5 Reasons to Cultivate a Cannabis Practice
With full legalization coming soon, Illinois CPAs have a growing industry to capitalize on.
Growing a successful firm in today’s CPA industry requires two
things: finding good clients and providing them with world
class service. Sounds simple, but the secret sauce that helps
with both is finding a great niche and becoming an expert in it. If
you’re a CPA like me, you love the challenge of navigating complex
accounting and tax issues, implementing systems and controls, and
helping your clients manage the financial health of their business
and maximize cash flow, which means you’ll love the opportunities
available in the cannabis industry. Think that’s taboo? Think again.
I picked cannabis as my niche in 2015, and business has been
growing exponentially. The list of states which have legalized
cannabis use is expanding rapidly as Americans increasingly
support medicinal and recreational cannabis use, including in Illinois
where lawmakers recently approved recreational cannabis sales
and possession to become legal Jan. 1, 2020. Simply put, cannabis
is not just a niche, it’s a national movement with many passionate
individuals who truly believe in the medical, social, and economic
benefits. And, cannabis is going to drive a multi-billion-dollar
industry that’s going to need you.
So, here are five reasons why to get familiar with the nuances,
rules, and complex entities of the cannabis industry and start
serving them today:
1. You’ll Make More Money
Several factors play into the fact that accounting professionals
working in or with the cannabis industry earn more. For one,
it’s still a federally illegal industry—more risk, more reward.
Cannabis is also a very complex industry with several types of
businesses—think cultivation, chemical manufacture, food and
beverage production, labs, transportation, retail, and more.
Cannabis businesses are also high earners; the average “mom
and pop” cannabis company will generate seven-plus figure
revenues and are able and willing to pay higher fees for
specialized professional services.
Clients need help navigating several complex issues, including
rapidly changing laws, business valuations, lack of access to
traditional banking services, financial reporting, tax liabilities,
audit and compliance, and more. Couple this complexity with an
extreme lack of CPAs serving the industry and you have a
perfect storm allowing you to realize much higher fees.
2. The Niche Is Underserved
The U.S. cannabis industry is only legal at the state level, which
means most accounting firms, including the Big Four, are largely
avoiding serving the industry. I estimate 90 percent of existing
cannabis businesses are using bookkeepers that have
QuickBooks or Xero training but not the expertise to perform
complex GAAP and cost accounting they truly require. Meaning
now is the time to establish your expertise in the industry.
3. It’s the Fastest Growing Industry (Globally)
More than 35 states have legalized cannabis to some degree
and each year more join the list. Cannabis is a real solution for
several medical issues, it provides jobs and tax revenues,
reduces black market activity, and is one solution to the opiate
crisis. It’s no wonder billions of dollars are backing many of these
companies, growth rates are extremely high, and M&A activity is
picking up. There’s a big book of business waiting for CPAs who
can help these companies succeed in a highly competitive,
complex, and regulated global business environment.
4. You Can Streamline Your Practice
and Clients Will Seek You Out
When your systems and practices are in place for use across
similar companies, the work you do becomes easier and more
efficient, which saves you time, makes you more money,
and allows you to do better work for your clients. It’s also
much easier to market your services to a single industry and
become established as an expert in it, which ultimately attracts
clients to you.
5. It’s Fun and Exciting
From the people you meet to the events you can attend,
this industry is simply fun. So, if you are looking for an industry
that is innovating and growing with some of the most dynamic
and brilliant minds in the country, then the cannabis industry
is right for you.
Andrew Hunzicker, CPA, is the CEO and managing partner of DOPE
CFO and CFO Bend.