HBK Cannabis Solutions is a team of cannabis industry subject matter experts within HBK CPAs & Consultants. HBK is among the first accounting firms to specialize in the cannabis industry. The firm has worked with entrepreneurs in all industry segments—cultivators, processors, and retailers—from a single facility to multi-location and vertical operations. Their team counsels owners, management, and investors in multiple states and countries. HBK has experience in valuing both plant-touching and ancillary businesses in the cannabis industry.
We talked to Eric Grischow, regional manager of the cannabis group. He lives in Boardman, Ohio near Youngstown, with his wife, Elizabeth, and 18- month-old daughter.
Why did your company start working in the cannabis industry: We started working in the industry primarily for two reasons. First, we had clients who were interested in the industry and we wanted to serve them as best as we could. Second, approximately six years ago, after seeing legalization in Colorado, California, and Washington, we knew it was going to come to our geographic areas and we wanted to become experts in the industry before anyone else.
HBK has 600 plus employees in 17 offices. Almost a year ago, the firm created a separate profit center for the cannabis industry. Our cannabis solutions group. Now we have 13 full-time people and others working part-time in the cannabis industry.
How did you start focusing on the cannabis industry:
I’ve been with HBK for five years and worked full-time in cannabis for nearly three years. I started off working on a lot of manufacturing clients and real estate businesses and then expanded into providing tax and auditing services in construction companies and working on employee benefit plans audits. One of the partners in my office started pulling me into some small bookkeeping projects which eventually grew into larger jobs including complex tax return preparation planning and performing audits for multi-state operators. As our client base expanded and my exposure to the industry increased, I realized I had an interest in focusing on the cannabis industry completely.
Why is the cannabis industry so different from an accounting perspective?
Since cannabis is a Schedule I substance under the Controlled Substances Act, it is federally illegal. As such, companies are subject to Internal Revenue Code Section 280E which mandates taxation on gross profit and disallows deductions for selling, general, and administrative expenses. Because of this, we try to help our clients maintain their books and records in a manner that is 280E compliant. The federal illegality results in more audit risk and fewer banking options. All of these are challenges we try to help our clients maneuver.
What services do you offer clients in the cannabis industry?
Anything we can do for a non-cannabis client, we can do for a cannabis client – and more. We work with clients as early as the application stage helping with financial projections business plans and standard operating procedures. Many of our clients use QuickBooks Online and we help them set it up and teach them how to use it – or sometimes they want us to do the bookkeeping. We have performed tax preparation and compliance services for real estate entities, manufacturers, wholesalers, and retail businesses for years. It is a natural expansion into the cannabis industry which just required education and training on our end to become experts.
Why do you plan to participate in the Ohio Cannabis Health & Business Summit?
We want to participate in the Ohio Cannabis Health and business summit to hear from industry experts in Ohio regarding the state of the industry and hear questions, concerns, opportunities, and solutions for cannabis companies. It is a unique and close industry that requires subject matter experts and we want to be a resource and advocate for our clients and the industry.