Do you think that the IRS would believe that your dispensary is buying cannabis from the Home Depot
The Alterman's did stay tuned for the Alterman case
Now that's dope
There are three court cases that really shaped the accounting
landscape for cannabis companies and those cases are the CHAMPS case, the Olive case and most recently the
Alterman's case in this series. We'll be deep diving into each one of these cases
And today we're going to discuss the Alterman's case. Now the dope CFO just recently held a webinar
Discussing this case. So I am going to flip to that webinar and you can take a look at what we discussed
surrounding the Alterman's.
I hope that you guys are able to find a lot of value in this case
This is something that is happening in this industry, and we need to be aware of it so that we can avoid having
These issues with our clients. In this workshop
we're just going to discuss how poor accounting is a downfall for cannabis owners, and were going to see the epitome of
you know poor accounting and what it does to these cannabis companies. And so just
high level the case results for Alterman. They were audited for tax years 2010 in 2011
and this audit happened in 2014, and it was just finalized this year. Under payment of taxes was nearly
$400,000 and
their accuracy
Related penalties were $78,000 dollars. That's nearly
$500,000 in just
taxes and penalties that this company had to pay
based on this audit
And and maybe I'll say a couple of high-level things right at this point
Before we jump in deeper, so in the cannabis world
Just in the last ten years. They've been kind of three big cases in the first case was a CHAMPS case
which you can google CHAMPS and
That was actually kind of a victory for cannabis and cost of goods sold
and that's what so many people are actually doing incorrectly now and
Aggressively and in the Champs it basically said it was okay to have a second line of business within your MD
Non cannabis line and if you tracked it separately and if it was actually a substantial real business
you could get some more deductions on your tax return so many many people took that case and just
Took it way way way too far, and we're doing things incorrectly and actually the next case Olive
If very similar they tried when they were actually in core, they tried to say
Oh, we were doing this like CHAMPS was and we have a separate line of business, but they hadn't tracked it separately
They hadn't done anything
Separately and they lost but now this third case that just came out in 2018
Just this month was also a definite loss for the CEO against the IRS
The IRS is demonstrating that they are going to really look with a hard hard look at exactly how you're doing accounting
And how you're separating the businesses and whatnot. And if you're not doing it, right they have no qualms about
Hitting you up with massive penalties and interest and the court just upheld
Those huge fees one other point. I like to tell my CEOs
I kind of talked about this idea of sitting on a ticking time-bomb and not having any idea. So these Alterman's back in
2010-11 and they were probably just nice people and they had their dispensary it started to grow and helping people
They're probably really good people and they got a tax preparer and who did not a good job
I mean at the very first just by not telling him they were keeping good accounting records
and so they filed their tax returns then they may have thought they were just doing absolutely fine until
2014 when the audit happened and the first results were handed down and then from
2014 to right now four years of litigation and battles back and forth
So here we are eight years later eight years later and they're getting half a million verdict handed down
This is kind of I I googled and searched for them. I couldn't find them. I believe they're already out of business
if they're not out of business, this probably will put them out of business and I think this is
likely for them to have further of its on further years because the IRS is gonna just
Obviously jump back in if they know they're already doing it wrong
so these people are probably not in the greatest shape right now as a result of this audit and and ruling
Yeah, yeah, and so just you know
to piggyback off of that
What do you think that this is worth like we're talking about they have these huge fees not to mention their business is completely shut
Down not to mention
They had to go back and forth in litigation for over four years over these mistakes that they've made
So that's why what we're doing as accountants is so important to these cannabis owned owners
That's why it's so important that they have accurate books and records
It's not the same as messing up for your local chiropractor or your local real estate agent. It's not the same
They're facing a huge penalties and they're also highly regulated and being audited a lot more frequently than your average
Company owner and also one other thing the loora looral Alterman is the wife in the case
She was I just did an interview for a magazine on this exact. We just went through the same opinion. Damn
he the reporter actually had called and talked to Laura Laurel Alterman and she actually
Wasn't even aware that there had been a ruling
Like ten days after this is the whole internet knows but she doesn't know and it just again tells me she's relying on absolute
Not good consultants accountants or attorneys. Then the fact that she had no idea. She'd even lost what has
owned five hundred thousand dollars is scary to think about
Yeah, especially since your business is gone and which brings up another interesting
Point about cannabis CEOs in the real world and we all know this
When when there's multi-million dollar businesses?
