In the most recent episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I focus on 2020 hashish license leaderboards in addition to license progress in 2020. We additionally communicate with Zach Gordon, Tax Senior Manager at Grassi CPAs, an accounting {and professional} companies firm with an extended historical past supporting shoppers working in and with the hashish trade.

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Cannacurio Podcast Episode 27 Transcript

Narrator: This is the Canacurio podcast by Cannabiz Media, your supply for hashish and hemp license updates immediately from the information vault. Don’t overlook to subscribe to the Cannabiz Media e-newsletter and comply with us on LinkedIn, Instagram, Twitter, and Facebook to remain knowledgeable of future episodes and knowledge releases.

Amanda Guerrero: Welcome to the Canacurio podcast powered by Cannabiz Media. We’re your hosts Amanda Guerrero and Ed Keating. This week on at present’s present, we’re joined by Zach Gordon, a tax senior supervisor at Grassi CPAs. Zach and the Grassi workforce are an East Coast primarily based and an accounting {and professional} companies agency.

They only in the near past joined the Cannabiz Media platform and we’re tremendous excited to have them on as they’ve a particular subscription that we would like to share extra with you guys about.

But as all the time, earlier than we dive in with our visitors, we’re going to verify in with Ed to see what he is obtained for us this week from the information vault, Ed.

Ed Keating: Hey Amanda. So proper now, as we get into year-end, me and the workforce have been engaged on a spread of leaderboards. So we’re engaged on manufacturing subsequent, as we have simply accomplished retailing and cultivation.

The cultivation, as we discuss nearly each quarter, is closely concentrated with licenses from California and Oklahoma. They management about 87% of the brand new licenses, I believe, which have come out and doubtless 70% total within the nation. So undoubtedly persevering with the leaderboard pole positions as we come into the top of the 12 months.

Amanda Guerrero: And I’ve to only inquire, did Michigan make any appearances on this cultivation chief board?

Ed Keating: Yeah, they’re proper up there within the third spot. They’ve actually been including lots of licenses throughout the worth chain, as a result of I believe the final time we talked, we chatted about dispensaries and retailers and their charge of progress of including these sorts of licenses was actually steeper than all the opposite states. So I believe we will proceed to listen to from them as we go into 2021 as properly.

Amanda Guerrero: Yes. As many of our loyal listeners know, we now have been carefully monitoring the expansion throughout the California, Oklahoma and Michigan markets, and so they have been completely on the high of our leaderboard in 2020 and I’m positive we’re wanting on the identical for 2021.

As I discussed, at present, we’re joined by Zach from Grassi CPAs. Zach, welcome to the present. We’re so blissful to have you ever.

Zach Gordon: Thanks a lot for having me, very excited to be right here.

Amanda Guerrero: Yeah, of course. Not thus far ourselves on the podcast, however you simply survived or are surviving the loopy winter storm that is hitting the East Coast proper now, appropriate?

Zach Gordon: Yeah, that is proper. I really needed to get the shovel and the salt out. So, who would have thought.

Amanda Guerrero: Oh my goodness. Well, we’ll undoubtedly focus our dialog at present on what you guys are doing over at Grassi, however glad to have you ever on the present. Now with Grassi, they have been a reasonably lengthy standing agency, since 1980, throughout the accounting companies area. When did you guys get into the hashish trade? How did that occur?

Zach Gordon: That’s a tremendous query, and it is one of these issues that I believe throughout public accounting, related conversations are being had. The agency has been within the hashish house since about 2016 and the dialog began with, “You’re kidding, right?”

One of the companions went into the managing associate’s workplace and was like, “We’re getting some bites, we’re getting some questions and we have our own clients who were either investing or becoming more and more interested in the space. I think it’s about time we got in.” And of course, the primary response was, “What are you crazy?” Obviously this being a number of years in the past, the market wasn’t fairly what it was now.

