"The growth rate is phenomenal."
By CPA Trendlines Research
What’s hot? Pot’s hot.
How hot? Big-time hot.
Maybe hotter than the tech boom of the 90s hot.
CPA Wayne Harding may not go so far as to compare the pot boom to the tech boom. But he knows both first hand.
He's already diving into the brave new world of legal weed. As CFO of GrowCo, which provides growing infrastructure and water to licensed cannabis farmers, he’s on the cutting edge of an industry that is showing all the signs of going nationwide. GrowCo is a subsidiary of Two Rivers Water Co.
Harding knows a hot opportunity when he sees it. He was head of sales at Great Plains Dynamics software of Fargo, N.D., in the 1990's before it was sold to Microsoft, and since then he's been in on the ground floor of such well-known start-ups as CPA2Biz and Rivet Software. Harding is well-known and well-respected throughout the profession, giving the cannabis business that much more cachet. Want more? Harding's green-eye-shade auditor is North Dakota-based Eide Bailly, one of the 25 largest firms in the nation, not known for taking wild-eyed flyers on sketchy clients. In fact, conservative estimates put the cannabis industry last year at just under $2 billion, with growth of 30% to 50% a year.
But Harding says the cannabis opportunities go well beyond agriculture, manufacturing, marketing, spas, stores, dispensaries, and paraphernalia. The field is wide open for accounting, tax, and business consultants.
When CPA Trendlines met Harding at a cannabis industry trade show, we asked him what CPAs should know about the cannabis industry. He says, “It’s a wonderful growth opportunity. The growth rate is phenomenal.”
Growers, retailers, and providers, he sys, need all kinds of financial services, from internal control to tax consulting. The pioneers in this business aren’t necessarily traditional business people. Often their finances have involved nothing but cash that never saw the inside of a bank, let alone the gullet of the IRS. The law was something to be avoided, not meticulously followed.
See the slide deck: GrowCo Presents at Harvard Club, New York
These “ganjapreneurs” need accountants. They need advice on how to handle finances. They need to learn the fundamentals of business. They need to understand the small print of a real estate lease. They need to know how to deal with a bank. They need someone who can interpret the minefield of tax returns on profits from a product that is still federally illegal.
Banks, of course, are a little reluctant to get involved, but banks are famous for savoring the smell of cash. But their doors aren’t exactly wide open. Among their concerns are internal controls in a cash-only business that may be vulnerable to fraud, theft, broken leases, incompetence, ambiguous legality, and the usual risks of agriculture.
The tax code may be the most difficult challenge CPAs face. Even though states that have legalized marijuana require quite a bit of accountancy and tax returns, technically, an accountant who advises a cannabis business is engaging in narco-trafficking. The federal government isn’t especially concerned at the moment, but still… it’s something for the good CPA to think about.
But it’s the challenges that make this a growing opportunity. The more difficult the challenge, the more open the field is to the CPA who can master the technicalities.
“These problems will deal with themselves over the next year or two,” Harding says. “And that means it’s a tremendous opportunity.”
Is that hot enough for you?