generally the CEOs in the United States of America have worked their way up and have big degrees and and
They get hired they do a start-up or whatever
But they've had years of experience in training in cannabis many people got the star
out of either getting investors who wanted in or out of the black market and so you will find many many CEOs that don't have
a lot of business skills starting
multi-million dollar companies
and so that's yet one more reason why they really need need us as accountants and advisers because they're
You know, I find with most of my clients
I'm actually fulfilling partially some of the CEO role because they just don't they just don't have an experience
Now we're gonna go into the case a little bit more and we're going to show you guys how all this could have been avoided
And how you can avoid this for your client, but first we're going to introduce ourselves
And also I want to just housekeeping if you have any questions during this presentation at the bottom of the zoom screen
You should see like a Q&A button. So click on the Q&A and put your questions inside of the Q&A box
That way we don't miss any of your questions. We'll just start by introducing ourselves
Ok, so Andrew, you can introduce yourself
Hey there, i'm andrew Hunziker and Naomi and I founded dope CFO together
And I've been cpa and CFO for almost 20 years. I
volunteered with a stable of experts with economic development of central organs
That's a big startup community here and in the state of Oregon, so I've worked with a lot of startups in cannabis and hi-tech
Before that and oil and gas before that
Awesome and I am Naomi Granger. And so I'm a CPA and MBA
I live in Las Vegas, Nevada. My background is big for accounting. I worked in public accounting for over 12 years
I made it to senior management level in public accounting before I decided that I wanted to do something different
I wanted more freedom and flexibility in my life, and I decided to go out and try to
Form my own business where I can do it my way
I'm CFO to multiple cannabis companies and I've spoken and mentored hundreds of different
Professionals and then I'm an avid traveler. I just spent the month of March in India
Traveling all through India and before that I was in Hawaii before that. I was in Mexico and so I
Live the work play life
So I was serious when I left public accounting that I wanted to have more freedom and flexibility in my life
So that's it about me
So then we're just going to get into first like what makes accounting for cannabis so different
The first thing is there's four different verticals
Yeah
So it starts with kind of farming and then growing the pot and the the cannabis and then from there you get into extract
Which you can sell separately and or goes into edibles or other products like that and then eventually the M dispensary
I like that picture. It's him
So that's the I think probably the most two common companies are formed our dispensaries and farms
But they're both pretty much multi-million dollar enterprises in year one
They both take a lot of employees and help they can both do lots of revenues in
In year one or two and as we go through this I'll highlight some things as I'm looking through the case as well
Just some things to note that we see with a lot of our clients
so in this case, one of the first things you'll notice is
The son Jack was kind of working in the dispensary and also doing accounting
That's very common to find a relative or somebody doing accounting that has no accounting background over experience
So that's the first telltale sign that they need our help
And another thing that makes this a little bit more complicated is just text code IRC 280e
Which we will go into depth how this impacted the alterman's cannabis is still schedule 1 controlled
substance and based on that
They have to follow this text guideline
Which has a lot of different nuances about it as far as doing your cost accounting doing your accrual accounting
And they as as they were dispensary they were also
280e says you basically can't deduct anything except cost of goods sold. And then that takes you into the code section 471 and
That's very specific on what you can or can't deduct as well on the cannabis side. So
That's the first piece of the puzzle for a dispensary is how much can you get into cost of goods sold?
What cost can you actually deduct even under 280e and then?
The next question is some of the other things about the non cannabis activities. How can you deduct some of those costs? Okay
Alright, and so then we're going to get into the actual case now just a little bit about the case
First of all, they are a dispensary in Colorado and they sold marijuana
This is if you actually read the rulings they describe it as marijuana merchandise and non marijuana merchandise
They didn't have any services that they offered and then they started a grow site in 2010
so that was another thing that happened in Colorado where you had to grow seventy percent of what you sold and
Then now we can get into what did they do wrong? And this is a long list there was
Record-keeping I'm just going to go through the list and we can go piece by piece. There was a lack of a check register
Incomplete credit card statements no monthly or annual reporting. He only provided the balance sheet and the P&L took their tax accountants
I didn't have any support they didn't have any cost assigned to their inventory when they did their inventory counts lack of
Recording physical inventory count so they did the count
They didn't record it and they didn't assign any cost to the account
They had untrained bookkeepers zero
Beginning of your inventory every single year year over years is hard to believe that somebody can completely sell out at December
31st and have nothing for new year and then they were using cash method of accounting which is a no-no so we can go
piece by piece through this if you would like
Yes, so there and also Rachel's got a question in the chat about who's responsible for paying these huge penalties
This is a prior slide if the business is out of business. I believe the individual owners
So yeah, when you read the case the IRS because they're illegal they show it as a disregarded entity or a sole proprietorship. Which means
The tax burden goes to the owners. Yeah, and it's even if you look at the title of the case
It's Laurel Alterman and her husband William Gibson and against the IRS
So the husband held four innocent spouse support of innocent spouse protection to I guess I don't know how how that plays out
Yeah, I would not be surprised if this is already in divorce as well which often happens when there's a big case
We're gonna QA down the call of these slides available. And is that would that be in the queuing the recording?
