other industries, is new and until January 2018 there really wasn’t such a thing as cannabis accountant. There were experienced, talented accountants working with cannabis companies in legal states (medical and recreational) developing processes, creating cannabis-specific chart of accounts and staying up-to-the-minute on legal cases involving the application of 280E. There were, and still are, bookkeepers, accountants and CPA’s working with cannabis companies that don’t have the correct skills, the latest information or the right tools to keep their employers/clients compliant, audit ready and on a path to success.
This spring the hubs and I took a short working vacation, or a “workcation”, to Portland, Oregon to attend the Cultivation Classic and explore all things green: vegan food, cannabis businesses and outdoor green space. It was my first visit to the city and I was excited to see if it was as funky and surreal as Portlandia made it seem. Yep, it really is. The Cultivation Classic was a fantastic event and all expectations were exceeded in regards to food, dispensaries and lush, green scenery.
🌱 Traditional non-cannabis businesses, particularly small businesses, can successfully operate with a good monthly bookkeeping service and a knowledgeable CPA. Cannabis businesses cannot. Why? IRC 280E. Local/State/Federal compliance. Lack of access to banking. That’s why it’s so concerning that many (most?) Cannabis CEO's continue to try to “get by” with a monthly bookkeeping service and a CPA firm at year-end for annual tax filings. The issue with this approach? It’s what’s missing. Everything in between!
What does that mean? What’s involved? Who’s involved? How do I make it happen? Below I outline what I believe are the four basics components of any accounting & finance “department”; reduced to its simplest form for small to midsize organizations (farms, grows, dispensaries, delivery services, extractors, edibles manufacturers, etc.).