Because cannabis is illegal on the federal level, there are numerous accounting issues for companies in the industry and those that do business with them.
We sampled several members of the New Jersey Society of CPAs for their thoughts on questions they’re asked and advice they might have.
What is the biggest concern about taking on a cannabis-related business?
- I see our role as CPAs in assisting clients with compliance with federal and state tax law and regulations and setting up an appropriate bookkeeping and internal control systems. The biggest concern is being considered as accomplices in case of criminal charges to cannabis clients. – Sergei Suslov, CPA, SVS Accounting
- My biggest concern for taking on a new cannabis client is whether they are properly capitalized and the integrity of their principals and management. – Steven B. Shaiman, CPA
What question(s) are you being asked by clients interested in this space – whether as an investor or as a business?
- Potential owners are interested in knowing the size of the capital raise and whether there are outside sources of capital. – Steven B. Shaiman, CPA
What do ancillary businesses need to be aware of?
- Avoiding prosecution in case of criminal charges to our clients. – Sergei Suslov, CPA, SVS Accounting
- Ancillary businesses need to be aware of the latest state and federal laws and regulations. There are many proposals right now, and whatever does pass will surely be amended in the future. – Steven B. Shaiman, CPA
What advice (from an accounting/auditing perspective) do you have for someone interested in entering the cannabis industry?
- Hire a good lawyer and accountant and follow their advice. – Sergei Suslov, CPA, SVS Accounting
- My advice to prospective cannabis businesses is to assemble a first-rate team including: CPA, attorney, consultant, insurance agent, real estate agent and software provider. – Steven B. Shaiman, CPA
- My advice would be to get someone who is extremely knowledgeable and savvy with IRC280E. – Sandy Suchoff, CPA