There's not a recording and we're not sending the actual slides out
But there is a recording of the presentation so we talk just about cash accounting
So remember into a de it says it's real clear
If you deal on a drug like heroin or whatever pot you are required to file tax return
It doesn't so Twiggy is not saying what's legal or illegal because you could literally be selling heroin and they're just saying, okay
It's fine. If you sell heroin, you got a still file a tax return and you can't deduct anything
But then it turns out you can deduct cost of goods sold if you're doing inventory account incorrectly
So you can't use cash accounting him. That's kind of what they were doing
They're using cash method of accounting and recording no beginning or ending inventory and they were just saying cost of goods sold was
Purchases but we all know that's kind of cash basis
we just oh
Everything I purchased I sold it all but we know in the real world that doesn't happen when you're a retailer you buy
Inventory and you sell some of it and there's always some leftover
At the end of the year and that's how you do a cruel accounting
But they were they really they weren't doing any kind of accounting at all. They were just
Yeah, even just the complete lack of record-keeping even to just say
No to accrual accounting, but yes, all your cannabis clients need to be doing accrual accounting
Other businesses can do many other things. So this everything we're talking about is
Much more strenuous for cannabis. Yes businesses can do do what they want
Yeah, and Amy that should answer your question. So this is something that is specific and required for cannabis companies
They must do accrual accounting in order to qualify for any
Deductions and I'm just going to go into a little bit more
Detail on some of these bullets in the case
it said lack of record-keeping they didn't record the hours for the employees that worked in the grou versus the
dispensary
So they didn't know how to sign those to non cannabis related things and cannabis related
Sales, and they couldn't determine if the receipts were for non marijuana or merchandise or marijuana merchandise
They just had receipts but there was no way to know what the receipt was for or what the purchase was formed
for the sales as well as
Purchases and then they had confusing labeling in the G&L. They had these purchased notations or they labeled them as
Meds see and so it was unclear if that was cannabis related are non cannabis related. Let me point out before you go on
I'm still in record keeping and I'll highlight of some of this as I talk if you wanna look it's interesting
40-page grueling to read and it reads pretty quick but on page ten
it says
Alterman provided IRS with receipts that corroborated some of the expenses paid and
Some of the purchases made but none of these were in the record the record included the general ledger it what's kind of weird
They were they were actually recording some things in the general ledger and some things they weren't recording and then some things that they were
recorded in the general ledger
like Naomi said it who knows what it said so they had some purchases of pot so they bought some pot and
some of those purchases they said were bought at Home Depot and sumit Lowe's and
That's where that's obviously crazy and the IRS
The judge said yeah, he found it very unlikely that they were buying pot at Home Depot or Lowe's
But that just shows you the level
That's not even accounting. That's not bookkeeping. That's not even record-keeping that's not even data entry negligence. Yeah, that's
Just I mean, they almost would have been better to record. Nothing. Actually. They might have gotten
Gotten better than what this yeah
So that wasn't kind of funny with some of the stuff is very humorous by the way as you read it
They one claim they made was that they were some chicken soup
but no, they could find no records of any sales or
Inventory or anything related to chicken soup
They said that the employees spent a lot of time trimming the plants and the employees testify that they didn't do that at all
Yeah, it's a trimmings a big labor-intensive activity at most growth sites. They did have agro activity but their employees
Stated yah in the case that they actually didn't do any trimming
So I think we may even go back at a high level to go real at a high level of what they did
So they were already doing very very poor accounting. And so the first if you are a dispensary and
You want to claim two separate like you don't have to do this. You could just be one business. You're a dispensary. You sell pot
But you could if you want to try to develop another business and it would help you tax wise to do that
But you could just be one business or two businesses in your location
If you're gonna be two businesses one being a cannabis and one being a non cannabis
There's a couple requirements to do that. And which some of these people like the Alderman's didn't get one
The business has to be substantial enough to stand on its own. It's got to be a real business
You can't sell a million dollars a pot and ten thousand dollars of pipes and paraphernalia and say oh, yeah
We've got another business and we're gonna deduct a whole ton of expenses on this business
Even though it only brings in 1% of the revenues, so it needs to bring in something
I think 10% is like a nice starting point that you could show
It's a real substantial business
And then the second thing is you have to be able to show separate accounting for that whole business
You can do that in QuickBooks. We a class accounting and you can record all your
Cannabis purchases and sales and cost of goods sold in one class and your non cannabis
revenues and expenses and the other one and you including you'll have to do some allocations of
Labor and rent and utilities and all that depending on reasonable and documented
factors such as the amount of square footage the non canvas stuff is filled in or the amount of labor that
Business takes so you have to do those two things if you want and if you do those two things, yes
You can deduct some things that are not allowed under 280 even advertising you can get some real business deductions
So it's worthwhile to do so, it's worthwhile to tell these CEOs, you know
If you're gonna do this, you should do it, right you're gonna save tax dollars
Not to mention you're gonna have better
accounting which makes your business more valuable and you can sleep better at night because you don't have to worry about
the IRS coming in five years later and
Becoming a nightmare in your life. So that's only one area. Let's just pretend they weren't even doing that
Let's just say they were just simply selling pot
They still had a major mess up because to sell pot you can deduct cost of goods sold
but you still have to do good record-keeping you still have to show your cost accounting and all that and so again,
They weren't even doing that part right either in this next slide. I just kind of put a screenshot
This is an actual screenshot out of the case, which shows that you know
They're showing their beginning inventory balances zero every single year year over year
They didn't have any ending inventory only in 2010. No cost of labor
No cereals nothing and the mineral states that they're using the cash method of accounting
Yeah, and the and even this twelve thousand number they talk about that in the case
They switch tax CPAs back and forth a couple times. Neither of them did much of a job and some of these numbers
Like even the numbers that are here, they had trouble finding like purchase these four hundred seventy six thousand
Where'd that number come from where this twelve thousand?
