why jax wheatley shifted from lbgtq to cannabis clients

they charge the same price for a cannabiz as for any other retailer.

by liz gold
cannabizcpa.pro

jax wheatley has a unique accounting firm brand. as owner of rainbow tax & accounting in milwaukee, oregon, just south of portland, their focus for many years had been addressing the unique and special tax needs for the queer and lbgtq community. but when same-sex marriage became federally legal, the needs of their clients changed (many of their tax issues went away) and wheatley started looking for a new niche to fill their practice.

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during that time, cannabis was becoming legalized in oregon and wheatley went for it.

“cannabis was an industry not a lot of people wanted to deal with,” they said. “not a lot of people wanted to interface in it. i thought, ‘well, this is a good area to learn.’ and it was extreme. it was a very steep learning curve.”

wheatley has been in the accounting industry since 1975 and started rainbow tax & accounting 19 years ago. aside from working with individuals and couples, they have extensive experience with small businesses and nonprofit organizations.

to make the transition into cannabis, wheatley started telling some of their clients who were “420-friendly” that they were looking to expand into this area and asked if they knew of anyone going into the industry; for example, medical growers in the area who were going to become recreational growers. wheatley was interested in talking with these folks about their business needs. then they got a break – one of their top clients made an introduction to an attorney in the eugene area who specialized in the cannabis industry.

“she started taking me around everywhere with her and introducing me to people and then just letting me talk about what i knew about accounting and the industry. that’s kind of how i found my way in,” wheatley said.

they also took any cannabis-related classes that were available for accountants and lawyers in the portland metro area, as a way to further their education. their first client came from that lawyer in eugene. it was a company that was using a cpa firm in new york and ultimately decided they wanted someone local.

“one of the things i did that was very unique and i think is very unique in the industry is that if you are in the cannabis industry or you are in some other retail industry, you pay the same price in my firm. i don’t charge people more because you’re in cannabis than if you are selling clothing out of a mall store,” wheatley said. “you’re going to pay the same for retail-type accounting. a lot of what happens in this industry, if some service provider finds out you’re in the cannabis industry, your price just tripled.”

when bringing on new cannabis clients, wheatley has a stipulation – your bookkeeper cannot be using cannabis and they have to be someone who understands bookkeeping.

“it makes a big difference,” they said. “i’ve worked with some who were (on the product) and it was very frustrating because they would round things and say, ‘oh well, $1,500 is close enough.’ well no, it’s not when we’re talking about the very strict federal cash regulations and irs regulations.”

because every number has to be tracked, wheatley said they are very particular about who is keeping the client’s day-to-day records – they need to be able to trust the information that is given to them. and they prefer clients who are just getting started and haven’t developed bad habits – yet.

typically, wheatley said if they are working with one of the cannabis attorneys in the state, they are brought in at the tail end of the licensing process. this usually happens right before they file for their license as they have to show the state of oregon they have an accounting system. so, at that point, an accounting system is set up, as well as tracking mechanisms for cash.

wheatley also works with clients who obtained licenses early on and now are looking to sell them. in order to sell, their accounting has to be up to date and all their taxes have to be paid. “all those things have to be dealt with in order for them to get their initial investment back.”

currently, wheatley only works with cannabis clients in oregon, though they have small business and nonprofit clients all around the united states and a few international countries. this was a conscious choice for them as learning all the different laws and regulations in other states and jurisdictions is time-consuming.

they accept clients on referral basis only to keep the firm small and niche-based. wheatley takes calls from prospects who come directly from an established client or is a member of the lgbtq or cannabis communities.

as for advice for other cpas looking to work in the industry, wheatley said it’s important to do your own research. “you can’t just depend on what’s out there on the internet. you actually have to read the regulations.”

 

posted on july 26, 2019