Los Angeles, CA. On July 10, 2018, the National Association of Cannabis Businesses (NACB) will hold its second advisory services Symposium, which will focus on issues relating to tax and accounting in the cannabis industry. The event will be hosted by the acclaimed advisory firm CohnReznick and feature speakers from other premier firms and top-ranked boutiques.
The Symposium is part of NACB’s mission to assemble a community of top advisors and businesses in cannabis, bringing world-class thought and talent into this fledgling industry. Future Symposiums will tackle investment, security, insurance, and other essential topics. Earlier this year, the NACB conducted its inaugural Symposium on Cannabis and the Law in Washington, D.C.
Stepping Up to the Challenge
While cannabis operators are working diligently to pay applicable taxes and enhance their financial accounting systems, a multitude of factors unique to the industry present significant challenges. These include well-known issues such as IRS Code Section 280E (which operates to deny ordinary and necessary business deductions to cannabis) and the lack of access to banking (which forces many to operate on a cash basis). In addition, years of operating in unregulated or semi-regulated markets have meant that many cannabis businesses have not been able to establish the financial structures and practices other businesses rely upon. Tax accounting is another challenge, as cannabis businesses contend with a patchwork of varying schemes across state and local jurisdictions utilizing combinations of sales, excise, and cultivation taxes. All the while, businesses are subject to frequent audits and intense regulatory scrutiny, with little guidance from agents (who are oftentimes themselves learning as they go).
As with its first Symposium, for this event, the NACB has brought together participants from top accounting firms, forensic financial consultants, law firms, as well as some of the best cannabis business owners in the nation, all of whom are dedicated to building a healthy cannabis industry. This includes international accounting firm CohnReznick, which is hosting the event.
CohnReznick’s Michael Harlow, a partner in the firm’s cannabis practice, said, “The Cannabis Industry faces the unique challenge of being a rapidly growing industry with new operators and investors joining the industry every day, while at the same time operating in a challenging state by state regulatory environment. Every company we talk to has challenges that are unique to their business model, local regulatory environment and investor requirements. We are very excited to help clients navigate these challenges.”
The NACB expects the Symposium on Tax and Accounting in Cannabis will not only receive notice from industry actors and lawmakers, but will also help shape the conversation around the cannabis legal environment.
The distinguished presenters include:
Alexander Arnote of FTI Consulting. As FTI’s Senior Direct of Data Analytics, Alex Arnote serves in a client interfacing role primarily focused on assisting companies with audits, investigations, government regulations, and litigation characterized by short deadlines and requiring a high level of accuracy. His main responsibilities include supervising multiple projects at once, generating data productions and/or analysis in response to government and/or court requests, and writing expert reports for use in litigation.
John Barthel of BLY, CPA. As an owner and partner at the accounting firm BLY CPA, John Barthel, has been working with various cannabis businesses in California for the past 5 years, helping them organize the manual process inherent in the industry. Through his experiences, he has developed techniques and business relations to streamline companies, focusing on tackling the ever-growing complexity of compliance. His engagements have him on the forefront of the emerging legal cannabis industry and given him intimate knowledge of what’s happening in the space.
Nick Etten of Veterans Cannabis Project. Nick Etten is the Founder of the Veterans Cannabis Project. Since serving on active duty as a U.S. Navy SEAL, Nick has spent 20 years as a private equity professional and operations executive with several organizations. Nick earned an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University, and a BS in political science from the United States Naval Academy.
Michael Harlow of CohnReznick. Michael Harlow is a partner and the Co-Practice Director for the DC Metro Tax Practice for CohnReznick. As such, Michael enjoys working with a variety of clients across the Washington region. He has more than 15 years of experience in public accounting serving clients in attestation, accounting, and tax advisory roles. Michael has extensive experience across multiple real estate-related industries including homebuilding, land development, residential management, commercial management, and land engineering. Most recently, he has taken a lead role in the CohnReznick Cannabis Practice, bringing his existing skill set to this emerging industry. He is a Certified Public Accountant in the state of Maryland.
James Hunt of Harris Bricken. Jim Hunt has spent his legal career advising individuals, non-profit organizations, closely-held businesses, and Fortune 100 companies on tax law, including U.S. federal tax and Washington state tax controversies. In addition to his general tax expertise, Jim currently represents a wide variety of clients in the cannabis industry, including ancillary businesses. His nuanced knowledge of the unique federal and state taxation challenges faced by this industry, makes him a formidable legal partner to Washington cannabis businesses. Jim also is his firm’s go-to person for tax issues faced by foreign companies that do business in the United States. Jim was the two term Chair of the State and Local Tax Committee of the Washington State Bar Association. Jim’s industry and public accounting experience includes in-house tax counsel and management roles with: Ernst & Young; GE Capital; WAMU/J.P. Morgan Chase; and, Amazon.
Eugene Morgulis of the National Association of Cannabis Businesses (NACB). As the NACB’s LA-based executive and the Director of Legal & Strategic Initiatives, Eugene oversees the development of the NACB's tech compliance product, is involved in the creation of NACB’s National Standards, and heads up the NACB’s Symposium program for lawyers, accountants and other advisory services. Eugene's legal career began at the international law firm Ropes & Gray in Boston, MA. His practice included commercial litigation and government enforcement, later focusing on the emerging fields of Cybersecurity and Data Privacy law. In 2013, he was awarded the Lawyers’ Committee for Civil Rights and Economic Justice Recognition Award for his work on NAACP v. Galvin, which expanded access to voter registration for low-income Massachusetts citizens.
Stephen Parinello of King & Spalding. From diligence and structuring through post-transaction integration, Steve Parinello has brought creative solutions to the table when helping his clients navigate byzantine tax rules in some of their most complex transactions. He also regularly advises global clients in creating and maintaining efficient cross-border arrangements, collaborating with other tax attorneys in Jones Day offices all over the world. He is called upon regularly by clients to answer critical tax withholding and reporting questions, as well as by the Jones Day’s litigation attorneys on the tax consequences of judgments and settlements.
Please see our resource page for more information about the NACB’s previous Symposium on banking and finance, which featured presentations from Cadwalader, Wickersham & Taft, Jones Day, Davis Polk, King & Spalding, Torys, Hoban Law Group, Frontera, and Harris Bricken. Other participants included representatives from Cowen, Kroll, Navigant, CohnReznick, Empire Global Ventures, Cresco Labs, Matrix NV, ForwardGro, PhramaCann LLC, Prime Strategies LLC, and the American Gaming Association.