Was a number somewhere in the general ledger and they just put it in there as ending inventory
But it just yeah didn't have much much support at all. So the IRS said clearly they were not doing inventory accounting correctly
So again, this has nothing to do with the Champs case and non cannabis
This is just purely cannabis accounting like you're not doing inventory correctly
there was no records of any physical inventory counts and and that I mean
They're lucky. They still actually allowed them a fairly sizable deduction for cost of goods sold. We have a question
It says if there is a separate inventory management company with a separate set of books selling to several different
dispensaries of the same owners each with a separate set of books
is it okay for the inventory company to have the same address as one of the
Dispensaries if they're renting out the back portion of the building to package and sell raw product. That is a super complicated
You know, I will tell you right off
Most that's the kind of crap that's been going on poor tax people and poor
Attorneys telling people to play games and think of the old form over substance
Does your question look like a shell game to you? We've got eight different companies
We're selling out of the back of our shop and we're all the same owners and we've all got different sets of books or selling
Stuff back and forth. That's probably not gonna get you any kind of benefit at all
so first of all, the inventory management company if they're selling pot
they've got to have a wholesale license or
Their agro license to sell each of these dispensaries and then each dispensary would have to have a separate license
So assuming all these people have different licenses with the same exact set of owners
I'm not sure what benefit you're gonna get out of this because you would be if they're all the same owners are either filing a
Consolidated return I must it would depend how the entities are set up. I don't think those kind of games really work
Let's set up
now that said
What does work?
If you have a dispensary
you can set that up another company that's non cannabis like say a property management company and you buy the land in real estate and
You rent the equipment or you if you have a real business with a real purpose and it's not just oh I'm putting these
Cannabis companies and different names and moving stuff back and forth. It's it's got to have have real validity
I think whatever you're doing you can't set up
Structures and whatever just to avoid tax
so at the end of the day if that's the purpose of this complex structure you set up and
Someone can come in and look at it. Why on earth did they do this?
Well to avoid tax that answer I think usually is not gonna work
Yeah
And now I'll just get into some of the findings
at the the result of this case is they found that they were under reporting revenue by about
Twenty five thousand dollars in two thousand ten and eight thousand and two thousand and eleven the IRS reduced their cost of goods sold allowed
Originally, they reduced it from two thousand ten from four hundred and sixty four thousand down to three hundred and eighty eight thousand
But then at the end they conceded and gave them about four hundred and fifty thousand but then in 2011
they tried to reduce it from two hundred and fifty three thousand of what they claimed down to one thousand dollars and
Then the IRS conceded and allowed them to take two hundred and thirty two thousand, but you know
What if they wouldn't have conceded like they would have only had a thousand dollars of cost of goods sold
Which doesn't even make sense, they disallowed all business expense deductions except for depreciation
They assess them a twenty percent accuracy related penalties
Which came to the seventy eight thousand dollars of penalties
And say and I will say something right there cuz and then if you go to page
twenty five and you see the actual opinion it says right there at the top the
Taxpayer bears the burden of proving by a preponderance of the evidence
That the IRS is determination and notice the deficiency are incorrect. This is the burden of persuasion
So again good books and records. You got the client as the burden of proof now, let's get into what they should have done
Okay, so the marijuana and the non marijuana business should be recorded as separate
Businesses and and Andrew kind of touched on some of these earlier. They need to be doing accrual accounting
They need to be doing cost accounting
They need to have a perpetual data room set up that
Supports all of their numbers in their books and they need to have monthly quarterly and annual
reporting done and even further than that because there's like there's a footnote number 18 on page 27 and
It said these people were selling ultimately was selling t-shirts and hats
But the t-shirts and hats had the name alter med LLC on them
So the IRS said the alternate LLC hatton t-shirt was advertising for the medical marijuana
And so even though they were selling hats and t-shirt if they can claim that it's advertising for your dispensary
You may lose that deduction. Anyway, so you gotta be really really careful of how you're selling and making sure you're actually selling some
Cannabis things and non cannabis things that aren't simply an ad for your cannabis business
because if if they're just an ad for your cannabis business that kind of
Fits the theory of this isn't really a separate business. This is one business and and you're using the those kind of things
So that's one about three separate businesses. Make sure you set up a non marijuana business and
Keep it as separate as possible and do be creative. Like I have a dispensary owner that's holding community events
They added a coffee shop
they're doing lots of different things with their space and they're doing
Educational stuff and so you can have lots of ways to make other money and he's and they're actually making real money
Which is good to you. It's it's good for you to have another business. Those are the results
That's kind of like the high-level summary of this case. And we do have a training program for accountants to help them avoid
These with their clients. I just wanted to introduce that to you guys
And then after that we'll go into the Q&A and we'll open up your line if you have specific questions
And you can ask them on the line. Yeah, we are we am. So are you done on the case part?