As the market continued to evolve and our shoppers obtained an increasing number of excited and we obtained extra excited, it was only a pure match. It goes with out saying we needed to do our analysis. So I used to be really the founder and first chairperson of the New York State Society of CPAs Cannabis. Committee.

So it was fairly distinctive in getting all these professionals collectively, some who could not have been very skilled on this house, however needed to study extra, and the few of us who did have that hands-on expertise, we obtained an opportunity to have a bit of a sounding board. And that was actually a good way to get, not solely ourselves extra into the trade and extra publicity, however lots of different CPAs to have that sounding board as properly.

Amanda Guerrero: Yeah. And you have not too long ago simply joined the Grassi CPA agency, is that appropriate?

Zach Gordon: Exactly. I joined over the summer time, so-

Amanda Guerrero: Congratulations.

Zach Gordon: Thank you. Thank you. It’s actually been fairly a journey, however I’m actually excited to be right here, all joking apart. The follow actually is rising, pardon the pun, like a weed. I’m sorry, I needed to. I had that in my again pocket, I had to make use of it.

Amanda Guerrero: I like it. I like it. The puns are limitless on this trade.

Zach Gordon: Oh, they positive are, and so they get extra corny by the day, however that is all proper.

Amanda Guerrero: Now, coming from a hashish accounting centered background, particularly with your earlier work with the commerce affiliation, how do you suppose the MORE Act impacts to assist rules and subsequently the shoppers that you’ve got at Grassi?

Zach Gordon: That is a unbelievable query and I might put an enormous asterisk in that it is primarily based on what we all know at present, and as we all know, any laws having to do with hashish is a shifting goal. At the federal degree, it is much more so.

Theoretically, assuming the MORE Act passes in some semblance of its present kind, there are some actually large impacts. Now, we won’t reply all these questions, solely as a result of we do not know for positive the how, the when, and people are all fairly essential questions. But let’s simply say for the sake of dialog right here, that hashish as a complete is de-scheduled.

So it is at present a Schedule One drug that implies that 280E applies, and particularly, that implies that there’re no deductions outdoors of price of items bought. I’ll save the remainder of the tax dissertation for an additional time, however once more, only for the sake of this dialog, price of items bought is all you’ll be able to actually take into consideration when you’re a plant touching enterprise.

Now, how does that have an effect on our shoppers? In each manner you may probably think about. And that is the place having the suitable documentation, having the suitable skilled steering can actually take you a great distance. I might wager that this reply will change over the following few months, but when it have been to cross, there are vital implications.

Ed Keating: So Zach, one query that I had in phrases of shoppers, particularly for the reason that agency has been doing this for some time, is, are you working with each plant touching and ancillary shoppers? And when you do, how do their wants differ from the companies that you simply present to them?

Zach Gordon: That’s an awesome query. We do have plant touching. I imply, we work with single state operators, multi-state operators, candidates and everyone in between. We additionally work with fairly just a few completely different ancillary service suppliers from the expertise facet, from infrastructure, from just a few completely different sides. It’s fairly attention-grabbing, and they’re all wildly completely different in how they should be serviced. When you look-

Ed Keating: And I-

Zach Gordon: I’m sorry, go forward.

Ed Keating: No, go on end. Finish.

Zach Gordon: Oh, I used to be simply going to say that if you’re plant touching enterprise, the documentation is vital. Making positive that you simply perceive how, as we talked about, price of items bought, how that is being allotted, who you are servicing, the way you’re servicing, et cetera. It’s simply extremely essential. Not that it is much less so when you’re an ancillary service, it is just a bit completely different.

Ed Keating: Right. And I keep in mind if you have been approaching board, Grassi, we have been chatting and I requested you a bunch of questions then too, and one of the issues I keep in mind is that you simply have been coming to the agency and the agency already had type of this multi-state view already. It wasn’t that you simply have been simply dealing, as an example with shoppers in New York state, however cities, if I keep in mind, that you’ve got broad protection nationwide. Is that proper?

