a lot of client education is involved.
by liz gold
cannbizcpa.pro
recently, i had the opportunity to attend an oregon cannabis industry meetup group in portland. it’s a networking event for cannabis professionals and businesspeople who want to mix and mingle. after the speaker, an “open mic” for businesses is held, at which individuals have a minute to give an elevator pitch about their cannabusiness.
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that’s how i met ben condon – he got up and talked about his cpa firm, bc consulting, llc, which he describes as a small boutique niche cpa firm focused on the cannabis industry.
after a combined nine years of big four experience at ernst & young and deloitte and a year at another cannabis-focused cpa firm that recently shuttered its portland office, condon decided to strike out on his own with a colleague and start bc consulting. the firm officially opened its doors late last year.
“the opportunity presented itself,” condon said about his foray into cannabis. “once i started working in it, i began to see there’s a lot of opportunity and need.”
as the industry matures, so do the business owners. he describes the first wave as those people “who have been growing cannabis in their basement for 40 years,” then an influx of people who came into the industry 15-20 years ago with medical use. now with states like california and washington, he said, you are seeing people with more professional backgrounds.
“i like the clientele,” condon said. “they are pretty laid back and because they don’t have the financial background and speak accounting languages, it’s a new challenge. but that’s what makes it rewarding. sometimes you talk with someone for the first time and they have all the preconceived notions about taxes and how much they can deduct and their mind is just kind of spinning. you tell them what’s fact and fiction and help them do what they need to do. it’s complicated but it’s not this process we can’t handle.”
condon and his partner, joe bailey, are building out their practice. though they aren’t necessarily picky with who they work with, their sweet spot is those clients who are vertically integrated from farm to retail because of the tax savings strategies that can be employed.
“while with 280e you can only deduct the cost of goods sold, if you have a vertically integrated business you can get fancy with creating more entities and absorbing more costs as you go up the chain, as opposed to a dispensary that doesn’t have much wiggle room,” condon said.
that said, they don’t require their clients to be high growth necessarily.
“we like clients who are organized and easy to work with,” he said. “even if they are a medical grow and their annual revenues are a few hundred thousand.”
some of their clients came from their previous firm, migrating naturally, and condon is finding that his clients like to keep it local.
“i can do this remotely,” he said. “but people in this industry do want to have people close by. these folks in oregon, they don’t want a cpa in san diego. there is a certain comfort to know someone is close.” still, while condon is mainly focused on oregon, he has clients in states such as arizona, massachusetts and nevada, and doesn’t discriminate based on geography.
one of the biggest issues his clients face is dealing with theft, which often happens by their own accounting manager. business owners just don’t know and are often “robbed blind.” as a result, he stresses the importance of strong internal controls.
“our main service is tax filing and tax advice,” he said. “but we want our clients to have good advice however they can get it. we’ve had clients where the accounting manager quit and then the replacement goes in and there’s a stack of envelopes from the irs, back roll taxes and then the safe is empty. there’s no checks and balances. in accounting school, you learn you need three separations of duties – someone to record, someone to authorize and someone who has custodial control – a lot times companies will have one person and that’s very problematic … it can turn an honest person into a thief.”
as for the future, condon is open to working with all types of clients and sees consolidation happening down the line.
“we want to grow but we don’t necessarily want to grow forever,” he said. “we come from the big four and that is the strategy and that gets kind of old. at some point, you want to be happy with what you have.”
but for now, so far so good.
“the networking atmosphere for cannabis is incredible,” he said. “there are a lot of connections to be made. it’s fun and dynamic. if there is a particular industry to be starting a cpa firm in, i think it’s such a smart choice.”