Controls Over Cash – Commercial Cannabis Business

Controls Over Cash – Commercial Cannabis Business

Perhaps the most important operational issues we encounter as a California Cannabis – CPA are controls over cash – commercial cannabis business. The integrity and reliability of internal accounting controls over cash is the single most important factor in the ability of investors, regulatory agencies, and bankers ability to trust a California commercial cannabis industry business.

We have studied and evaluated the operational structures and controls over cash in numerous cash-intensive businesses. We have concluded that the model structure advocated by the Nevada Gaming Control Board is the “Gold Standard” for cash-intensive businesses.  The internal control procedures and reporting both by businesses and their independent accountants are readily adaptable by a California cannabis – CPA. However, in order for a business to be able to obtain the level of service from its outside accountants, they need to verify that the firm and the individual practitioner employed by the California Cannabis CPA firm they select is:

  • Licensed by the California Board of Accountancy – the verification and validation of CPA licensure are very simple either on CPAVerify or the license lookup on the California Board of Accountancy website.
  • Has the required experience to issue attest reports. The  ” A Experience Designation” on the CBA website indicates whether a California CPA has the verified experience to sign off on attest engagements such as financial statement audits, or reports on internal accounting controls [See more about this below].
  • Has a sufficient level of experience to have acquired the requisite perspective to properly evaluate the results of their audit procedures. We suggest ten years as a bright line of experience, and the profession seems to agree, based upon the length of time required to become a partner with Big 4 and most national firms.
  • Has a graduate degree in Taxation or Computer Science – while not an absolute requisite, the almost universal 150-hour requirement for CPA’s is best satisfied with a master’s degree. The presence of a graduate degree in taxation or computer science demonstrates that the CPA made a specific investment in technical skills that are most relevant and beneficial to commercial cannabis businesses. 

You can learn more about California regulatory requirements for cannabis businesses at:

The California Board of Accountancy discussion about “Experience Designation” appears below.

Controls over Cash - Commercial Cannabis Businesses California Cannabis CPA
California Board of Accountancy Experience Definition

The “key takeaway” from the definition is that a California cannabis – CPA should have the A Experience Designation, a sufficient level of experience, we suggest that ten years as a guideline for the time to develop the requisite judgment and experience.

Finally, if you are curious about how some of the other “so-called experts” stack up, we have done the homework on that for you as well take a look here. Oh and by all means look up California Cannabis – CPA – Derek Davis or New Era CPA’s – Paul Rutledge and ask them about the criteria we discuss in this post and tell them aBIZinBOX Cannabis Practice Group sent you. Our view is that the best way to distinguish verifiable expertise and experience from self-designation is best done by direct inquiry.

Author: abizcannabis

Managing Director & CEO of integrated transactional financial advisory, tax, and technology consulting firm - aBIZinaBOX Inc New York, Chicago, and OaklandCPA.CITP.CISM.CGEIT.CGMAExpertise with: Alt. Investments/Private Equity, Real Estate, Professional Services, CA Cannabis, Tech Start-Ups and Distressed Assets/DebtTechnology Certifications including:Advanced & High Complexity Cloud Integrator AICPA PCPS, CAQ,, IMTA, CITP ISACA CGEIT, CISMState CPA Societies in California, Florida, Illinois, New York and TexasExpertise with Regulatory Compliance - US - HIPAA, FINRA, SEC Rule 17(a)(3)/(4), eDiscovery, FINCEN - EU- EBA, ESMA, EIOPA UK - BoE, PRA, FCA