Cannabis lawyers and cannabis CPAs are two important players in the marijuana industry, but what’s the difference between how they define liability? Understanding the nuances of liability in the cannabis industry is key to understanding how to manage risk and ensure the success of any cannabis-related business.
Cannabis lawyers and CPAs are both responsible for helping businesses understand the complexities of the cannabis industry and navigating the legal and financial aspects. But while they both have similar goals, they each have a unique approach to defining and managing liability. Cannabis lawyers often focus on the legal implications of liability, while cannabis CPAs are more concerned with the financial implications. Understanding the difference between the two can help businesses better assess and manage liability in the cannabis industry.
Here's an overview of the differences with Indiva COO Katye Maxson-Landis:
How lawyers and CPAs look at liability is incredibly important for business owners to understand. As a business owner, you want a lawyer and a CPA (or a lawyer group and a CPA accounting group) that are going to shake hands on this issue of liability, because lawyers and accountants define liability really differently.
Lawyers are looking at your personal liability or your legal liability when it comes to contracts or when it comes to losing assets. When it comes to litigation, a cannabis CPA is looking at liability from the standpoint of tax: how much money do you owe at the end of the day, at the end of the year, at the end of the quarter? How can I help you be able to smooth your cash flow so there is not a surprising bill at tax time.
Again, many regular business people don't consider taxes on a day-to-day basis. 280E is a tax code that will not allow you to deduct some of the expenses you might spend on a daily basis. It really requires you to consider liability all the time.
So legal liability is important. Unilaterally, tax liability, and how tax liability attaches to either individuals or businesses is is something that owners need to know because that comes from how you select your entity, it comes from how risk adverse you are to this industry or to having liability, or how comfortable you feel with charging into the unknown and really being able to be a trailblazer in this space.
There's room for everyone at all liability levels and liability tolerance levels in the industry. But it requires really educating yourself more based on how you feel about that particular word.
A Cannabis CPA That Understands Liability
There are many things that can impact liability and can contribute to a business facing some form of bankruptcy or insolvency – but this is a good starting point. When you’re starting out, seek legal and financial guidance to help you maintain your business and build it into a successful, sustainable enterprise.
As a business owner, you are responsible for ensuring that your operations are conducted in a way that protects other people, their assets, and their businesses. As such, it’s important to take stock of your operations and to take steps to identify and mitigate any potential liabilities that may arise.
Through its financial advisors, Indiva brings together a team of industry experts who can help answer key questions and guide your business through the intricacies of the cannabis industry. If you’re interested in learning more about how to protect your business from liability, reach out to one of our trusted representatives.