Why the Cannabis Industry Needs More Accountants
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How fast the cannabis industry is growing is astounding. It’s managed to thrive through the COVID-19 pandemic, one of the most challenging times in our country’s history. As a result, business owners are readying themselves for a prosperous future.
But a flourishing cannabis business is highly dependent on having the right people overseeing different aspects of the company. Specifically, it’s integral you enlist the support of a financial professional to ensure your company finances are on the right track. And stay on track as the industry and your company grow.
Accountants are especially needed in the cannabis industry. Let’s look at why and what can be done to bring more top-tier accountants to cannabis businesses in need.
Someone to help with financial challenges
More and more states are legalizing the medicinal and/or recreational use of marijuana. As a result, many dispensaries and other cannabis-related businesses are opening across the country to accommodate the growing demand.
And although there is enormous potential for success for a company in this sector, success comes with significant challenges, especially financial challenges.
Because cannabis businesses are opening left and right, the need for financial professionals like accountants is growing because they need help navigating the murky waters of making a legal profit from cannabis.
Additionally, business owners need guidance on navigating complicated tax laws and running a primarily cash business without the genuine support of banks.
Keep reading to learn more about an accountant’s impact on cannabis businesses.
Accountants can find longterm work
It can be highly intimidating running what’s essentially a cash-only business, especially when you’re bringing in thousands, even millions a month, like many cannabis businesses do.
So, accountants have a unique opportunity to support businesses in the cannabis industry with specialized knowledge and skill in managing all facets of finance.
Just like any company, a cannabis business needs a solid financial foundation to thrive. Accountants can ensure this foundation is built effectively mainly because they make great financial managers.
According to UAB’s Collat School of Business, “financial managers are more involved in decision-making processes that can have repercussions for the entire company. These include establishing long-term financial goals, cash management, and monitoring financial details to ensure certain legal requirements are met, as noted by the U.S. Bureau of Labor Statistics.”
Knowing this, there’s value in having someone on your team who is adept in all the traditional accounting responsibilities like bookkeeping, financial reporting, and tax preparation.
But you also need someone who can help you make the right investment decisions and manage the ongoing flow of money in and out of your business.
Additionally, accountants can help you navigate your specific legal structure and its specific tax requirements, how to pay taxes owed, and any tax deductions available despite Internal Revenue Code (IRC) Section 280E.
Now that we’ve established why the need for accountants in the cannabis industry is growing and their unique role within these businesses, we must tackle how to make it so they can do their jobs seamlessly and more effectively.
What can be done to accommodate this growing need?
We must accommodate the growing need for accountants in the cannabis industry to ensure businesses create solid financial foundations. Here are four ways we can get started doing so:
More specialized education
Although top universities are offering cannabis-related degrees, there aren’t as many options for furthering your education in cannabis as there should be.
Aside from four-year degree programs, there should be options for shorter degree programs or certificate programs.
And there should be more variety for what you want to learn about in the cannabis industry. As is, there are limited accounting degree programs out there that are cannabis-industry specific.
However, a cannabis industry-specific accounting degree can ensure students get specialized education in the best accounting practices for cannabis businesses.
Better software, tools, and technology tailored to cannabis businesses
Much of the accounting software used in cannabis businesses is used in any business. But the way accountants oversee finances in the cannabis industry is different than other industries.
And this makes an excellent argument for bettering the software, tools, and technology they use by tailoring them to the inner workings of cannabis businesses.
Create focused job training opportunities
Despite legalizing marijuana use in many states, it still carries a negative stigma. And individuals who choose to work in the cannabis industry are constantly followed by this shadow of negativity, including accountants.
To move the ball forward, we should consider normalizing job training opportunities in the industry.
It can attract a more professional pool of workers, making the sector more sophisticated and respected.
Keep working on making things better on a federal level
As long as marijuana is classified as a Schedule I substance, this status will impede any progress we’re trying to make on getting cannabis businesses the financial support they need.
If we can decriminalize marijuana on a federal level, it will open up financial resources that make it a lot easier to regulate income. It will also make accountants’ jobs easier because rules and regulations will be a lot clearer.
Business owners in the cannabis industry need sound financial advice and support just like any other business.
The help of an accountant in the cannabis industry is especially needed because companies are on such a rollercoaster ride when it comes to tax laws, regulations, rules, licensing, and so forth.
So, with more specialized education, on-the-job training, better software, tools, and technology, and a commitment to making things fairer on a federal level, we can better accommodate the growing need for accountants in the cannabis industry.