Zach Gordon: Exactly. Now, the asterisk I might put there’s we wish to know the state. We wish to know the market earlier than we’d get in.

Ed Keating: Sure. Sure. Sure, yeah.

Zach Gordon: So being educated is an enormous deal. Not simply talking for myself, however for different professionals throughout the agency, we take that training very critically. It goes with out saying that California’s clearly the largest market, and as a lot as anybody can wrap their heads round that beast, that’s the compliance infrastructure for California, that is clearly a logical start line.

And some of them are mature markets as properly. We have our eyes there. But as new markets come on-line, you higher imagine, 12:01 on that day, we’re noses to the books attempting to know that market.

Ed Keating: Absolutely. Now, as a man who began working for primarily a Fortune 500 tax writer out of faculty, I’m all the time intrigued-

Zach Gordon: To brag somewhat bit.

Ed Keating: … by the regulation. So what rules information your work? Does FinCEN Bank Secrecy are available in? What are you having to have a look at to assist perceive the associated fee of items bought points that you simply talked about and a few of these different nuances that people who find themselves new to this market simply do not know what they do not know?

Zach Gordon: Well, that is a good way to border it. Cannabis is exclusive in that, I do not know if there’s one other trade, the place there’s so many first time or comparatively new house owners and operators. And that brings up its personal challenges, and to your level with that, the best way you phrased that, they do not know what they do not know. So in that regard, and I believe mentioning FinCEN is actually attention-grabbing, as a result of we do must be acquainted with just about each regulatory physique beneath the solar.

And on condition that that is hashish, on condition that it’s federally unlawful for all intents and functions, we have to ensure that compliance is hermetic, not solely on the state degree, however the federal degree as properly.

Ed Keating: And from a compliance suite standpoint of the instruments and software program that your shoppers have to make use of, I imply, are they in a position to embrace trade merchandise like Work or ADP or QuickBooks? How do they ensure that they’re monitoring issues the suitable manner?

Zach Gordon: See, that is a loaded query, as a result of going again to the problem of hashish being an unlawful trade, once more for all intents and functions, there are particular platforms which can, in the event that they know that you are a hashish enterprise, they could not permit you to use their platform.

Now, that being stated, there are nice platforms on the market. You talked about Work, it is a platform tailor-made for the hashish trade and that is unbelievable. And that is very thrilling, not solely with platforms like Cannabiz, however some of the others which can be on the market being tailor-made for the trade and simply seeing how far they’ve come during the last couple of years is actually thrilling from my seat.

Ed Keating: Awesome. Well, and one final type of expertise compliance query is, Cannabiz Media publishes experiences on type of what makes up the software program stack within the hashish house, what instruments are license holders utilizing, so I’m curious, do you or folks in your agency must grow to be fluent or acquainted with lots of the ERP seed-to-sale and level of sale outputs? Does that issue into some of the work product that it’s important to do, when you’re doing, as an example an audit or one thing like that?

Zach Gordon: It’s not even a query and your timing for a query like that would not be higher. Quite actually this morning, we have been on a Zoom name with a consumer, we’re going by means of an audit, properly, we’re getting ready for this developing audit season, and going by means of precisely, their POS programs and their stock administration software program. That’s precisely on the nostril, and we now have to understand it.

There’s no manner we will conceivably go in as auditors, except we all know what the output seems like, except we all know precisely what we’re getting and that they are in full compliance relying on the state market.

Amanda Guerrero: Well, so earlier within the dialog, Zach, you talked about that it is actually essential for companies to have documentation and to have the right analysis instruments accessible to them with a view to discover new markets or to ascertain themselves there. I’m curious, as a brand new current subscriber to the Cannabiz Media platform, how have you ever guys been in a position to combine us into your course of and what are some of the first use circumstances that you simply foresee the workforce having?

