CPA Andrew Hunzicker Creates Course in Cannabis Accounting

Portrait of Andrew Hunzicker

"This industry is very underserved by accountants."

By Liz Gold

Andrew Hunzicker has created a course to teach other CPAs, accountants and bookkeepers what they need to know to break into the cannabis industry.

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The online six-week course, dubbed the Green Accounting Firm Startup Training Program, launched this month and participants will learn everything from the unique pain points facing cannabis CEOs to the basics of compliance and licensing. The idea is to help other accountants move into the industry.

“Many people in bookkeeping and accounting are getting into cannabis but don’t understand the complex cost accounting or tax or other issues,” Hunzicker says. “My course attempts to help bookkeepers and accountants get into the space with a much better understanding of the industry, the issues, the best practices. It’s a full implementation package for those who want to start a business.”

Hunzicker, who is a CPA located in Bend, Oregon, has been providing CFO services for more than 20 years for startups. But his foray into cannabis started back in 2015, when he did a limited engagement for Signal Bay (now Evio Labs). The company had one lab in Bend at the time and was looking to acquire more but needed help with due diligence and negotiation work. Later that spring, a friend at the large regional marketing and branding firm The Meriwether Group connected him to Hifi Farms, which led to a full-time CFO position for two years.

“During that time, I did a great deal of research on cannabis tax and cost accounting issues, banking issues, cash management, software and more and met many of the leaders in the industry in fields of legal, tax, software and compliance,” he says.

His work with Hifi Farms awarded him runner-up for Portland Business Journal’s CFO of the Year award in 2017, making him the first cannabis CFO to ever be nominated.

In September, Hunzicker left Hifi Farms to launch his own accounting and CFO services firm, Ancor Advisors, focused solely on helping cannabis businesses.

“I saw a very large need for accounting, tax and outsourced CFO work in this space,” he says. “Two weeks later Hifi became my first client and in the next couple of months I added five more in every segment: lab, dispensaries, CBD/seed company, farms, processors with combined forward sales in the $10 million range and about 80 employees. Many more are reaching out to me, as this industry is very underserved by accountants. Most midsized and large firms won't touch the space due to federal and insurance issues. And yet, this space has complex accounting needs, cost, 280E, multi-entity, consolidations, etc., as well as banking, cash and software issues.”

Fast forward to now and Hunzicker works out of Bend and Beaverton in Oregon, has clients in three states, four team members and plans to add more soon. He also outsources some of his tax prep work to some larger firms in the space. His firm is completely on the cloud and everyone works virtually.

“We set up everything to be remote,” he says. “So, at the end of the day, you don’t have to sit in a physical location. If you came to my office you wouldn’t see one piece of paper.”

Hunzicker says CEOs of cannabis companies have a myriad of issues: compliance (state, licensing, federal, OSHA, IRS, FDA), complex cost accounting, 280E/tax issues, rollup of vertical multi-entity structures, consolidations, cash management/security, banking, software and HR. His practice provides everything from basic bookkeeping, HR and payroll to complex tax planning.

“Sometimes it’s simply being on the inside of the industry and being connected with the right people,” he says. “For example, Maps Credit Union will serve Oregon companies with banking but until recently couldn't serve cannabis companies east of the Cascades. Now they do, and many didn't know this. Another example is complex entity structures. Many groups are setting up management company layers that have no real business purpose to avoid 280E tax and they risk future fines, penalties and even losing their license, so you need to be really careful what legal advice you follow.”

One trend Hunzicker points to is that there are too many companies in the industry right now – too many farms, dispensaries and other green companies – and only the best will survive.

“With the high level of competition, regulation, high taxation, high cost of labor and rent, and wide swings in commodity pricing, this is a very difficult industry to run a successful operation,” he says. “Many have a ‘world-class grow’ or a ‘world-class product line' or a ‘world-class shop’ but that's not good enough. You need a ‘world-class company’ that includes operations, branding, finance, accounting, HR, IT and more.”

He says many CEOs need someone who can understand the challenge of cost accounting and the associated indirect costs. For instance, a farmer may think they know how much it costs for them to grow a pound of marijuana, but it’s more complicated than it seems.

“If you asked any farmer what does it cost you to grow a pound of weed, it’s an incredibly complex answer,” he says. “Most of them think they know but they don’t. You have to lock down every element – soil, rent, the power bill – it’s a very complex cost accounting issue.”

As more and more clients come to him, Hunzicker says he is often finding disasters in the books from accounting professionals who don’t know what they are doing.

“I've seen the financials for more than 20 cannabis companies, and with almost all, I've found many bookkeeping errors, incorrect cost accounting and too-aggressive 280E application,” he says.

That said, for accounting professionals who want to learn there’s a ton of opportunity.

“I’ve told other accountants, it’s a good opportunity for them and even if they leave the industry later they will have so much experience in cost accounting, consolidated financials, multiple industries,” he says. “Most of these companies are big entities and they often have more than 20 employees, with first-year revenues more than $1 million, which is more than a typical business.”

3 Responses to “CPA Andrew Hunzicker Creates Course in Cannabis Accounting”

  1. Liz Gold

    Gerald, go to the Ancor Advisors website and you’ll find the info you need to register.

  2. Gerald Grennan

    Liz, where can a find a time and date to participate in Andrew’s seminar?

  3. Gina Byrd

    Very interested. Crazy tax situation. Would like to learn more


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