Yeah, did you have more to add I was gonna say one final thing. I'll tell you at the end
It's around the so at the very end of the deal of the clause about negligence that they were finding them basically negligent
They had a negligence penalty for failure to keep good records
negligence includes any failure by the taxpayer to keep adequate books and records or
substantiate items properly
negligence is a pretty bad thing and I'm saying questions pop in so I'll go ahead and and
Introduce the course you guys pop your questions in and and then we will answer all those questions at the end
Andrew and I do have a training course if I'm called accounting for cannabis and it's an online training once you log in you justyou
Can log in and you get access to the portal a lot of times we get this question
Do you need to be a CPA and no you don't have to be a CPA in order to do cannabis accounting?
We have a lot of bookkeepers a lot of accountants a lot of EA's a lot of attorneys
Different things and are in our group and they're able to build their business that way
Is it legal the answer to that is yes partially, but that's what makes it special so
Because it's federally illegal we have the 280e issue that we've discussed and that's what was the main issue with the ultimate case
But as an accountant
You can legally have them as a business without any problem without getting in trouble
And will you lose your professional the AICPA says check with your state?
Each state has their own guidance on what accounting professionals can do in
Servicing this niche within that state and so what our program does is. We it it helps
Accountants who want to get into this niche or who want to grow a cannabis accounting firm it helps you provide world-class
Service to your clients and the way that we help you provide world-class service is through our cannabis tailored working papers
We have a chart of accounts that we provide in the program
We have the flower calendar that helps with inventory so that you don't get
Zero inventory at the beginning of every year no purchases and we walk you through how that needs to be
done and we also have the
Allocation percentages and allocation work papers so that you can understand how to properly do your cost
Accounting kaien is going to have to pay taxes regardless
But we want to save them and make them pay the least amount of taxes
so doing the cost accounting right is the way to get them to pay the least amount of
Taxes and then we also have the month end process so that we show you
What you should be doing on the last day of the month the first day of the month and you know
Throughout the entire month so that you can service
That client and so if this is something if you think that this is a system
That you think will add value to both your client and your bottom line. We just have one question for you
And that's are you ready to become a dope accounting professional?
So if there's anybody on this call who would like to delve deeper and learn more about cannabis accounting?
We do have a special offer
You can just follow this link bit ly slash dope CFO and schedule a call with us
and we'd love to talk to you when we think that was great and I
Will go and jump give you a break for a second. There was a couple of questions that popped up
at the bottom of the screen Amy
Asked how does it grow or price their plant inventory? I know in retail
It's the purchase price, but if they're growing from seed, what's the process?
Amy that is the crux of the matter for a grower and or an extract maker and that's the cost accounting that's
Taught in our program and it's not simple
so with with cannabis to grow from a seed to an actual product is
Anywhere from a hundred and twenty days to a hundred and eighty days the farm I worked out
It was a 180 day cycle that includes veg
Growing watering harvesting drying curing testing at the lab
And finally you end up with a package of pot labeling and all that to take to the dispensary
How much does it cost to grow a pound of pot?
Well, you start with a seed or a clone which is either free or very close to free very very cheap
That's your raw material. So in a canvas company at any ending reporting period your raw materials are usually very low on the growth side
same with finished goods because the second that you've been working on spot for 180 days growing it and trimming it and
Testing it lab and all the stuff and you end up with this package to pound a pot you
Immediately take it to this mystery if possible and sell it generally on a grow site
You have very little raw materials
very little finished goods in inventory at any period where almost all your inventory is is in whip working process and
The way you value work in process again, it starts with your fire calendar
So you need to know they may have thousands of plants and 50 different strains
And so for every strain you need to know exactly how much completed us
So if their cycles 180 days say you've got ten plants that you planted yesterday say, it's June 30th today
I know it's not June 30th
Tell Friday we're gonna go counter inventory and we counted all these plants and these one plants we counted yesterday
Well their work in process, but they're just still seed in the dirt and they're not worth very much
So they're there one day out of 180 days percent complete and then we got another plant
What about a bunch of plants that are at the very very very end?
