insight magazine


Craft beer. German opera. Medical marijuana—find your focus, find your niche. By Derrick Lilly | Winter 2015

Winter Niche

What moves you? What makes you stand out? What are you effortlessly good at? And maybe more importantly, who needs you?

The answers to these questions may or may not lead to the same end, but they’ll surely tip you in a direction that melds your passions with your work. In other words, this is the first step in identifying your niche—that thing that makes you special, fulfills you, makes you proud.

Here we highlight just three of the many unique niches out there, and the CPAs who serve them.

Brewing Up Business

It’s a little sour upfront, but it coats the tongue and goes down smooth; the hint of mango makes it pretty refreshing…. We’re talking beer here—a Berliner Weisse to be exact.

When people think of CPAs, the image of some 30- and 40-somethings knocking back a couple of craft beers over business probably isn’t what springs to mind. But that’s exactly what you should expect when you meet with the leaders of CliftonLarsonAllen LLP’s Chicago Craft Brewery Industry Group.

Out of their Oak Brook, Ill. office, CPAs Chris Gugora, Tim Irvin and Alex Warner have brewed up a niche specializing in the tax, accounting and advisory needs of the region’s booming craft beer industry.

“We took the approach that craft breweries needed their own designated industry group, and the firm has taken notice of the success we’ve had here. They see where the craft beer market is going—it’s exciting to be part of an industry that is experiencing such a period of growth—and therein lies the potential for the firm itself,” Irvin explains. “As service providers, we are just at the tip of the iceberg of how we can help craft breweries get to where they want to be—whether that’s being a small neighborhood brewery or a large production facility.”

What’s especially unique about this industry is the business owners themselves. While some have strong business acumen, many are startup brewers learning on the fly.

“It’s a clientele that from the financial side of things could really use some help because they aren’t always coming from traditional business backgrounds,” says Warner. He points out that many craft breweries are a mix of manufacturing and distribution entities, and with that comes some specialized tax considerations.

“A lot of these breweries just want to get their tax returns filed the cheapest way possible, but it’s really important to have a service provider that knows the industry to really take advantage of the benefits available,” he says. “Take R&D tax credits for example; there’s a considerable amount of trial and error and experimentation that goes on within this industry. There’s equipment depreciation. If you have tip-earning employees, there’s a fairly lucrative payroll tax credit available that we often see clients overlooking.”

“Whether we are helping our clients on the tax side, or with operations, accounting, internal controls, fraud protection, risk management, wealth advisory, employee benefits or stock ownership, there’s the potential for a lot of growth for a firm like ours,” says Irvin.

It’s hard to argue with that when nationally a new brewery is opening every day and another is being acquired every five. But targeting a niche like this is about more than just business; it offers these CPAs the chance to work and connect with clients that truly interest them.

“The biggest attraction for me is that we help hardworking, down-to-earth people make high-quality products that bring people together,” says Irvin. “The people in this industry look after each other; it’s not craft brewery against craft brewery, it’s all of them working together to grow.”

“It excites us,” adds Warner. “I would be hard-pressed to find another industry group where the people are as passionate about their products. It’s frankly a fun group of people to work with. And personally, working in this group has given me a sense of fulfillment. I take some pride in the products of my clients.”

Life’s a Song

“I guarantee you that I’m not an opera singer, but I have a number of opera singer clients. You see, anytime you’re building a practice, you wind up with a client base that develops in no small part from your social networks. You pick up a few clients, you develop an expertise—like reading pay statements from German opera houses— word gets around, and before you know it you’ve developed a niche,” says Greg Mermel, CPA, founder of H. Gregory Mermel, CPA, PC, Accounting and Financial Services in Chicago’s Lakeview neighborhood.

As Mermel describes it, the process of carving out your niche seems easy enough. A CPA since 1974, Mermel built a practice that serves two areas close to his heart: The performing arts and LGBT (lesbian, gay, bisexual and transgender) communities.

“I’ve had a sometimes professional, sometimes avocational, interest in the performing arts, and I am a gay man. Surprise, I have a lot of clients in both of those communities,” he jests. “If you want to develop a niche practice, you really have to know the ins and outs of it. In my market there has to be a whole lot of empathy—both groups of clients need to feel comfortable. Relationships are much more central to their identity; it’s something that is so intensely personal.”

Admittedly, now that there are no longer differing federal and state distinctions on marriage, working with same-sex couples has become easier. There are fewer “what ifs” to account for when devising tax and estate plans, and there’s less splitting and combining of tax data. But that doesn’t mean the work has lost its uniqueness. Mermel’s clients are often entrepreneurial and self-employed, and many are cleaning up previously filed separate tax returns, amending returns to account for benefits coverage changes, and retroactively correcting marriage statuses.

