leveling the playing field for cannabis businesses

portrait of brian whalen
whalen

green bean cfo tackles the common problem of irs form 8300.

by liz gold
cannabizcpa.pro

“a savvy ceo owner knows that a world-class cannabis finance and accounting team is a necessity and a competitive advantage,” writes brian whalen, cpa in the opening to his book, “cannabis entrepreneurs’ guide to accounting, taxation & financial compliance.”

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“there is only one right way to do cannabis accounting,” he writes. “doing accrual/cost accounting in accordance with generally accepted accounting principles (gaap) ensures that you pay as little tax as possible, are always state compliant and irs audit-ready, and have financial statements ready for securing investors and lenders. in addition, performance metrics can be harnessed from your financials and used to set goals for operations and management.”

based in new bedford, mass., whalen founded green bean cfo to level the playing field for established cannabis businesses and newcomers by providing an affordable finance and accounting department. he’s not your typical cpa, either – he comes with tattoos and stories from serving six years as a u.s. navy nuclear reactor operator.


related reading: irs code 280 simplified (kindle edition), by jared younker (editor) and the apothecary cpa.

how does a veteran feel about working in a federally illegal industry?

“i don’t think it’s morally wrong so i don’t have any problems with it personally,” he said. “i don’t think it will be federally legal anytime soon. i do think banking will come along and the unfair tax laws will go away before it goes federally legal. it’s a step by step thing and will take quite a while.”

whalen started taking on cannabis clients during his last year at bentley, while he was earning his master’s in taxation. he later linked up with steven berley, cpa aka the apothecary cpa, and the pair decided to partner in servicing clients – with whalen on taxes and financial forecasting and berley focused on accounting. they marketed mainly on social platforms and found the leads were coming from all over – direct emails, referrals from other cpas, linkedin, and facebook, to name a few. they were also active on various facebook groups such as dope cfo and irc 280e tax practitioners, talking with other practitioners about cannabis tax and accounting issues.

whalen’s clients run the gamut and include companies that need pro forma financials for a $65 million cannabis park, to cultivators in humboldt county. he works with clients across the country from california to oklahoma to rhode island.

“we are running into a lot of people with tax issues and unpaid taxes,” he said. “we take a look at a lot of tax returns in screening potential clients. many of them, if not most of them are done wrong. people are not applying the regulations for inventory correctly.”

whalen’s firm is run virtually, with contracted team members in south carolina, washington, and california. he said his team will handle nearly anything for clients within their capability but doesn’t do valuations, instead focusing on outsourced cfo services. the green bean team aims to add value to a client’s business in any way possible, their motto being “we count the beans to grow your profits.”

green bean cfo also provides free half-hour consultations to prospects in which he will assess what type of cannabis business they have, their goals and the current accounting process in play.

“you’ll find a lot of people haven’t been doing it properly at all or they are keeping their books but don’t have an understanding of cost of goods sold,” he said.

one major challenge he sees frequently during calls is getting irs form 8300 filled out properly from cannabusiness owners. “if you receive more than $10,000 in cash from a single party or entity within a 12-month period, you’ve got to get the person’s business information. people don’t know about the form and then when i tell them about it they want to backtrack the information. you have to get the information from them when you receive the cash. a lot of the cash-based cultivators who have been doing it forever have no idea about this.”

when it comes to other cpas and accountants coming into the cannabis industry, whalen says you have to go all in.

“you have to be 100 percent committed to it,” he said. “it’s going to occupy a lot of your time and there are so many moving parts. there is not time to do anything but cannabis.”