we've already
Trimmed them and dried them and cured them that we're picking him up from the lab tomorrow and July 1st that pots ninety-nine percent
Complete and so for each plant and strain you have to estimate the yield per strain. So maybe half a pound per plant
So maybe a pound and a half you do estimates than that
And by the way, these are all coming from the operations farmers guys telling you how many plants they have
They count them all what the estimated yield by strain and then also how much complete they are
And then from there you go into cost accounting once you have all that data, and you can actually start allocating
Direct and indirect cost and that could be things like direct labor and direct labor
utility security
nutrients oil supplies testing
there's many many costs that you you can allocate in the inventory and cost to get sold and
By the way, the IRS says if you are doing this all correctly and with GAAP accounting
You can add even more costs like scrap and rework and depreciation in the cost of goods sold
So yet another reason to benefit the CEO by doing good cost accounting. So that's the process. It's not simple most companies
Don't do it anywhere near correctly and that was the whole reason
I haven't started helping these companies at first and then people started asking me for help because there's not a lot of guidance out there
Big accounting is basically not here. So there's no industry guides. There's no people that grew up being trained in this industry
QuickBooks doesn't have a chart of accounts. It's all hit and miss right now
someone else asked about
Helps actually setting up the book separate entities and picking entity types all our students and you whether you join our course or not
We're not attorneys. Yes, many cannabis companies have many entities
It's sometimes is a good idea for them to have various entities there BLL CS or C corpse or subsidiaries
we don't help them set it up like their LLC or pick their entity type we can give them advice and do tax planning and
Say well for example
The law just changed on C corpse C corpse have a lower tax rate that lower tax rate goes to cannabis companies
so it may be worth looking into if you're a
dispensary as an LLC of converting to a C Corp
So those are questions that you can do a tax planning
our group does a lot of we have a lot of tax people in our network that all of our students are a part of
They're 70 of us or all over the US with every skill set we have
CFOs
CPAs many firm big four we have tax prep firms attorneys in
well.ca fees a
Lot of those questions answered but you as your as the business provider would actually set up and help them set up the books with
The chart of accounts we teach you our process, but we're not we don't actually go in and do the work for you
Yeah, we show you how to set up the books, but these are big businesses
So they understand that they need an attorney in place when they're setting up their legal entities
They need a tax professional in place when they're doing legal entities
They're not going to think that the accountant should be doing everything for them
They know that it mean if it's going to be done, right? They have to have the right people in place
So they're you know
It was a good point and most of these people have already got attorneys in place many of them pay some of these attorneys
outrageous fees to help them with their licensing
They'll have an attorney to set up their organization structure and entities, but they'll also use attorneys to help them fill out the application
So if any state that has an application for cannabis if your dispensary in, Oregon
You have to go to the website and download all these documents to fill out and it's time-consuming and complex
But we as accountants can also do that role because if you want to you can help with that
But many attorneys are charging ten thousand to thirty thousand dollars to a client just to basically fill out these forms
It's I've actually done this myself because I helped the first farm. I worked at do all these forms and it wasn't that complicated
And then we just have one more question from Tess
She's saying can you please quickly go over the accounts or what account should go under classes?
So Tess, I'm not sure how familiar you are with QuickBooks. So it does class counting. So every count goes under class
So you have a chart of accounts of whatever software you use and that's your main chart of accounts. And so say it's
Rent expense, for example when you pay the rent bill
Say it's a thousand dollars of rent. You can just code that all the rent expense if you're not using class accounting
But what class accounting allows you to do in QuickBooks at least and that's where most of our clients are
You can pick you might have a class for your cannabis
Part of the shop and another class for the non cannabis part
so you say it's
50/50 ones half the side and ones the other half you would have two classes set up in QuickBooks
Permanently and every time you pay the rent bill five hundred dollars would go to your cannabis class
Five hundred dollars would go to your non cannabis class and you do the same forever. You could do the same for utilities
There's those costs are usually allocated on square footage same for security cameras
But then cost like say you have Joe and Fred or in the backroom all day long
taking pounds of pot and they're packaging them into pre-rolls and cute little packages and labeling them and all they do is
Help get inventory ready for sale. Well, you could put all of their
Cost allocated and cost of goods sold again using classes. So that's just a function in QuickBooks
sandy says what forms license applications so every state that
you that has legal cannabis has a whole entire process and like
California has a website where you go if you want to apply for a legal far more legal
Dispensary and they have many many forms to fill out and requirements and they check owners and it's just a long long process includes
fingerprinting sometimes and your SOPs and
Diagrams of your actual property so they're getting a lux which is the land use
Compatibility state and for your county the state won't give you a license unless your county approves and every county has different rule
There's a lot of work and detail work. We can help our DCA's order ceo's with that if they need it as well
Okay, and then Joe was asking a question. He's an EA that works in bookkeeping and payroll
I've been wanting to start offering outsourced CFO services
I haven't started yet because I don't know how to structure it and haven't cost accounting since college
Would your program give me the tools that I need to be successful or should I build some experience first?
