Operations · From the archive

Questions to Ask When Hiring a Cannabis Accountant

Ask how much of their practice is cannabis

Not whether they 'work with' cannabis businesses — what percentage of their client base holds a license. A firm doing this occasionally learns on your dime. A firm doing it exclusively has seen your exact problem before, probably this quarter. Follow up: how long have they served the industry, and through which market cycles?

Ask them to explain your 280E position

A qualified cannabis accountant should be able to look at your license type and describe, specifically, what you can capitalize under §471 and what you cannot — and what documentation makes that position hold. Vague reassurance that they'll 'maximize deductions' is a red flag in an industry where most deductions are disallowed by statute.

Ask what happens when the IRS calls

Have they represented cannabis clients under examination? What did the examiner test, and how did the positions hold? A preparer who has never defended a cannabis return is guessing about what survives one. You want the firm that builds every return expecting it to be read.

Ask about the operational side

Do they reconcile seed-to-sale to the ledger? Will they visit your facility? Can they split payroll between COGS and expense with documentation? Cannabis accounting is operational, and a firm that only sees you in March cannot do the part of the job that determines your tax bill.

Then ask yourself the honest one

Would you put this person in front of a licensing board, a lender, or an examiner and feel represented? That is ultimately what you are hiring.

This article is general information, not tax advice.