Smelly Stinky Enrolled Agents – Cannabis Experts
Smelly Stinky Enrolled Agents – Cannabis Experts, well self-proclaimed experts anyway. [the firm is purely fictional, but we were inspired]. We have been collecting anecdotes and observations for some time on which attributes and facts we think are important in the process of selecting an advisor.
Our list starts with issues related to professional licensure, what kind, and where the license was issued.
- First, the commercial cannabis industry is incredibly complex, with local jurisdiction rule for just about every aspect of doing business. There are approximately thirty states with legal medicinal or adult-use cannabis. We can’t fathom attempting to keep up with that many sets of rules. We made a deliberate decision to limit our commercial cannabis practice to California. The logic being, the size of the market, and a twenty plus year history of legal cannabis. That doesn’t mean that the transition from a laissez-faire market to a highly regulated one is going to be an easy transition.
- The broad range of challenges with accounting, taxation, technology and regulatory compliance requires deep expertise over a broad range of topics. As such, a certified public accountant [“CPA”] with an advanced degree in taxation is the best choice. While there may be Enrolled Agents with sufficient background in accounting and technology, the lack of requirements translates to uncertainty over an individual’s qualifications with both. No matter which you choose, you should also have a qualified attorney that works well with them.
- We believe that your advisors should be licensed in the jurisdiction where your cannabis business is located. [That isn’t a general requirement for choosing a tax and accounting service provider, but for cannabis, there are some compelling reasons.]. It is possible for a CPA to obtain something known as a practice permit if they aren’t licensed in a given state in this age of CPA mobility. If an EA mentions that they have an advantage over a CPA, they should be “bitch slapped” and then ignored. We addressed that issue as Jordan S Zoot is licensed as a CPA in California with an “A” license, #132647, and Jordan S.Zoot, CPA, P.C. is licensed as a California Accountancy Corporation [#7995]. You can look up CPA’s licenses on the CBA website, or cpaverify.com.
We believe that attorneys, accountants and other consultants that serve cannabis clients in California with a physical presence by individuals [whether employee or contractors] or maintain an office in California should pay California taxes on the income they earn in California. If you use the services of a non-resident contractor, you are required to withhold CA taxes. Admittedly, the rules are complicated and read more about them here. We file and pay taxes on California sourced income, both at the firm [S Corporation] and individual levels. The firm is a California corporation.
We have been told that our posts tend to be way too long, so we will stop here, and pick up the discussion in our next post.
If you would like to discuss how we can help you, use the contact form.
Prior post in this series – California Cannabis Biz – Check Consultants
Next post in series – Prepackaged Cannabis Business Plan – Just No