A cannabis Chief Financial Officer (CFO) is one of the most crucial hires for any expanding cannabis company. As your business grows, so does its financial needs. But there’s more to it than that.
The cannabis sector is characterized by irregular overhead expenses and regulatory compliance necessities. This being the case, knowing how to find the right person to handle the finances of your cannabis company is essential for success.
But what should you expect from your cannabis CFO? First, you’ll need to know what a cannabis CFO will do for your company.
Responsibilities Your Cannabis CFO Will Handle
Your CFO manages the executive accounting functions of your canna-company. While overseeing these functions, this person will ensure your business operates as smoothly as possible, tracking your profit and losses, cash flow, and balance sheets. As they analyze the accuracy and detail of your numbers, they’ll highlight changes that could be made to improve your business’s operations, as well.
Once you find a cannabis CFO, this person will also perfect and monitor your financial processes. They will set up your business’s internal controls, as well. These actions ensure your cannabusiness is compliant with state regulations and investor expectations.
Your CFO should also know how to manage cash flow. This involves determining whether your business can cover its operating costs.
Furthermore, this person will check your systems to ensure they’re protected from fraud and inventory shrinkage. The internal controls this person should implement include processes and procedures to:
- Record transactions and other financial information
- Handle, record, and spend money
- Track, cost, and record inventory
Financial reports, including reports to internal management and outside parties, are also your CFO’s responsibilities. This person can also help your company raise capital and negotiate debt with reasonable interest rates.
The right cannabis CFO will also develop key performance indicators to determine your progress. These KPIs can include the average number of sales per day, your average transaction size, and more.
Your cannabis CFO will also oversee tax preparation. Since it’s their responsibility to create all of the preparatory documentation for tax season, they must maintain these deadlines. They should also manage the complex tax filing process, checking for deductions in accordance with 280e and the cost of goods sold (COGS).
Tips to Successfully Vet a Cannabis CFO
Do financial credentials matter when hiring for a cannabis CFO position? Of course. But there’s more to hiring a CFO than that.
Use these tips to ensure you hire the right cannabis CFO for your canna-company:
1. Make a list of your requirements and expectations for your prospective cannabis CFO.
Your time is valuable, and with this fact in mind, it’s best to include what you expect of your prospects when you post about this position. You need a qualified candidate, and the best way to discourage the unqualified is to set your expectations before meeting with anyone.
Once you make this list, you have a few options to uncover prospective candidates. You can post about the position on popular job platforms, such as Glassdoor or Indeed. However, you can save time using a headhunter to find qualified candidates.
A headhunter will use your list of requirements to seek out candidates. This person will conduct the initial screenings and interviews on your behalf, and when they find someone they think is a good fit, you’ll conduct the final interview.
2. Check each applicant’s resume to determine who is most likely to fulfill the role.
As you sift through the resumes, compare the educational background and work history of each candidate. This information is vital for a successful hire as it shows the dedication and experience you can expect from each candidate, as well as how they compare to others applying for the position.
Ideally, it’s best to find a CFO who has a minimum of 3 years of experience doing similar work. This ensures your CFO is adequately prepared to handle the responsibilities that come with the job. While someone with minimal experience might be more cost-effective, you’ll pay for the difference as an inexperienced CFO will have to learn while they’re working.
3. While conducting your interviews, probe prospects for more information about their work experience and any relevant projects.
A CFO confident in their past experience is ideal because they can show you that they already know how to do their job. With this in mind, if a prospect crumbles when you ask for more information regarding their work experience, there’s a good chance they’re stretching the truth about it.
Ask for more information on relevant projects to get a better understanding of each prospect’s work experience. If they lack experience in or knowledge of the cannabis sector, this could be a red flag showing they’re not the right fit.
Operating as a cannabis CFO means being knowledgeable about the environment surrounding this industry. This includes staying up-to-date with regulatory changes to ensure compliance.
A simple error can cost a cannabis business operator their license, and consequently, thousands of dollars. With this being the case, it’s best to find someone who has experience handling a cannabis CFO’s responsibilities.
4. Question the candidate about an issue your cannabusiness is currently contemplating to see what insight they can offer.
What finance-related issue is your business currently struggling with? Ask your prospective CFO what they think about this problem.
The insight your candidate provides could reveal their ability to handle other problems, as well. Some things to consider include how effective the solution is, if you agree with the solution, and the candidate’s attitude while addressing the issue.
Any candidate worthy of your CFO position will have some insight to provide. But it’s up to you to decide whether or not the way they handle your current problem is adequate.
Think about what it would be like to work with this individual. If the candidate has the right answers and attitude, they could be the right fit.
The level of involvement your cannabis CFO will have depends on your company’s size and needs. For small businesses and startups, a CFO will handle the financial and accounting responsibilities. However, if you’re operating a large enterprise, your CFO could be managing teams that handle your accounting and bookkeeping.
Regardless of your company’s size, your CFO will be responsible for developing your business from a financial perspective. With this in mind, implement these tips to ensure you make the right choice as you’re hiring a cannabis CFO.
If you need assistance hiring a cannabis CFO, feel free to contact us at any time.