WOMEN’S MENTORIN G CIRCLES

A new twist on traditional mentor ing!

Make a dif ference in your career… and those of other s.

This fresh take on mentoring brings together women of all experience levels and backgrounds to form a place for mutual sharing, encouragement, and empowerment.

Why Join?

• Lear n from the challenges and successes of other s

• Expand your professional and per sonal suppor t network

• Gain multiple per spectives, unique advice, and a diver se array of ideas

• Increase your conf idence and develop your leader ship skills

How they wor k:

• Each Mentor ing Circle is compr ised of 8-10 women with var ious levels of exper ience from a wide range of practice areas and industr ies

• The Mentor ing Circles meet at least four times per year in Chicago and the suburbs

BY CLARE FITZGERALD

Mom-and-pop shops aren’t driving the U S cannabis market anymore Big domestic and international players have rolled those businesses into their own as the cannabis industry has rapidly grown and evolved over the past few years Today’s market leaders are large, complex, capital hungry, high-revenue-generating entities, and according to CPAs working in the field, they’re in desperate need of high-quality accounting and finance expertise and guidance

Professional service providers ranging from plumbers to soil experts and lawyers to real estate agents have jumped to meet the needs of emerging cannabis growers, sellers, and distributors, but the accounting and finance industry has been much slower to engage

That’s starting to change, according to Andrew Hunzicker, CPA, co-founder and owner of DOPE CFO, a Bend, Ore -based provider of education and tools designed to help accounting and finance professionals enter the cannabis industry. As more states legalize both medicinal and recreational cannabis production, sales, and use, and acceptance of cannabis as a legitimate business industry grows, small accounting firms are planting their seeds and many mid-market firms are growing full-fledged specialized cannabis divisions Hunzicker also predicts the Big Four will enter the sector if cannabis is ever legalized at the federal level

For now, cannabis is still classified as a Schedule 1 drug at the federal level It’s equated with heroin and is considered to have no medical value despite studies suggesting otherwise. But even with the stigma that classification carries, cannabis is growing into a massive market domestically and internationally, and the rush is on to grow with it.

A Maturing Market

According to Illinois CPA Society member Taylor Schuck, cannabis industry specialist and accounting services supervisor at Mueller CPA in Elgin, Ill , the cannabis industry has moved well beyond its infancy stages It’s evolving, maturing, and driving global economic growth and development

Here in the U S , cannabis is gaining mainstream momentum So far in 2019, 27 state legislatures have considered bills to legalize cannabis for adults, according to the Marijuana Policy Project, a cannabis policy reform group Illinois where legal recreational cannabis sales are expected to start Jan 1, 2020 is one of 10 states that have legalized both medicinal and recreational cannabis use Medicinal cannabis is legal in some form in 33 states, and possession of small amounts of cannabis has been decriminalized in 26 states

On the national level, the U S House of Representatives this summer held its first hearing on whether to end or reform federal marijuana prohibition The U S Senate Committee on Banking, Housing, and Urban Affairs also held a hearing to discuss financial challenges facing the cannabis industry and considered legislation that would prevent federal financial regulators from punishing financial institutions that provide services to state-legal cannabis businesses The Farm Bill that President Donald Trump signed into law last December legalized hemp a strain of cannabis grown specifically for industrial uses of its derived products

As policy and legislative discussions continue in the political arena, public support for cannabis is growing In a recent Marist College poll conducted for NPR and PBS NewsHour, 62 percent of registered voters said legalizing recreational cannabis is a good idea In a 2010 Gallup poll, only 46 percent of Americans supported legalization

More states are moving to legalize recreational cannabis via ballot instead of referendum, which could increase momentum for national legalization in the coming years, according to the 2019 Cannabis Market Report from Brightfield Group, a predictive analytics and market research firm for the cannabis and CBD industries As more markets open, the industry’s value is expected to explode The total U S cannabis market is predicted to reach $22 7 billion in 2023, according to the report, and the majority of that is expected to be driven by recreational sales, particularly from newly opened, fast-growing Midwest and East Coast markets

The Brightfield Group also reports that the hemp-driven CBD market (think edibles and other infused products) is growing even faster than cannabis in the U S and will soon be a $22 billion industry Cannabis companies are increasingly pushing into the CBD space through mergers and acquisitions as a precursor to THC legalization THC, or tetrahydrocannabinol, is the chemical responsible for most of marijuana's psychological effects

