The CFO is potentially the most important leadership role in your cannabis business – make sure the person you hire is equipped to work in this industry.
- CFO is the point-person for all financial reporting, including reports to your board of directors, as well as to outside parties like your investors.
- As someone who oversees tax preparation, this person must be very familiar with the 280e and COGS deductions.
- Look for an expert who not only has rigorous financial credentials, but experience working in this restrictive industry.
Speak to one of our experts to learn how to outsource your CFO role.
The Chief Financial Officer role is one of the most important positions in your cannabis company. There are many irregular overhead expenses to keep track of, and being compliant with the 280e regulation can be a full-time job. Here’s what to look for in finding a person to keep tabs on the finances of your cannabis company.
What does a cannabis CFO do?
The CFO is charge of overseeing the executive accounting functions. Essentially, this person determines if your cannabis company is on track with their profit and losses, balance sheets, and cash flow. They review the numbers for accuracy, detail, and to help inform any changes that need to be made to the business’s operations.
This person is also responsible for overseeing the financial processes and setting up internal controls to keep your company compliant with state regulations and investor expectations. The CFO should handle cash flow, and be able to ensure there is enough money to cover operating costs. In addition, they need to be sure that systems are protected against fraud or inventory shrinkage. Some of the internal controls might include:
- Processes for handling, recording, and using money
- Processes and systems for recording inventory
- Processes and systems for recording transactions and other financial information
The CFO is the point-person for all financial reporting, including reports to internal management (a board of directors, and your staff) and to outside parties (lenders, investors, etc.). They can also take the lead on raising capital and negotiating debt with reasonable interest rates. The CFO must be involved in developing KPIs for the company, such as average transaction size and average number of customers per day.
Lastly, and most importantly, the CFO oversees tax preparation. They need to provide the necessary documentation, meet deadlines, oversee and understand the complex process, and be very familiar with the 280e and COGS deductions.
What to look for in a cannabis CFO
Obviously, this is an important role – and it’s critical to find the right person who can bring rigorous financial credentials to help your cannabis company succeed. To vet a CFO, follow these steps:
- Look to posting the position on job platforms such as Indeed or Glassdoor. You could also contact a recruiting agency or a headhunter who could find a more qualified candidate that meets your requirements since they do initial screening and interviews for you.
- Do your due diligence by checking applicants’ resumes. What is the prospective CFO’s educational background and work history? You should look for someone with at least 3 years of experience so your CFO is not learning at your expense.
- During the interview, ask for deeper information about their project and work experience. A CFO should be able to talk confidently about the work she or he has done in a management role specifically.
- Present a situation your cannabis company is currently facing to the prospective CFO and see what their insight into the matter is.
- How knowledgeable is this person about finance and the cannabis industry? The questions they ask you can be very revealing – spend some time at the end of the interview letting them ask whatever they want.
Keep in mind: the level of involvement of a CFO in a company is dependent on the size of the company. Different entity sizes have different needs. In a smaller company such as a start-up, the CFO might do everything related to financials and accounting. In a big company, the CFO may have an accounting team, a bookkeeping team, and a treasurer who report to him or her.
Read more about hiring the best employees for your cannabis company, and get in touch with our accounting experts for more advice.