Formulating New Guidance for Cannabis Clients


Zach Gordon to speak at NYSSCPA's Cannabis Conference, Nov. 9.

By Liz Gold
CannaBizCPA.PRO

A strong network in cannabis, staying up-to-date on all the moving parts of legislation and reading constantly keeps Zach Gordon, CPA well-informed as co-practice leader of Janover LLC’s Cannabis Industry Practice Group. He’s also the chair of the New York State Society of CPAs’ Cannabis Industry Committee and planning the upcoming NYSSCPA’s 2019 Cannabis Conference in conjunction with the Foundation for Accounting Education. He’s taken on these leadership roles as a senior manager in a firm that he’s been at for less than a year.

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“I don’t sleep much,” he says with a laugh. “There’s a lot of reading going on. I subscribe to every resource you could possibly imagine. And honestly, it’s just on us as professionals to make sure that we’re as up-to-date as possible with all the legislation out there, the potential legislation. And it’s a matter of having a good network, as well.”

Gordon and his team, which includes co-practice leader Jason Hoffman, CPA, and partner and mentor Marsha Ellowitz, understand the close-knit vibe of the cannabis community and how important it is to cultivate relationships. Hoffman and Ellowitz were focused on the industry for more than five years before they publicly announced the practice launch in September 2018.

“We certainly do our best to play nice with professionals in other states, whether it’s other CPAs, attorneys, finance professionals, certain business owners, politicians,” Gordon says. “That’s a big part of it as well. It’s a growing community, but it’s not that big at the moment where, as long as you have a good reputation that will carry you a long, long way – especially from a knowledge base standpoint.”

Slated for Nov. 6, at Baruch College in New York, the NYSSCPA’s 2019 Cannabis Conference is a chance for those CPAs interested in the cannabis industry to meet business leaders, learn about best practices, tax, and legislation. Like most conferences, it’s an opportunity to earn CPE, check out the latest technology, talk to exhibiting vendors and network.

“Last year was really an intro to the industry,” he says. “This year, we want to take it a step further.”

This includes addressing hurdles their cannabis clients are facing and some of the challenges that have come up for CPAs, including banking and regulatory issues. There will be business owners in attendance, according to Gordon, who have surmounted these challenges and found success in the industry to share their experiences.

Gordon says more CPA state societies are taking the cannabis industry seriously. He said he’s spoken to state societies in New Jersey, Massachusetts, Arizona, and Nevada.

“There are quite a few states that are heading down this road,” he says.

And though the AICPA has “certainly evolved, without a doubt since we first started this journey,” Gordon says there’s still more work for them to do. “It started with, in essence, a non-answer, which is perfectly understandable to be honest. This is certainly still a delicate topic. From where I sit, I completely understand not having a concrete answer. They have done some seminars and some exploratory work and the AICPA has come a long way. There have been communications for sure. But there’s still more work to do. The guidance right now at their level is certainly not where it should be and certainly not where I’d envision it being a few years from now. I take a positive stance as to the direction they’re going. But it will absolutely take some time.”

In the meantime, Gordon will continue to build out Janover’s cannabis practice. The firm works with all different sects in the cannabis industry – from growers, brands, producers, to technology. They handle companies that touch the plant or ancillary businesses that don’t. They help clients properly structure their business entities, focusing on optimizing legal and tax advantages. Aside from a broad range of traditional accounting services, they also help with 280E compliance and business valuation.

“At this point, we’ve seen it all,” he says. “We've actually, as a team, done a very good job of bringing in a wide array of clients just to keep life interesting because, why would we want life to get boring? It allows us to really just expand our knowledge base and this is one of those industries where there is no set path. It's significantly more complicated. The level of guidance out there is just nonexistent. So, if you're talking about challenges from our side that's one of the big ones.”

From the client perspective, Gordon says, banking still remains a significant issue.

“FDIC insured banks are not servicing the industry,” he says. “Unless you want to operate completely in cash you do have to get a bit creative as to how you're going to properly bank. We are fortunate to have strong relationships with some community-owned banks and credit unions depending on the jurisdiction. That's one of the first conversations we always have with our clients. Beyond that, honestly, it's just guiding them along the process. Every state's a little different, every part of the industry is a little different. That's certainly what's interesting from our side but also a challenge, for sure.”

Gordon started in public accounting 11 years ago. About five years in, he realized he could stick around for the long term or try something else. He decided to head into public equity and was on the finance side for a couple of years. While there he got into the tech space, which he says, “opened his eyes a little bit.”

“I had my own company CH3 Ventures, a cannabis-focused technology incubator, accelerator and investment group]. He focused on technology and financial due diligence, while also providing tax and consulting services for a little while and that allowed me to really open up my network and that's how I got into the cannabis space actually,” he says. “Through my journeys there I reconnected with an old co-worker friend of mine [Hoffman] who had actually started the cannabis practice at Janover. “We were sitting down, just talking and realized that it did make sense for us to join forces and tackle this together. It was sort of like coming home, believe it or not.”

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