The cannabis and CBD industries also are driving job growth

According to cannabis information hub Leafly’s 2019 Cannabis Jobs Count, the cannabis industry added more than 64,000 jobs in 2018, and it now directly employs more than 211,000 full-time workers in the U S

Weighing Cannabis’ Complexities

Producers, sellers, and distributors operating in the rapidly evolving cannabis marketplace face complex challenges and they need solid expertise to help guide them Many cannabis businesses have operations in several states, and the legal and regulatory environment is changing quickly in each According to Schuck, that complexity offers plenty of opportunities for CPAs to provide a variety of accounting, tax, and consulting services

However, anyone interested in serving the cannabis industry has to be well versed in relevant court cases, committed to staying on top of legislative changes, and highly knowledgeable on Section 280E of the Internal Revenue Code, which forbids businesses from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances as defined by the Controlled Substances Act Helping cannabis businesses evaluate what is deductible and what isn’t under Section 280E is one of the main areas where CPAs can guide cannabis clients

“Cannabis businesses need qualified accountants who know how to do 280E right,” Hunzicker says, adding that experienced CPAs shouldn’t try to take an overly aggressive approach to interpreting the code

In addition to providing 280E-compliant tax returns, CPAs also are being called on to develop tax strategies, provide M&A and due diligence services, and advise cannabis clients on entity choice and how to structure their businesses Valuation is another challenging area “Cannabis businesses need to be well capitalized, because they have high operating costs and high volatility in revenues related to commodity price swings,” Hunzicker says, citing high start-up costs, rents, payroll expenses, and complex tax burdens as other pressing expenses

Even businesses that have their own accounting departments still need help “These companies have been in need of quality accounting services for years, ” Schuck says

“Cannabis companies have been massively underserved by the mainstream accounting industry,” Hunzicker exclaims “Cannabis companies have a lot of compliance needs States are coming up with their own sets of rules and then changing them Keeping on top of those very detailed and complex rules requires someone who is very heavily compliance oriented Cannabis CEOs are too busy running their businesses to do it ”

Unique Market, Unique Risks

Although cannabis is a large and somewhat untapped market offering a variety of service opportunities, CPAs and their firms also need to be aware of the unique professional risks the industry presents Legal, regulatory, ethical, reputational, and practice management considerations all arise if you ’ re providing services to businesses that produce, sell, or distribute a substance that is still illegal under federal law

Cash management is one issue, according to attorney Stan Sterna, vice president and accountants’ professional liability risk consultant for Chicago-based insurance broker, Aon, the national administrator of the AICPA Member Insurance Program “Federally insured banks may not accept deposits from federally illegal enterprises because of potential money-laundering or aiding-and-abetting charges,” he explains “As a result, cannabis clients deal primarily in cash, increasing the risk of both unreported revenue and defalcation, which increases a CPA’s professional liability risk ”

Cash transportation also is an issue, according to Schuck, but he expects some of the industry’s banking woes to be eased by new regulations And although it can still be difficult to find a bank in some states, Schuck says many financial institutions are confidently banking cannabis clients without any federal enforcement

Sterna encourages CPAs to be aware of other risks He explains that many cannabis businesses struggle financially or fail, and their ability to discharge or restructure debt is limited because they have limited access to the U S judicial system, including the bankruptcy process Also, the Section 7525 tax preparer-client privilege may not apply to cannabis clients “If the client is under investigation, the CPA may be placed in the awkward position of being required to testify against that client,” he says

The complexity of the business also can create the potential for CPAs to make mistakes “Multiple taxing authorities may impose taxes or fees on the product With so many returns to prepare, the likelihood that a return could be audited or that the CPA could make an error or omission increases,” Sterna cautions

But as Schuck sees it, the big risks, such as a client breaking the law or taking an unreasonable tax position, could happen with any client in any industry, and the risks can be mitigated through proper onboarding and due diligence procedures And as for the federal versus state law gap, Schuck says CPAs are licensed by the states, and they have a right and responsibility to provide services for cannabis businesses operating legally in them “CPAs are actually helping cannabis companies comply with state laws and statutes,” he says, which is why he doesn’t give much weight to the idea that a firm’s reputation would suffer or a firm would lose clients simply because it provides services to the cannabis industry

At this point, Schuck says many small practitioners are quietly serving the cannabis market and continuing to move forward confidently “Those firms are signing tax returns without facing any repercussions If you take proper steps, exercise normal due diligence, and have strong client acceptance procedures, you don’t have anything to worry about,” he says

Hunzicker advises CPAs to treat cannabis businesses as they would any other client “If you apply the same risk management standards, you ’ re highly unlikely to encounter trouble,” he says