While Mermel isn’t one to send out press releases or write tweets touting his niche practice, he admits that there’s a strong sense among the performing arts and LGBT communities of wanting to “keep it in the family” when doing business. His involvement in both communities, in addition to the Chicago Area Gay & Lesbian Chamber of Commerce, keeps a steady flow of business coming his way.

“I have a great luxury in my work life. I do work that I enjoy. For the most part I do it for clients that I like. And I run my small practice on my own terms,” he states with satisfaction.

Growing Opportunity

“It’s been a really interesting run; it’s a tremendous opportunity. It’s like nothing else,” says Jim Marty, CPA, ABV, MS, owner of CPA and consulting firm Jim Marty and Associates LLC in Colorado. What he’s referring to is the budding legal marijuana industry. Serving legalized dispensaries and growers could be a hit for accounting and finance professionals across the nation willing to roll on both sides of the law (bad puns intended).

At the time of writing, 23 states and Washington D.C. had legalized marijuana use in some form, with many more considering medicinal use and recreational use laws. Here in Illinois, 2014’s Compassionate Use of Medical Cannabis Pilot Program Act created a four-year roll out allowing sick and dying patients suffering from debilitating medical conditions access to medical cannabis. The Act permits up to 22 cannabis-growing operations and 60 licensed retail dispensaries to operate across the state—all of which will ultimately create jobs, generate revenues, occupy real estate, pay taxes, require audits, and more.

“That’s how it starts,” says Marty. “What happened in Colorado is that we had medical marijuana for four or five years, and shortly thereafter full legalization came along.”

Legal marijuana was a $700M industry in 2014 for Colorado, and it could surpass $1B in 2016. Marty, whose firm has grown rapidly based on its marijuana industry expertise, estimates that Illinois’ marijuana businesses eventually could generate $2B.

So what does this mean for Illinois CPAs? The answer is cautious optimism. For starters, it’s important to note that risks exist; state laws conflict with federal laws, and marijuana remains a Schedule 1 drug subject to federal prosecution. But Illinois’ medical marijuana program is highly regulated and essentially mandates CPA interaction with licensed growers and dispensaries.

Bridget Carlson, deputy director of Medical Cannabis at the Illinois Department of Financial and Professional Regulation, points out that Illinois’ Administrative Rules supporting the medical cannabis program require dispensaries to engage in, and submit to the Department, annual audits compiled and certified by an auditor or CPA.

“It’s a very strict statute and there are strict regulations for these operations to follow,” Carlson explains. Among other state departments, two that CPAs know quite well are involved in marijuana oversight. The Illinois Department of Financial and Professional Regulation registers, licenses and regulates the dispensaries, and the Illinois Department of Revenue regulates marijuana taxation, which is subject to privilege taxes, occupation taxes and other industry specific surcharges.

While opportunities are there, Illinois CPAs are encouraged to proceed with caution. Speaking from his experience serving cannabis industry clients, Michigan-based CPA James Campbell of NUMBERS Professional Accounting Services warns that highly complex and discouraging business arrangements often exist within this particular industry.

“Marijuana taxation by itself is a complicated affair, but I feel there are far more complex issues hiding out there,” he says. “Medical marijuana may not be a good niche for a small practitioner in Illinois to enter right now. But Illinois Medical Marijuana Version 2.0 may be more attractive in a few years.” 

Medical Marijuana Sees Cautious Introduction

In November, Illinois finally began issuing official identification cards to qualified medical marijuana patients as it nears implementation of the Compassionate Use of Medical Cannabis Pilot Program Act signed into law in January 2014. The Chicago Tribune reports that this is one of the final steps required before full implementation of the Act, a process that’s been slowed by cautious regulators. So far, only 6 of 60 dispensaries and 13 of 22 cultivation centers have been approved to operate in the state. What’s more, only 3,200 people have been approved as medical marijuana patients. Initially, the patient pool was estimated at about 100,000 people. The Act currently allows for medicinal use of marijuana to treat 39 conditions and diseases. In October, the Medical Cannabis Advisory Board recommended that eight additional conditions and diseases be considered for approved treatment, including chronic pain due to trauma, Chronic Pain Syndrome, Chronic Post-Operative Pain, Intractable Pain, Osteoarthritis, Autism, Irritable Bowel Syndrome, and Post-Traumatic Stress Syndrome (PTSD).

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