Zach Gordon: Well between us, I want we had gotten on the platform ages earlier, as a result of it has been an awesome expertise. And I genuinely imply that. Just first getting an understanding of who’s out there, in any given market, is extremely essential. You cannot know how one can correctly service an trade, a area or something extra detailed than that except you perceive the market itself and Cannabiz’s instruments are unbelievable. That actually has been a distinction maker.So we have introduced in our advertising and marketing division, we talked about the audit workforce, we introduced them in, simply to know at not solely a excessive degree, however at a bit extra of an in depth degree, the who, the what, the how lengthy, et cetera. It’s an unimaginable device.

Amanda Guerrero: Yeah. Thank you. We respect your sort phrases there. Bringing within the advertising and marketing and the auditing division, I imply, that is actually a good way for your enterprise to know and get a snapshot of what is going on on throughout the hashish trade at actual time, or inside actual time.

While we do give these updates concerning the knowledge vault throughout our reveals, we do have a workforce of 25 researchers which can be working tirelessly to replace these data, hold them and supply our subscribers with one of the best accessible data, not simply from a gross sales and advertising and marketing standpoint, but additionally from a market analysis standpoint.

Now, I’m assuming that you’ve got had a while to look by means of the platform and work by means of it, simply on first look, do you may have any suggestions or methods or ways in which you are using the platform that you simply’d prefer to share?

Zach Gordon: Absolutely. So there’s a nice tutorial and the customer support is unbelievable. So I do tip my hat for that, and this isn’t a shameless plug, I actually do imply it. It’s been an awesome expertise.

As far as suggestions or methods, mess around somewhat bit, just be sure you know by area, by license, attempt to play with it somewhat bit. Try to seek out that one market that you simply suppose you already know and see what the output is. It’s no higher technique to study than that.

Ed Keating: Yeah, I might concur and I wish to say when Zach and I met a very long time in the past at commerce reveals, you actually did get an opportunity to know the product and really ship folks to our sales space. You’re like, “You’ve got to go look at that.” So we respect the truth that you have come on board as a buyer and introduced Grassi alongside with you.

I needed to zip again to some of the markets. So we have got about 5 new markets or expanded markets approaching board. Obviously you are going to be everywhere in the proposed rules, type of seeing what they imply, any ones specifically, like New Jersey shouldn’t be very far-off, is that the one that you simply’re, you are actually attempting to control? Or versus a spot like Arizona, the place they are going to give out fractionally extra licenses and doubtless principally to present license holders. Any picks that you simply’re making in phrases of the place you actually need to focus first?

Zach Gordon: Well, both manner, it is actually thrilling to know that there are 5 new markets coming on-line. That’s simply, it is frankly, excellent for enterprise on that entrance and given the financial firepower of New Jersey, given geographically the place it’s, it is simply from a comfort issue on the geographical facet, of course, that is going to be very attention-grabbing.

We’ve already gotten fairly just a few pings to write down analysis and begin placing collectively monetary fashions, to begin fascinated with what potential write-ups might appear to be for the functions as they arrive out. I might say particularly for New Jersey, the thrill is palpable and actually what which means is I’m in all probability by no means sleeping once more.

Ed Keating: Yeah, I wager. I imply, it has been attention-grabbing simply to listen to some of the early insights that individuals have. It could be guesses, perhaps not perception, however from what I’ve seen in New Jersey, it seems like they are going to cap cultivation at about 36 licenses, however no cap on dispensaries, retailers, which is fairly attention-grabbing.

Then I’ve additionally heard that Mississippi could also be taking a web page out of the Oklahoma playbook and principally let the market resolve, let hundreds of licenses fly. Have you heard something? And are there markets which can be extra attention-grabbing to you as a result of of how they subject licenses like a managed state with restricted licenses versus a Wild Wild West, like in Oklahoma or maybe in Mississippi?

Zach Gordon: Well, that is a loaded query as a result of they’re attention-grabbing for various causes. So we did check out Oklahoma again when it actually kicked on-line. It was, to your level with the Wild Wild West remark, I agree with that.

