When you’re a Cannabis entrepreneur, it may be tempting to DIY your business finances to help improve the bottom line. However, many people underestimate the critical importance of transparency and accuracy when it comes to their company’s assets, and create a list of excuses as to why they don’t need to hire outside accounting help. Financial matters can be delicate, and it takes a qualified professional to handle them correctly.
This is where aBIZinaBOX comes in. Founded in 1995, aBIZinaBOX represents the constant evolution of cutting-edge interfaces of thought and practice in integrated financial advisory, tax, predictive analytics, and technology consulting.
The Cannabis Practice Group [“CPG”] of aBIZinaBOX Inc. CPA’s serves commercial cannabis industry businesses in California. The CPG has professionals in Evanston, IL, and Oakland, CA. The practice is led by Jordan S. Zoot, CPA, Managing Director – CEO, who has been in professional practice since 1982.
They strongly emphasize that this offering is NOT more of the same. The skill levels of their professionals are exceptional, the services they provide require substantial experience and skills. If they reflect carefully they can count on one hand the number of firms which they believe have comparable skills in the entire California cannabis market. The articles they publish and the content on their website “telegraph” that message. Perhaps their expertise is most clearly seen in their published comments and participation in the process of commenting on Proposed Regulations and engagement with BCC, CDPH-MCSB, CFDA-CalCannabis, and CDTFA.
Their engagement is with senior Policy Analysts, Branch Chiefs, General Counsel, and Agency Directors. They made a substantial commitment to invest time, dollars and sweat to be part of “the solution” which is a successful transition to a highly regulated market which they hope will thrive. Their clients benefit from those relationships as well. They demonstrate their competence and skills with the content they produce, their input to the regulatory process and efforts on behalf of their clients. They avoid “dog and pony” trade shows and endless self-promotion.
aBIZinaBOX’s – Cannabis Practice Group continues to monitor on a daily basis the evolution of the regulation of California’s cannabis industry to retain their position as a leading cannabis CPA firm with practical expertise. They will maintain their position as a leader in financial record-keeping and report for California cannabis by continually adjusting to the demands of this evolving industry.
About The Leadership Team
Jordan S. Zoot, CPA – Managing Director – CEO
Managing Director & CEO of integrated transactional financial advisory, tax, and technology consulting firm – aBIZinaBOX Inc – New York, Chicago, and Oakland
Mr. Zoot is licensed as a CPA in CA, FL, IL, NY, and TX. He has a national reputation of technical and transactional taxation of pass-thru entities [Partnerships, LLC’s and S Corporations], private equity and alternative asset funds primarily in distressed mortgages and assets, professional services, real estate, venture-funded tech start-ups, and the commercial cannabis industry in California.
Mr. Zoot has extensive experience in taxpayer and practitioner representation with the Examination, Appeals and Collection functions with IRS, including Special Procedures – Bankruptcy, Insolvency, Offer in Compromise, and Circular 230 Practitioner Representation with the Office of Professional Responsibility [“OPR”]
Mr. Zoot has a member of the AICPA, and state societies [CalCPA, FICPA, ICPAS, NYSSCPA, and TSCPA] for over thirty years. He has served an appointed member of AICPA’s Responsibilities in Tax Practice, Practice Management, and Subchapter K Technical Committees and as the CITP Champion for Illinois. He has had extensive involvement in the regulation commenting process with the US Treasury.
Samuel E. Levinson, CPA – Managing Director
Samuel E. Levinson, CPA has extensive experience with working with public and private REITs, inbound foreign investment in real estate, acquisition due diligence and other transactional tax advisory work.
Sam worked extensively with owners and operators of real property including opportunity funds, real estate investment trusts, and foreign inbound real estate investment, primarily from China.
Meet the Professional: Jordan Zoot of aBIZinaBOX
DCN: What other verticals does aBIZinaBOX specialize in?
Jordan S. Zoot: The firm is licensed as a CPA in CA, FL, IL, NY, and TX. We have a national reputation of technical and transactional taxation of pass-thru entities [Partnerships, LLC’s and S Corporations], private equity and alternative asset funds primarily in distressed mortgages and assets, professional services, real estate, venture-funded tech start-ups, and the commercial cannabis industry in California.
The firm has extensive experience in taxpayer and practitioner representation with the Examination, Appeals and Collection functions with IRS, including Special Procedures – Bankruptcy, Insolvency, Offer in Compromise, and Circular 230 Practitioner Representation with the Office of Professional Responsibility [“OPR”].