So I've been a CFO for a long time and it's kind of tricky so it depends what you mean by CFO services
So a lot of sometimes CFO - a lot about capital raising and they build pitch decks and five forward-looking financial models
And so I've done a lot of that kind of stuff for CEOs and helping structure debt versus equity
Whether or not you've been trained or are comfortable in that I'm not sure you could offer that or not our call our program doesn't
teach
New skill sets. So for example, we don't teach people how to prepare tax returns. So we have different skill sets in our group
So some people in our group are tax preparers, and so they're learning the Cannabis stuff related to tax and their niche
But yes, you can expand in other niches. We do have bookkeepers that are kind of doing some CFO services
So, for example, I have a rolling cash forecast I use of my clients
It's pretty simple that they can understand and I show one of our bookkeepers
Our program has been using it with success and she's not a CFO but her CEO really likes it. So you can yeah
But if you want to be the outsource accountant or bookkeeper, if you just want to provide those higher-level services
Then we do teach that we teach you the cost accounting
we have a
detailed to our training on cost accounting and we teach you the ins and outs of cannabis accounting so you can at least get
Started and then maybe progress and move up to
Offering valuations and CFO level services and sometimes people that's just a title
You might be using CFO services, but meaning something else
But if you want to just out haven't be an outsourced bookkeeper or accountant
That's what the training will teach you and then also in our network - we people partner with each other including us
so maybe there's a
Tax preparer that lands a client but that client also needs bookkeeping and CFO
So the tax preparer my partner with two people in our group me and Naomi have gosh
I think we've partnered with like six students down different deals and we have we have three bids right now that all involve students -
Future clients and just four different pieces and then I saw that a couple people have raised their hand tomorrow
Do we want to I think Willie raise their hand another person
Yeah, we could try
Our Rachel says does your program refer clients or how do we find them before in a state where cannabis is still illegal?
I'm guessing Rachel you're in Idaho and maybe just kidding but there
So it's not part of our program to refer clients
But that said out of the 68
Students we have I think of referred
Prospects and actual clients to maybe eight to ten of them so far and so I do that
anyway
Just did I get a lot of people coming at me now me and I mainly bit
Larger clients now that are like ten million dollars or more in sales
And so if we get someone smaller come to us we saying he says she's ready for a referral. So Rachel's in, Texas
Yes, we've got one of our most successful students summer is on the college. She's from Texas
So maybe summer can answer that with that and cannabis is not illegal in, Texas
I had a Texas client in Austin. So there's three licensed cannabis companies in Texas right this second
So it's limited Medical approved like many states, but it's a great state to get involved there
I think in one of our last q and A's we googled cannabis groups in, Texas
And there was a ton of them so you can immediately become involved in digital and and real world
cannabis groups and start getting your footing
Yeah, and also so to answer her question, how do we find them if you're in a state where cannabis is illegal?
so in the training program
We do have a full-on marketing portion where we show you
25 different ways that you can find these cannabis owners and you can go to the different states websites the different trade shows online
Methods that where you can find these owners one of my clients is in Hawaii. Another of the other clients are in, Oregon
I've never met them. I live in Nevada where it is legal, but my clients are not local to me
so you can absolutely it's a 100 percent remote business so you can absolutely
Have clients who are in a state outside of where you are currently located and summer
I think I just pleaded your question and tomorrow saying to summer do you want to do you want to unmute summer and let her?
Just talk about that question related to being in a Texas state and also just her experience to the program summer
By the way is our very first student who ever joined the course
Back in January and she lives in Dallas, Texas, which is where I worked at Price Waterhouse in the 90s
Yeah, it's not enough. You want to unmute summer. Let her tie summer. Oh, she's still muted. You did I?
It's totally doable in Texas and you have to think about Texas like you said there's only three dispensaries and they're only dispensing for
Intractable epilepsy, but the states that surround us are no medical
I mean it's coming on board in the states that surround us as well because Louisiana is about to start selling Arkansas time
issues Oklahoma's voting tomorrow go, Oklahoma, you measure
yeah, so
At some hotel you have clients in other states. Yeah, uh-huh, Oregon
Yeah, so you don't have to be restricted to Texas? No, you're not restricted and I'm a
50% partner in a CPA firm and we have another niche
That my partner works on and that's with attorneys and they're everywhere they're, California
Arkansas I mean and we just we do zoom a lot
We do these zoom meetings with them if they want to, you know, see our faces or something like that
But anymore it's just because we're niching. It's just a quick phone call or you know
The clamps up maybe once a month, we'll have a one-hour meeting with a client just to go over everything something like that
So yeah that with technology today. You don't have to be in the same city anymore. Yeah, you can do it all all remote
Mm-hmm
Yeah
That's kind of another part of our program and and the more
Because I think a lot of us are introverts and the more I get in that class
It's like I used to I've transitioned over the last two years of being partial remote and then coming
Occasionally and now like I flat out tell CEO they want even if they live down the block they're not gonna ever see me
Unzoom because it's just
Generally, we can do anything that we need to do over a phone call or resume call
I like them to get out of that whole mindset
That's not well, but we don't provide them our time and where and when how we work
We just give them deliverables begin what they want good accounting good cannabis
Accounting peace of mind more money in their pocket the things they actually really want they don't really want someone to come
Interrupts them for half a day at their office. Yeah
That's always the time to drive especially around Alice. Oh
Yeah
Sandy says what's your opinion on getting inexpensive virtual office addresses?