Connecting With Cannabis

For those willing to take on the risk, there’s a high potential for reward According to Hunzicker, with average dispensaries hitting $1 million in sales per year, and many in the $4 million to $5 million range, accounting and bookkeeping needs alone can reach several thousand dollars per month in billing for CPAs Providing other CFO, HR, payroll, and consulting services can create additional billing opportunities “Cannabis companies have intense, complex needs, and they understand that they need our services,” he says

The clients certainly aren’t hiding, either With all the media attention surrounding the industry, Hunzicker says cannabis CEOs and investors are easier to find than clients in other industries Schuck agrees that meeting people and getting involved in the industry is relatively easy He suggests attending municipal meetings where local governments are considering the entry of cannabis businesses, finding educational resources and training programs, and staying current on industry changes by joining industry groups (like the Illinois CPA Society’s Cannabis Industry Member Forum) and subscribing to email distribution lists

For CPA firms serious about developing cannabis as a specialty area, Hunzicker also recommends jumping in and participating in the marijuana movement He notes that many industry groups are welcoming and communicate daily about constantly changing issues and regulations “Cannabis is an exciting industry and offers an amazing opportunity to grow your success by building a niche,” he says “It’s also a fun time to get involved You will meet interesting people and find very appreciative CEOs ”

BY ANNIE MUELLER

Every manager has experienced it at one time or another: the feedback void. A careful delivery of pertinent feedback is answered by silence.

“A lot of people become what I call ‘blank starers,’” quips Brad Karsh, founder and CEO of JB Training Solutions and author of “Manager

3 0 ” “You give feedback, and you get someone sitting there blankly.” Further discussion leads to defensiveness or more awkward silence. Finally, the meeting is over. Both manager and employee part ways and breathe a sigh of relief. What, exactly, has been accomplished?

“Feedback is very difficult for people to deliver and it’s even harder for people to receive,” Karsh states Steven Stosny, Ph D , founder of CompassionPower and author of “Soar Above,” notes that feedback often fails because it’s based on criticism, which calls for submission and makes people feel devalued The human drive for autonomy makes submission to others unpleasant, even when warranted Of course, no one enjoys feeling devalued, and the instinctive response is to argue for one ’ s value, defending against criticism rather than accepting it passively

“A big part of the problem is that we have not been socialized to have these conversations,” states communication expert Gregory Tall “We’re not comfortable, so we avoid them A lot of issues start with that avoidance ”

Feedback is often delayed until it can’t be avoided Then an already on-edge employee reacts defensively, a stressed manager feels resentful of the whole process, and nothing actually changes It’s no wonder many of us would drop feedback altogether if we could

Here’s where things get trickier: “Nine out of 10 people want the feedback,” Tall affirms “If there’s something they can do differently to be more successful, they want someone to tell them ” What employees don’t want is meaningless criticism or micromanagement, which engenders a back-and-forth of defensiveness and frustration

Too little, too late

Typical feedback provides too little: it is vague or generic, too specific for application, or too focused on managerial preference rather than meaningful change Employees don’t know how to respond to directives like “You need to be better at interpersonal relationships in the office,” or “You were too harsh in this one client email ” Instructing a direct report to “have a more positive attitude in meetings” sounds nice but overlooks two essential points: First, why does it matter? And second, how will anyone know when it’s been accomplished?

Feedback also fails on timing: Annual reviews present feedback weeks or months after an incident has occurred Directives become retroactive rather than proactive, bringing up behavioral issues too far in the past to be relevant The employee leaves with the justifiable sensation of having been kept in the dark

“Just-in-time feedback is important,” Karsh says “It’s not helpful to say, ‘Hey, remember that meeting we had months ago? You said that one thing Don’t say that thing again ’”

Removing resistance

Some essentials must change to make feedback welcome and effective: timing, delivery, and support

Stosny points out a key to making feedback work: Humans like to cooperate “Partnership is a big part of successful feedback,” Tall adds If supervisors offer feedback in a way that asks for cooperation rather than submission there can be better conversations, creative solutions, and effective behavior change In the long term, building an organization with a culture of cooperation rather than an authoritarian lead-and-follow hierarchy leads to more autonomous and happier employees This doesn’t mean that organizations must dismantle their hierarchy, only that leaders seek to establish their leadership through relationship rather than rule “It’s acting more as a coach,” Karsh suggests