The firm is a member of the AICPA, and state societies [CalCPA, FICPA, ICPAS, NYSSCPA, and TSCPA] for over thirty years. Firm members have served of AICPA’s Responsibilities in Tax Practice, Practice Management, and Subchapter K Technical Committees and as the CITP Champion for Illinois. We had extensive involvement in the regulation commenting process with the US Treasury.
The firm is engaged at numerous points of contact in a lead role with AICPA senior executives in the process of developing policy, advocacy and education for CPA’s serving the legal cannabis industry. He has been involved with OPR in connection with the cannabis industry, Title 31 [FinCEN] matters, and the IRS’s OVDP Amnesty Program.
DCN: In 1995 aBIZinaBOX was founded, after over 30+ years, how did the idea evolve to focusing specifically on the cannabis industry?
Jordan S. Zoot: The firm began in New York where Jordan had been a Tax Partner with Arthur Andersen LLP. for fifteen years. We started with commercial real estate developers, alternative asset hedge funds and professional services. Our initial involvement with cannabis occurred almost right after the passage of Proposition 215 in 1996. Our practice included a substantial number of foreign creative professionals that we had set up S Corporations for that self-sponsored for Type O-1 visas A substantial number of them moved to Southern California so our practice quick grew a substantial bi-coastal presence.
We ramped up our cannabis practice approximately six years ago due to our relationship with the law offices of William E. Taggart Jr. a preeminent civil and criminal tax attorney with a strong interest in the cannabis industry. Bill literally pulled us into the “quicksand” of the cannabis industry in California.
DCN: What are some of the unique or challenging accounting or financial aspects that a CEO of CFO apart of a cannabis company should be prepared for?
Jordan S. Zoot: The real challenges aren’t fancy…they start off as the same challenges any small business faces:
- Setting up, maintaining and keeping complete and accurate accounting records that meet all of the requirements for both tax compliance and cannabis regulatory requirements.
- Paying people, and properly filing and maintaining payroll tax collections, payments, and reporting.
- Calculating, collecting, remitting and reporting cannabis cultivation and excise taxes and sales tax to CDTFA as well as local city and county tax agencies.
- Setting up and maintaining a proper system of internal accounting controls over cash.
The list may not seem all that fancy, or hyper-complex. However, the four items listed above, particularly the third point are going to be responsible for driving at least 75% of the touch the plant businesses California out of existence in the next eighteen months.
DCN: Outside of having a strong legal team, why is it important for a cannabis company to have an even stronger CPA on their side when raising capital?
Jordan S. Zoot: Our view is that the role of a CPA in raising capital is limited as follows. A CPA firm should NEVER, EVER be involved in the direct solicitation for capital. The risk of a violation of professional standards or securities law makes it not worth it. The role of a CPA should be in advising and guiding a client through the process of selecting a strategy, assisting with technical structuring [e.g. tax and regulatory planning], and where appropriate the drafting and assistance in the generation of required disclosure documents, or part thereof.
For a CPA firm like ours that perform attest work [auditing], the AICPA independence rules preclude us for being involved in bookkeeping, setting up or implementing computer-based accounting software, or having a role in the management of a business.
DCN: Would you advise a CPA who is thinking of starting an accounting practice to focus on the cannabis industry? What does the opportunity landscape look like?
Jordan S. Zoot: I’d suggest it is an extremely tough sector. The cannabis industry has greater practice risks and complexities than just about any industry we have ever seen. Keep in mind that with thirty-eight years in professional practice, an MS in Taxation, Tax Partner with a Big 4 firm, etc. you would have a difficult time finding a CPA with my professional background.
As a client, to be honest, I would be very wary of a new CPA and his / her firm. The complexities of the sector, the endless shifting sands of rules and regulations insist that clients choose their advisors extremely carefully. If anyone is interested in a more detailed read on my views on the topic take the time to read: Choosing Cannabis Tax Advisors.
Finally, there is an outstanding article that was published in Tax Notes – The Business of Tax: Cannabis Tax Advising Growing Like Weeds.
DCN: What is one question you hear from cannabis entrepreneurs often about accounting and what is your response?
Jordan S. Zoot: What do you think is the most important issue for touch the plant cannabis businesses in California in 2019? Its very simple, getting your act together with respect to accounting and tax reporting. CDTFA audits of cannabis taxes are going to destroy more cannabis industry businesses in California that the next three causes combined.