For marketing so Ivan try to be namely 10 something like that
Were you I'm not sure where you would put that in your marketing
I would just use a phone number and a link a link to your LinkedIn profile or something like that, Andrew
Did you have any more questions of summer summer? Are you are you happy with the program so far?
When summer joined we couldn't say there was an awesome Network because it was just me and Naomi
He talked it up though, I mean I really
Liked sadm the first 10 came really quickly and
Came out of our Naomi and I I mean, theoretically actually Naomi's almost the first cuz I was in the fall of last year
I was helping many many people through our other program that we were in and
People that just found me about how do I do this for cannabis?
So I was helping people for free for a good long time until I realized I didn't have time to do that anymore
And then that's kind of when we evolved in
So in January, I don't know in the first 10 days. We had about 10 people so it all yeah
it happened pretty fast and then you know I commend you on your
It's just exploded the group is just grown and grown and grown every month
So and it really is you have a lot of people from different backgrounds accounting audit attorneys bookkeepers
We all have different experiences and we're it's a very open about sharing, you know a sharing group if we can help
You know, we're gonna if I can help you with something
I will a couple of times I've been called on to jump on him
you know to review some returns real quick for a bookkeeper who was gonna have a meeting with a CEO and
you know more than happy I had the time it's more than happy to do it at some are you that's a great point you
Have definitely helped some people and I really feel that's kind of the Karma in our group
We're all helping each other and it really people notice who who is like helping out and that's a huge deal
It's the same and I am too
There's nothing in my student things says I'm gonna help you all everyday, but I have taken calls with CEOs
I'm answering comments daily in our group in both in both groups - we're all trying to help each other and learn
Together and like right now a good example is the whole CBD issue and sandiana has done a ton of research
On that and it's been very helpful
I have to and it's there's just a lot of confusion in CBD right now, and I'm to be honest a little confused myself
But we'll we have a lot of good knowledge in our groups
I'm pretty sure we'll come to the the best answer before probably anyone else. So namely there's another question Thank You summer
Thank you, sir. Okay. Amy is well before we go into that question Rachel's question about referring clients
We also are working on a certification program for
students who have completed
The course and have landed their first client and then they see that they need additional help or support in the certification program
We're still ironing it out
I don't know if you guys have noticed Andrew and I have been getting a lot more publicity and we're getting our blog up
We're getting on podcast and different periodicals with that. It's gonna come a lot of referrals in our
Certification program we will offer referrals to students will offer more one-on-one support
review work
If you don't feel confident enough about you know
The work that your board product and you want us to look at your work papers. We will offer all of that
So all of that's getting ironed out, but that's just something that's coming down in the pipelines
And then amy is saying how important is it to have a cannabis-related URL or a business name for marketing?
I would not put cannabis in my business name at all only because there's still a lot of banks in merchant service providers and
Different businesses that aren't cannabis friendly and so even though you are not selling the cannabis
Having that in your name may cause problems down the road
So I would just have something you know
Very simple in your business name and leave the cannabis out for now and I gotta say I'm thank you for everyone - coming
I have to jump off because I actually have a three o'clock call but Naomi if you take all the final questions, that'd be awesome
Thank everyone for coming. Yeah, it looks like that's all of the questions Rachel's. Just asking are there any CPE credits available?
Not at this time, but we are actually working on it
It's about a three-month process to get those done
So we will be offering that in the future and that'll be part of certification as well. Looks like that's everything
So if you guys are interested in learning more make sure you schedule call with us
Go to bit ly slash dope CFO, and we would love to talk to you guys
What did you think
comment below and let us know if you've seen anything like this on any of your clients and if you're an accountant and you want
To learn how to service the cannabis needs so that you can prevent other
dispensaries from ending up like the alterman's make sure you check the description box and
schedule a call with dope CFO and don't forget to subscribe and click the
Notifications bill so that you can be notified about our next video on cannabis. Accounting. Take care
For more infomation >> TOP 1 DE MALADE AVEC MON POTE SUR MOBILE - Duration: 5:53. 
For more infomation >> Las cinco posiciones sexuales más peligrosas | Del 1 al 5 | El Espectador - Duration: 2:21. 
For more infomation >> الإرادة بداخلك أنت ◆ كيف تقوي الإرادة في نفسك ◆ كن صاحب إرادة وحقق أهدافك - Duration: 2:53. 
For more infomation >> Jessi respondendo se sente saudades da época do Unpretty Rapstar [Legendado PT-Br] - Duration: 0:04. 
Không có nhận xét nào:
Đăng nhận xét