Jessica Velazquez on Cannabis Accounting and Activism

Portrait of Jessica Velazquez

Her concerns stretch from the regulatory framework to the particular needs of minorities.

By Liz Gold

It was a fusion of life experience and natural skill that thrust Jessica Velazquez, CPA, founder and CEO of Indiva Advisors, into accounting.

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A first-generation Mexican American, Velazquez is the second oldest of eight, lending a hand in a busy family clothing wear business. At the age of 15, when her parents got audited, she was able to serve as translator and bridge the language gap between her family and the IRS agent.

As a child living in the south side of Chicago in a predominantly Latino neighborhood, Velazquez saw firsthand how the war on drugs devastated her community – particularly impacting minority males. She witnessed how they were charged and incarcerated for marijuana possessions, which ultimately effected their opportunities and future.

“Growing up in that environment, experiencing the unjust war on drugs enforcement and its impact on our social community along with this other side of working in the family business and knowing what I wanted to do in life … it evolved into pursuing an accounting degree,” Velazquez said. “Even back then I knew I wanted to do a concentration in tax and it was that IRS audit that paved the way for me.”

Velazquez practiced public accounting for six years – pursuing her master’s in taxation while working at PwC, with stints at Ernst & Young and RSM. She then went to private industry and helped build the tax department at Zappos, the online retailer. She spent subsequent years working in the gaming industry, developing tax teams and systems. Then in 2014, cannabis popped up on her radar.

“When Colorado implemented their adult use regulatory framework, I started reading and informing myself of the financial, accounting and tax issues,” Velazquez said. “I was having conversations with other financial professionals and reading as much as I could. I was in research mode.”

At the time, she was in Las Vegas doing consulting work when the cannabis conversation started in Nevada. All of the stars were aligned.

“It was pretty obvious to me that this is where I needed to be in life,” Velazquez said. “It was the perfect marriage. I get to do what I love in an industry that I love advocating for. I got involved with the goal to move the needle through advocacy efforts and change the conversation about marijuana because all the prior damage.”

As a result, K&H Consulting launched in 2016 providing accounting, tax and consulting services.The cannabis-focused firm recently rebranded to Indiva Advisors, a nod to indica and sativa, the two major cannabis strains.

Aside from Velazquez, the Indiva Advisors team consists of two other full-time CPAs – one in Nevada, the other in California – as well as a tax attorney and another CPA specializing in tax. The firm is growing, adding two new staff members in the last three months.

Indiva Advisors has offices in Las Vegas and now Los Angeles, and works with clients who are licensee/operators, investors/owners and ancillary service providers to the industry.

“There was a big benefit that we got our start in Nevada,” Velazquez said. “Our market is small with respect to licensees. There was a cap issued by the state, so it’s not a free-for-all. Most of the prominent players already had deep business roots in Nevada from gaming, real estate and entertainment. Luckily for me, having worked in public accounting along with my gaming experience in Las Vegas for the last 12 years, there was less than six degrees of separation between us. But it was a lot of knocking on doors. They wanted to know that I knew cannabis.”

Her clients’ issues depend on the geographic market. For her Nevada clients, the challenges are linked to expansion and M&A activity. For her California clients, it’s getting their companies off the ground in the new ever-changing and confusing regulatory framework.

“It involves a lot of technical planning to ensure that our clients are doing the best they can in either of those situations,” she said, adding she works very closely with her clients’ attorneys and their executive management teams so everyone is on the same page.

From a regulatory perspective, Velazquez points to Nevada as the gold standard.

“If other states are not looking to us as the example as they are setting up their framework, shame on them,” she said. “Our state has the most experience in creating regulatory framework for vices. We regulate and tax prostitution, gaming and other cash-intensive businesses. I think that’s what makes us different. We didn’t come from this gray/black market like California.”

Aside from managing her own firm, Velazquez serves as treasurer for the Minority Cannabis Business Association, a nonprofit organization created to serve the specific needs of minority cannabis entrepreneurs, workers and patients/ consumers.

“A lot of injustice has been resurfacing as we regulate marijuana across the US,” she said. “Unfortunately, there is such a minute representation of people of color in the industry.”

Velazquez said the biggest issue for people of color wanting to come into cannabis is access to capital, as it is within the industry as a whole.

“It’s challenging because we don’t have access to legitimate financial institutional lending; almost all investment is coming through private money. So you have this hurdle that is magnified 1000 times fold for people of color, the ones who have been most negatively impacted,” she said, adding the organization created a model equity bill that legislators can adapt to their own states to level the playing field and encourage restorative justice.

“MCBA is trying to put people in a room who have a shared value to empower and increase the representation of minority and people of color in the industry,” she said.