DCN: What are some of the issues that you as an accounting firm have faced when working in the cannabis industry?
Jordan S.Zoot: We could write a book on that one…perhaps the most significant involved the representation of cannabis license applicants and license holders by the three agencies that regulate cannabis in California. Our firm was DIRECTLY responsible for getting CalCannabis and BCC to recognize that right. See CalCannabis Solves Representation Issue.
We are extensively engaged with CDTFA, CalCannabis, BCC, and CDPH-MCSB in the regulatory comment and implementation processes. While there are many law firms engaged in the process, you can count the CPA firms that are truly engaged on one hand.
DCN: What sort of changes have you seen in your side of this industry since you launched your services?
Jordan S. Zoot: We have been involved in the cannabis industry in California for over twenty years…we can’t begin to provide a comprehensive answer, but we can offer a couple of very interesting articles. See California Cannabis Cultivation – Qualification as Farming and Background – California Cannabis Regulation.
DCN: What does aBIZinaBOX have in store for 2019?
Jordan S. Zoot: We will continue working our tails off serving California cannabis industry clients, and look forward to taking on new clients and showing them what we do well which is serving our clients. I think a quote from our website says it best.
If you have grown tired of tax advisors, accountants and attorneys that seem to graduate from the school of “baffle them with BULLSHIT” we should talk. It won’t take more than ninety seconds for you to recognize real experience and skills. How will you know…permit us to quote SCOTUS jurist Potter Stewart in Mishkin v. New York, 383 U.S. 502 (1966)
It is possible to read the Court’s opinion in Roth v. United States and Alberts v. California, 354 U.S. 476, in a variety of ways. In saying this, I imply no criticism of the Court, which in those cases was faced with the task of trying to define what may be indefinable. I have reached the conclusion, which I think is confirmed at least by negative implication in the Court’s decisions since Roth and Alberts, that under the First and Fourteenth Amendments criminal laws in this area are constitutionally limited to hard-core pornography. I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description, and perhaps I could never succeed in intelligibly doing so. “But I know it when I see it”, and the motion picture involved in this case is not that.”
DCN: Jordan, thank you for sharing your insight with the DCN community. Do you have any final comments you would like to share with our readers?
Jordan S. Zoot: Yes, last year, I wrote > 300 articles with an average length of 1,700 words…we strongly encourage you to read a sample of them and decide for yourselves what you think of our experience and expertise with the legal cannabis industry in California. [There is a wonderful section at the bottom of our homepage or feel free to check out our blog repository on CannabisLaw.report.
Finally, if are not familiar with CANNABIS COOPERATIVE ASSOCIATIONS [“CCA’S] you need to learn about them immediately you can start here.
5 things a Cannabis startup should look for in a Cannabis accounting firm
By Jordan S. Zoot of aBIZinaBOX
The leadership of the firm [and I mean every Partner or Managing Director] should have an MS in Taxation from a high quality program, be a Certified Public Accountant licensed in the state where the startup is located, which means that both the CPA’s and the firm should have full RESIDENT LICENSES such as we have in California, Florida, Illinois, New York, and Texas. Look both the individuals and the firm up on cpaverify.com to make sure that everyone is who they say they are.
The firm’s website should be visible and openly discuss the firm’s involvement in the cannabis industry. We split our firm into abizinabox.com and abizinaboxcannabis.com for exactly that reason. We actually wrote a substantive article that expresse our evaluation of our peers. See Long Ago and Far Away.
The firm’s leadership should be visible on the web, not with marketing garbage, but with a substantial amount of substantive content that demonstrates their expertise and experience, and contributes to the industry. As an example, do a Google search of my name or abizinabox, or check out our Post-Index with > 300 articles, 250 FAQs, etc.
Ask for references from the firm of cannabis industry clients that have used the firm of IRS Exams [“Audits”], Appeals, and Collections. If they can’t provide them run like hell and find a firm that has that experience. Ask the firm about their experience as Kovel Accountants.
Grill a representative of the firm about IRC Sec. 280E, not just how it works in general, but the mechanics of how it applied to cultivators, manufacturers, distributors, and dispensaries. As examples of what we would expect, here is our base article on IRC Sec. 280E, Cannabis Inventory Costing Update and IRC Sec. 280E Applies To All Cannabis Businesses Not Just Dispensaries.
Want to learn more about aBIZinaBOX, visit www.abizinaboxcannabis.com
DCN Company Profile: https://www.dcndirectory.com/listing/abizinabox-inc-cpas/
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