insight magazine

5 Reasons to Cultivate a Cannabis Practice

With full legalization coming soon, Illinois CPAs have a growing industry to capitalize on. By ANDREW HUNZICKER, CPA | Summer 2019


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.

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