In general, more feedback is also better But this doesn’t mean a more detailed quarterly review It means giving feedback more often, even daily Karsh calls it “just-in-time feedback”: When the undesired behavior occurs, address it immediately, or as soon as possible after The moment is now, always now Don’t wait for a prescheduled meeting In fact, there’s no need to make a meeting out of it in most cases The key is conversation When you ’ re delivering help in the moment, or immediately after, feedback is much easier to deliver and to receive ”

“Aim for simplicity,” Tall advises “You don’t need graphs and charts ” Ensure that there’s adequate privacy and say what needs to be said Immediacy has benefits for everyone: employees aren’t left wondering how many unspoken mistakes are hanging over them; supervisors aren’t carrying a laundry list of frustrations and corrections Further, it’s easier to measure feedback efficacy: Does the behavior change, or does it repeat? You might not know today, but you will know by tomorrow

Tall also recommends customizing how often feedback is delivered Employees of the millennial generation prefer feedback on a daily or near-daily basis Others, particularly those from Gen X or prior, prefer a hands-off approach: Let them know if there’s a mistake or an incident to correct, otherwise leave them to the work “Managers need to pay attention to their employees and where they fit on this spectrum,” Tall advises “When the communicator considers what’s going to work best for the other person, everything works better ”

Karsh subscribes to monthly sessions of informal feedback “No forms, no numbers, nothing even needs to be written,” he says Sit down and talk about how things are going Ask questions “These are the conversations that create a culture of feedback,” Karsh states

And does it really take too much time to customize one ’ s feedback approach for each employee? “It’s a choice between prevention and treatment,” Tall suggests “You invest time up-front to be thoughtful and intentional about what’s going to work well for your people Or you let things deteriorate into turmoil and deal with it then ” Prevention is less painful and time-consuming than dealing with an escalated, emotional situation Urgency adds both stress and complication On the other hand, proactive, customized feedback allows small incidents to remain small

Delivery without drama

The now-infamous “feedback sandwich” approach smushing a negative between two positives is too well-known (and universally disliked) to be respected or effective Frameworks inevitably become formulaic Pulling a ho-hum framework out of the supervisorial pocket sends a clear message: Dear Employee, I need you to change, but you ’ re not worth my individual attention It’s difficult for employees to hear anything else over the noise of nonchalance

The ideal feedback framework is no framework Instead, managers can rely on values of honesty, respect, and cooperation to guide them through each situation Honesty is essential, as there’s no trust in a relationship without it “We need to be more direct when we deliver feedback,” Karsh encourages “Avoid weak words You can be both assertive and nice When we deliver feedback in a passive, indirect way, it leads to miscommunication and frustration ” The value of respect helps leaders to keep their own egos in check, and to choose carefully what merits feedback and what does not “As a leader, you have to be objective,” Karsh continues “Am I giving feedback because I want them to do something the way I do it, or am I giving feedback because fundamentally there’s a mistake or behavior needs to change?”

Tall uses a simple formula to evaluate what needs to be communicated: “Expectations minus actual outcomes equals feedback,” he explains “If the result is as expected, we finish with zero feedback needed and move to praise or recognition But if the results fall short of the expectations, we have a deficit ” It’s good to create a set of criteria to help anyone in a managerial role determine what should be addressed Depending on how important something feels in the moment is the downfall of the immediacy approach Immediacy can become an excuse for unnecessary urgency; objective criteria provide a counterbalance “Specificity is so important We don’t want to waste our time on things that don’t matter,” Tall adds

Support systems

A culture of open, ongoing feedback must be supported from the top or it won’t last, Karsh says Leaders can demonstrate their commitment by asking to receive as well as give feedback Specific requests will help when employees are reticent: “Tell me three things I could improve in meetings” is more likely to get a response than “Let me know if you have any suggestions about my leadership style ”

Of course, anyone delivering feedback must also learn to anticipate defensiveness Karsh prescribes a slow approach “Do a little bit more listening as opposed to a little bit more talking,” he says “You want to find out their perspective on things ” Take an inquirybased approach The point is to get to the core, the reason for defensiveness; once that’s done, future moments of feedback become easier

In the end, feedback that’s delivered well but instigates no change is as useless as too little, too late feedback “The ultimate proof as to whether the feedback got through is whether the behavior changes,” Karsh says Leaders who commit to delivering feedback that can be measured specifically and objectively via adjusted behavior create a safeguard against micromanagement and preferential directives Focusing on feedback that gets desired results frees everyone to focus on what matters “It feels great to get feedback with a specific thing you can track, then improve, and see yourself becoming better,” Karsh states “That’s a victory for everyone ”