cpa simone cimiluca-radzins launches ‘linkedin of cannabis’

proper entity structure is vital, she tells consulting clients.

by liz gold
cannabizcpa.pro

simone cimiluca-radzins has started the linkedin of cannabis.

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a cpa who is licensed to practice in oregon, cimiluca-radzins launched kalogia last year with a simple goal: to help entrepreneurs, startups and rapidly growing companies reach financial freedom.

cimiluca-radzins’ work in the cannabis industry is twofold: she’s the founder and ceo of kalogia, an online platform that has more than 3,000 members comprised of c-level executives, entrepreneurs and business owners, and she also serves as an advisory consultant to cannabis businesses.

“we are providing business training and advisory services to our users as well as one-on-one advisory sessions,” she says. “so many businesses just lack corporate governance and corporate controls. it’s so much riskier because cash and inventory are the easiest things to steal and there is not a lot of control.”

when cimiluca-radzins first got into cannabis, she was already providing consulting services to companies. that work included helping startups get financially sound and taking a company public.

but she wanted more.

“i had just moved back to la in early 2014 and i was looking at this magazine for cannabis entrepreneurs and i said, ‘i am going to do that.’ i had enough funds to take some time off and really started interviewing as many people as i could. being an internal auditor, i knew how to interview and figure out how i would fit and from there i realized there was a huge need for connecting.”

one of cimiluca-radzins’ first realizations was that the cannabis industry operates in siloes – and there was a lack of resources in helping professionals find each other. so, from there the idea for kalogia was born.

but before she built it out, she dipped her toes into the industry by doing what was familiar – business consulting. she took on cannabis-focused accounting firm new era cpas as a consulting client and helped them open their portland, oregon office, expanding from already established offices in california and washington. her job was to recruit the partners and build out the advisory service line. during that time, she learned about irs tax code 280e and gained a clearer picture of the financials behind cannabis companies.

“the biggest thing i hear about 280e is that there’s really not much you can do,” she says. “but it’s really the accounting. and it really takes good accounting, best practices and understanding what your numbers are. from there i was using my cpa and that’s how i got into the industry.”

currently, liv advisors – cimiluca-radzins’ consulting company – is merging under kalogia.

“clientwise, i help establish operators,” she says. “i usually help operators who have cfos or accountants understand the framework and how to structure. i have been building out internal controls, strategy, financial forecasting and a little bit of leadership training for these young ceos. the biggest struggle here is thinking about how easy it is to go out of business in cannabis. eighty percent will go out of business within the first four years of operating. everything is way harder.”

she points to a $30,000 fine in california that ceos face if they don’t have solid books and records.

“it’s so necessary to give these ceos guidance,” she says. “i’m asking questions like, ‘how are you running your supply chain, what is your short- and long-term strategy, how are you managing your cash?’ what’s really cool and scary is that we have this very short window of opportunity to make sure they are successful before bigger business gets it.”

most of cimiluca-radzins’ clients are in manufacturing, vertically integrated along the supply chain. she says her clients’ revenue ranges from half a million on the lower end upward to about $10 million. she says growers are facing challenges as more larger businesses are making the market harder to compete.

“they are considering lowering their price because the price of cannabis is going down and they don’t have a brand strategy,” she says. “it’s hard for them. with them, i am building out an economic model for growers, aligning everybody to come together in a collaborative model.”

the goal for cimiluca-radzins is for her clients to build multimillion-dollar businesses – which is very possible when you have solid infrastructure and operations. she says her clients face issues around cash flow management, inventory management and corporate governance confusion – which is harder to prioritize when operators are putting out so many fires.

“corporate governance is harder to push,” she says. “to get a license you need standard operating procedures but standard operating procedures are different.”

but she says structuring the entity correctly is still one of the most important bits of advice she gives her clients.

“i really believe many companies don’t have appropriate entity structuring,” she says. “it gets chaotic with 280e and you might want a few entities that house certain things to reduce liability. if they are not managing cash well, they are going to come up with a lot of issues. the irs will audit – and the irs will soon have a population to audit. people don’t focus on this. hopefully, this will be a conversation that more business owners are having.”

posted on january 19, 2018