California Cannabis CPA Accounting Services

More often than not, cashing in on the cannabis industry can be tricky, especially when you’re new to this type of business.  It is also very likely that you’ll need assistance with organizing and filing your taxes if you come from a background in non-cannabis-related businesses.

Keep reading to learn how our experts minimize tax liability and maximize cannabis company profits with the right systems and procedures in place.

Looking for a cannabis CPA in California? Let Northstar lead the way!

Contact us now to speak with one of our tax and accounting experts about how to scale your operation with financial expertise.

california cannabis cpa

What is a Cannabis CPA?

A cannabis CPA offers tax and financial services for the people and companies operating in the legalized medical and recreational cannabis spaces in states throughout the country. These services involve handling taxes, business structuring, and obtaining financial support.

What does a cannabis CPA firm do for cannabis CEOs?

A CPA that exclusively serves cannabis companies understands the industry and the federal and local laws surrounding it. It’s always best to go with a specialized cannabis CPA firm as cannabis companies need more than generalized tax services.

The cannabis industry is a special sector, and as such, it demands industry expertise to ensure compliance. Accounting from public accounting firms has the potential to cause problems, even with something as simple as tax preparation.

While working with a cannabis CPA firm, cannabis CEOs partner with an accounting firm that understands cannabis accounting. From tax services to assurance services, someone who specializes in cannabis accounting will provide the proper guidance to ensure compliance with internal controls and industry-specific professional advice.

How do these ancillary services help cannabis CEOs scale their operations?

Cannabis accounting is a specialized field and should be treated as such. While the federal government has placed various restrictions on our cannabis clients, our mission is to handle all regulatory challenges in place to ensure appropriate tax planning and other services to cannabis companies.

Cannabis CEOs can rest assured that federal-level accounting issues never become a problem. By working with Northstar, CEOs operating in this industry are guaranteed compliance and ensure their businesses are always audit-ready.

The California Board of Accountancy (CBA) on Cannabis

The California Board of Accountancy (CBA) on Cannabis

The California Board of Accountancy (CBA) understands that a certified public accountant interested in providing accounting or advisory services to cannabis-related industries will need to understand this space. However, some advisory firms also have an interest in operating with cannabis clients.

At this point, the CBA is not able to issue legal opinions on cannabis accounting services. With this being the case, no position statement is to be issued by the CBA on this topic.

However, the CBA has issued some insight into operating a CPA firm that serves the cannabis industry. Here’s a quick FAQ that answers questions an industry-specific CPA firm might ask:

CBA Cannabis Industry CPA Firm FAQ

What is the new California law about cannabis that just passed?

California Governor signed Assembly Bill (AB) 1525, which took effect January 1, 2021. This bill provides a safe harbor for licensed individuals or firms that practice accounting if they render services to California’s cannabis industry.

The bill states that authorized persons or entities do not commit a crime under California law if they receive deposits or provide transportation and financial services to people licensed in commercial cannabis activity. However, the authorizations can be rescinded by the licensee at any time.

Can we accept a Licensed Cannabis Business as a client?

AB 1525 will take effect on January 1, 2021, and it provides that those who practice as a Certified Public Accountant in California can offer services to cannabis entities without it being considered criminal.

What are the potential risks of providing services to a Licensed Cannabis Business?

While it is legal to use cannabis products from state-licensed businesses in California and more than half the other individual states, they remain illegal federally.

Federal law states that any entity that supports illegal activity or accepts fees from it is engaging in racketeering. This means accounting firms, banks, insurance companies, and financial institutions may be breaking federal laws by doing this. It’s important to consult legal counsel before entering into such an arrangement because of the consequences.

Any other factors to consider when choosing to accept a Cannabis client?

In August 2016, the 9th Circuit Court ruled that medical marijuana laws are legal in accordance with state law. The federal government cannot prosecute people who grow and distribute medicinal marijuana under state laws because it would be unconstitutional to do so.

The decision to allow medical marijuana in the state of Arizona was based on a few factors. One factor is that Congress has passed laws preventing federal agencies from interfering with states’ implementation of their own statutes regarding medical marijuana.

As the differences between states and federal laws persist, Certified Public Accountants (CPA) are becoming more concerned with their professional liability insurance policies. In order to reduce the risk of a lawsuit or claim against them, CPAs should take note that there may be exclusions in their policies.

Cannabis Companies & Federal Law

Cannabis Companies & Federal Law

Cannabis companies must comply with state and federal law. But when it comes to laws at the federal level, cannabis accounting firms must know how to navigate them appropriately.