This is oversimplification, however anyone who needed a license obtained a license. And sadly what occurs is that does have the impact of virtually devaluing these particular person licenses. You do have issues over who the operators are, and I do not imply that from a background standpoint, I imply that extra from the experiential standpoint, the place there’s statistically a larger likelihood of them failing, and that is regarding.

Anytime you get right into a restricted license market although, provide and demand, that shortage brings some heavy financial impression. That’s all the time attention-grabbing and intriguing to be an element of. But I believe, to not sit on the fence right here, however they’re attention-grabbing for various causes, if that is sensible.

Ed Keating: No, that is an awesome level. I believe the MSO dialogue is a key one, as a result of we have talked lots about them on the pod prior to now. And the best way I take a look at it’s they’ve lots of experience with manufacturers, with folks and operations throughout state strains. They cannot transfer the product throughout state strains, however they will transfer lots of different issues. They even have much more in danger and lots to lose, so their probability for compliance is tremendous excessive, in order that they want anyone like a Grassi or one of your opponents to ensure that they’re crossing each T, dotting each I, after which proofing it 3 times earlier than they submit it.

So, yeah, it could make sense that these are the markets that, I might suppose could be extra attention-grabbing as a result of you may get much more accomplished working with one large consumer then attempting to chase round 60 small ones.

Zach Gordon: Exactly. And anytime you begin speaking a couple of market like New Jersey, for instance, the place there’s the quantity of zeros concerned in these checks, there’s simply naturally a degree of curiosity that comes with it.

Amanda Guerrero: Well, Zach, thanks a lot for becoming a member of us on at present’s present. It actually has been a pleasure having you and particularly given the very long time connection that you’ve got had with Ed and sending us leads at reveals, and simply being a longtime fan of the workforce, we’re blissful to have you ever as a subscriber and we’re tremendous excited to proceed working with you into the brand new 12 months.

Zach Gordon: I undoubtedly respect the sentiment and I return it. I’ve seen the evolution of the platform and it is actually thrilling. I’m very excited to see the place you guys hold going and blissful to be a person as properly.

Ed Keating: Awesome. Thanks. Happy New Year.

Zach Gordon: You as properly.

Amanda Guerrero: All proper, Ed, so let’s have a look into our crystal ball right here for the top of 2020 going into 2021, what can we stay up for from the information vault?

Ed Keating: We’re actually year-end numbers to see what the expansion appeared like. Trying to match what’s occurred during the last 12 months. We noticed, for instance, Florida added a complete bunch of shops. I believe they’re as much as virtually 300 dispensaries now-

Amanda Guerrero: Yeah, I noticed that.

Ed Keating: … regardless that that is solely coming from just a few handfuls of true license holders. Whereas Oklahoma has simply continued so as to add retailer after retailer after retailer. So simply letting listeners to the pod know to search for a year-end wrap up coming within the subsequent few weeks the place we try to parse by means of all of the numbers, all of the licenses, and what has occurred throughout the course of 2020.

Amanda Guerrero: Awesome. Well, it has been a real pleasure working with you on the present. I do know we have got a pair extra lined up for the remainder of the month, however for us right here in 2020, it has been a pleasure, Ed. Thank you.

Ed Keating: Absolutely.

Amanda Guerrero: All proper. Well, everybody that wraps up our present at present. Thank you a lot for becoming a member of us and tuning in. This is the Canacurio podcast and we’re your hosts, Amanda Guerrero and Ed Keating. Stay tuned for extra updates from the date of vault.

Narrator: Thanks for listening to the Cannacurio podcast by Cannabiz Media. Stay updated with the most recent episodes of the podcast and get alerts on the most recent licensing exercise within the United States and Canada, in addition to unique trade insights, by signing up for the Cannabiz Media licensing e-newsletter at cannabiz.media/e-newsletter.

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