Expert business analysis and accounting services are vital when launching and scaling a business, especially in the cannabis industry.

We recently asked Kenneth about money management in the cannabis space and how Equibis works to help small businesses navigate potential financial pitfalls and find success even without enormous backing capital. This Q&A also covers the biggest challenges facing cannabis industry startups, Kenneth’s work to facilitate diversity in the cannabis space, the unique financial challenges for social equity entrepreneurs and others from underserved communities, his best advice for cannabis startups, and more.

Scroll down to read the full interview!


Ganjapreneur: After years of experience in finance and accounting, what drew you to working with cannabis entrepreneurs?

Kenneth Mason: I think what you will find with a lot of folks is our personal connections. I’ve had family locked up, family caught in violence surrounding the cannabis. My first time consuming was at about 12/13. I grew up on the south side of Chicago and quite honestly weed has always been a part of everyday living. Going through school and eventually becoming a CPA, I left the world of auditing to start my own business work with small businesses in what I call underserved communities. Most of the companies do not have access to high level CFOs and strategic business advisors. So my heart became set on providing this type of impact on these businesses from communities that I grew up in. As I became more cemented in the community, I began joining social justice initiatives surrounding cannabis. and I quickly saw a need from a business perspective. I immediately began doing my research, learninig, and helping out cannabis companies that I eventually built relationships with.

What is the biggest challenge facing cannabis businesses when it comes to accounting and finance?

By now, I imagine everyone knows that my significant hurdle is 280e. It’s a part of the Internal Revenue Tax Code. To sum it up as simply as possible, a cannabis company cannot take any tax deductions from their gross income. Quick example of how devastating this tax code is. Say a company brings in $100,000 in revenue and has expenses of $99,000 from paying for rent, marketing, employees like an office manager, etc. You only have $1,000 in profit. The IRS says you cannot deduct marketing, certain salaries, etc because cannabis is still a federally illegal drug. The average business gets taxed on the $1,000 profit whereas the cannabis company can easily get taxed on an amount closer to the $100,000 of revenue it brought in. How can a business pay 25% percent on $100,000 which is $25,000 when they only made $1,000 in profit?

For a cannabis startup, how does the experience of working with Equibis differ from working with other accounting services?

Most accounting firms give you the basic bookkeeping and tax work. Some provide audit services. Those are things you are required to have. But, the reality is that getting your taxes done for you at the end of the year won’t make your business successful. It won’t help you reach your financial goals or create a financial plan. What makes Equibis stand out is our focus on guiding your business every step of the way to reaching your revenue goals, profit goals, short term and long term planning goals and much more. I often ask new startups, how much cash do you plan to have by the end of next month? Next year? I have yet to get an actual answer. We don’t simply look at what happened last year or last month. The value we provide comes from our ability to plan for the future, to show you where your business is headed as of right now and what needs to happen in order to be more successful next month. By looking ahead we are also able to avoid the hair on fire crisis mode that most businesses operate with. When my team is able to show you, “Hey two months from now we’re projecting the business to have negative cash flow, let’s push the purchase of the new machine a couple of weeks when we’d have more cash come it”, we help keep the doors open.

Do you serve clients in other markets and regions, or do you primarily stay local to Chicago/Illinois?

Equibis is a 100% virtual firm. We serve nation-wide. We do, however, like to pop in a couple times a year, that’s always fun.

What is the “profit-first model” and how does it play into the services that Equibis offers?

The goal of every business is to be profitable. Every business owner deserves to have their business take care of them financially. So, profit is typically our main priority. It’s simple really. If you aren’t profitable, the business fails. So we help make business decisions with the perspective of how it affects short term and long term profitability.

What are some of the services you offer to underserved communities, and how did this become part of the Equibis mission?

Most of these businesses cannot afford a CFO that can easily run up to $100k to $200k a year. We provide a lot of the services you would typically find with a corporate CFO. We lead the finance department. We look at pricing strategy, cost analysis, employee performance plans, tax planning, employee benefits, all of these things and make sure it’s done correctly and also in a way that the company is still profitable today and tomorrow.

Why is it essential for social equity applicants and other underserved small businesses in the cannabis industry to have financial representation?

Many people start businesses or get into the cannabis industry because of their passions for these things. Unfortunately, passion isn’t enough to run a successful business. Having a company that understand many of the struggles you will face not only from a business perspective but a social and a personal perspective, allows you to work with people you can trust.

Do the financial challenges facing social equity applicants differ from those facing MSOs and other larger operators?

In short yes, most social equity applicants do not have the capital to fund their ventures on their own. I believe that’s why you see the different states attempting to pass bills that would support these applicants financially and operationally. It’s no question social equity applicants deserve many seats at the table, but they also deserve the support to sustain those positions. Large operators have the funding to not only finance their ventures, but to also survive unforeseen events like a pandemic or waiting for licenses to be given. An example is in Illinois. Social equity applicants who did not have as much capital struggled with paying to hold their place on a lease in hopes of acquiring a license that the state had withheld for a year.

Are cannabis businesses at higher risk of being audited? How does working with Equibis lower this risk and/or help in the case of an audit?

Absolutely. An article came out from the IRS blatantly saying increased focus on auditing the cannabis industry is a better use of time because of the higher rate of these audits uncovering issues. It’s complicated. So we not only make sure cannabis companies are properly filing and paying their taxes, but that they are 100% audit ready. Part of working with us means that we set processes in place to cover our butts during any audit. What this also does is take away the stress from the owners. It ends us being passed audits with less involvement from the owners.

What are some of the additional benefits, beyond preparedness and avoiding costly mistakes, that cannabis startups can get out of a partnership with a financial advisor?

You will have a well-thought-out, structured plan on how to achieve all of your business goals and ultimately your goals for your life.

What are some common financial mistakes you see in the industry and how should cannabis companies address them?

Some common financial mistakes I see often are not having good standard operating procedures for cash or having a plan for how money moves within the company. With the standard operating procedures for cash, it’s critical to have good policies and procedures in place for prevention of theft, fraud and for being able to know where every single dollar is at all times. As far as the cash planning/management, smaller companies are not taking the necessary steps to be able to look at their cash position and say “this money is set aside for bills for the month, this amount is going to taxes, this for payroll, this is going to additional inventory. And at the end of the month, our cash balance should be $XXX”. They are spending without tracking and without having an idea of what type of position they’ll be in, in the future.

What’s your advice for entrepreneurs who are launching their first cannabis start-up?

Get your A team together, and make sure to have people with the skills to cover every important area of the business from compliance to finance to people management. Also, make it a priority to systematize and document everything as much as possible. Improving the system of how you operate and documenting it so that it is easily repeatable is necessary to scale and grow your business.


Thanks again, Kenneth, for answering our questions and sharing your expertise! To learn more about Kenneth Mason or Equibis, visit EquibisAccounting.com.











Cannabis Industry



Ganjapreneur interviews cannabis industry business leaders, activists, and experts who have useful insights to share. If you know of somebody we should interview, please don’t hesitate to let us know.