Business expenses for adult-use and medical marijuana-related operations are the same in both of these spaces. However, when it comes to deductions for expenses, these operations need a crafty accounting method to minimize tax liability.

As mentioned earlier, public accounting firms can cause problems with things as simple as tax preparation or filing returns. Accountants may be unwilling to work with companies working with or selling cannabis due to a lack of education and knowledge about the industry.

Accounting Services for Cannabis Business in Cali

Our cannabis accounting firm has a combined 120+ experience working with cannabis. As a full-service financial firm, we handle everything accounting-related for our clients.

From tax planning and compliance advisory services to ensuring our clients are committed to compliant practices, we’re here to help any legal business operators working in the cannabis industry.

Financial Services for the Cannabis Industry

Bookkeeping & Internal Accounting

We encourage efficiency and increase scalability long-term with our virtual accounting and tax offerings.

Here’s what you can expect:
  • Comprehensive & up-to-date books to offer the IRS everything they need to see in case of an audit.
  • Historical financial records cleanup to ensure all taxes and money owed have been handled appropriately.
  • Monthly reconciliation pack to ensure audit & investor readiness that helps companies bypass potentially critical issues.
  • Auditable & accurate cost accounting, including payroll management and other aspects of your operation that the IRS wants to see in your documentation.
  • Present monthly financial statements to keep the focus on your company’s success.

Controllership, Financial Processes, & Controls

The economic impact of COVID-19 has made these business accounting services more important than ever. With these our expertise in the cannabis sector, your business will meet its financial goals through improved governance and due diligence.

Here’s what you can expect:
  • Optimize financial systems in preparation for tax season.
  • Create & manage financial policies & procedures.
  • Internal & external audit preparation to satisfy the IRS and minimize tax liabilities.
  • ERP and IT system integrations to maintain adequate records of everything from the cost of goods sold to taxes.
  • Assess & manage financial risks to minimize tax liability and optimize money.

Chief Financial Officer (CFO) & Treasury

Northstar provides value to your business by improving inefficiencies, reduce expenses & enhancing earnings.

Here’s what you can expect:
  • Accounting and financial oversight for your cannabis business.
  • Cash-flow planning & management for your business.
  • Financial modeling & forecasting to set a roadmap for your business.
  • Key performance indicators & MIS dashboards to keep your business on track for success.
  • Strategic financial insight & analysis to keep the focus on your goals.

Investor & Board Management

Northstar gives advice and increases confidence for shareholders, board members, and company leadership. This leads to reliable partners that trust in your business as operators incorporate strategies that scale.

Here’s what you can expect:
  • Annual & interim reporting for sales, pay, distribution, and more.
  • Quarterly financials & business updates for the account.
  • Financial interface for board members & investors to focus on the success of the operation.
  • Board representation for partners.
  • Business decision support for everything, from costs and payroll to taxation, and more.

Fundraising & Development

Besides tax- and accounting-related services, Northstar will help you meet your short- and long-term capital goals. By structuring beneficial transactions and establishing crucial relationships, your operation will thrive.

Here’s what you can expect:
  • Robust financial modeling, equity valuation & capital-raising strategies.
  • M&A and strategic exit insight.
  • IPO support every step of the way.
  • Due diligence oversight to ensure the best decisions every time.
  • Business plans & investor pitch decks to showcase your operation to investors.

CEO Strategic Advisor

Northstar shapes and implements strategies to drive long-term profitability and support CEOs while enabling them to focus on their core mission: growing their cannabis businesses.

Here’s what you can expect:
  • Advice on business strategy.
  • Counseling on cash flow and capital structure.
  • Supporting/challenging business decisions for when you need it most.
  • Conveying business performance and concerns to the Board.

Cannabis Industry Success with Financial Services

Working with Northstar is easy. Visiting our website is the first step. Now it’s time to book your free consultation.

Schedule a time to speak with one of our experts and provide us with some insight into your operation. We’ll then develop the best strategy for your business.

Next, we’ll create customized solutions for your review. Once you’re happy with the plan, we’ll begin implementing it immediately.

Now it’s time to scale your business. The right systems, processes, and financial support will set your business up for ultimate success!

The Guidance Cannabis Businesses Need to Succeed

Looking to scale your cannabis company’s operations? Northstar is here to lead the way!

Contact us now to speak with one of our experts about how our California cannabis CPA services will grow your business in this budding space!

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