Cannabis Industry Accounting and Appraisal Guide, 2nd edition

May 2023 Hardcover, PDF (340 pages)

Brenda Clarke, Ron Seigneur, Stacey Udell

With the Second Edition of The Cannabis Industry Accounting and Appraisal Guide, authors Stacey Udell, Ron Seigneur and Brenda Clarke, distill their wealth of experience into over 340 pages of must-read insights, for anyone involved in this fascinating, rapidly evolving industry sector, including bookkeepers and accountants, lawyers, management and ownership and other advisors.   From inventory accounting nuances in cannabis, to tax planning and compliance under IRC 280E, to cannabis appraisal and economic damages, this book provides useful insights with pointers on where to find more in depth information and resources.  The book provides a framework for evaluating risk in cannabis investments and a sample sanitized appraisal report for an Oregon based dispensary.

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The Cannabis Industry Accounting and Appraisal Guide, 2nd edition Includes:

  • Summaries of 17 landmark marijuana court cases
  • Sample risk assessment framework and appraisal report tailored to the unique demands of the cannabis industry
  • A robust library of industry trade groups, on-line resources, education and conferences

About The Authors

CHAPTER 1: What is Cannabis?

Hemp and CBD. 

CHAPTER 2: History and Regulation of Cannabis 

History of Federal Cannabis Regulation 
Department of Justice.
Recent Cannabis Reform Efforts
State Regulation of Cannabis 

CHAPTER 3: Why is the Cannabis Industry so Hot Today? 

The Need for Private Investors 
Cannabis Enters Mainstream Financial Markets 
Industry Challenge: A Changing Regulatory Environment 
It’s Not All Rosy: Words of Wisdom Moving Forward 

CHAPTER 4: Exploring Entity Structure Options  

Sole Proprietorships 
Limited Liability Companies 
Corporations (C Corporations) 
S Corporations
Use of Multiple Entities

CHAPTER 5: Accounting and Bookkeeping Fundamentals

Accounting Methods 
Accounting Principles and Concepts 
Accounting Basics 
Financial Statements  
Cash Policies and Internal Controls 
Accounting Related Software 
Seed to Sale Software  
Payroll Provider Considerations 

CHAPTER 6: Advanced Accounting Topics  

Accounting for Inventory 
Cost Accounting
Standard Costing 
Methods Used to Charge Inventory to Cost of Sales 
Non-Financial Data for Accurate Cost Accounting 
What Does it Cost to Manufacture a Product? 
Risk Assessment in the Cannabis Industry. 
Revenue Recognition 
Internal Control Challenges in the Cannabis Industry  
Information and Communication  

CHAPTER 7: The Complicated World of Cannabis Taxation 

Qualified Business Income Deduction   
IRC Section 471. 
IRC Section 280E 
States and IRC Section 280E. 
IRC Section 263A 
Cannabis Specific Issues. 
Filing a Protective Claim for Refund 
IRS  Audit  Risk. 
IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business 
IRS Form 3115, Application for Change in Accounting Method  
IRS Form 8275, Disclosure Statement 
IRS Form 843, Claim for Refund and Request for Abatement 
Sales and Excise Taxes 
Court Cases Related to IRC Section 280E 

CHAPTER 8: The Approaches and Methods of Valuing a Cannabis Business 

Asset (or Cost) Approaches 
Income Approaches 
Market Approaches 


CHAPTER 9: Market Multiples in the Cannabis Industry 

Deal Structure 
Public Cannabis Company Market Multiples 
Private Cannabis Company Market Multiples 

CHAPTER 10: Startup and Pre-Revenue Valuation in the Cannabis Industry 

Investment Vehicles 
Capitalization (Cap) Tables 

CHAPTER 11: Valuation Reports 

Types of Valuation Reports  
The Typical Components of a Valuation Report 

CHAPTER 12: Unique Issues in Cannabis Appraisal 

Cannabis is Federally Illegal 
Small Business Administration (SBA) 
Extraordinary Tax Burdens. 
Dynamic Industry Change 
Municipal Challenges. 
Reliance on Prospective Information 
Overall Risk Assessment 

CHAPTER 13: Lost Profits 

Lost Profits. 
Economic Damages 
Forensic Considerations 

APPENDIX A: “Must See” Documents  

APPENDIX B: Landmark Court Case Summaries 

Alpenglow Botanicals, LLC v. USA 
Laurel Alterman and William A. Gibbons v. Commission of Internal Revenue 
Alternative Health Care Advocates v. Commissioner of Internal Revenue. 
Jason R. Beck v. Commission of Internal Revenue 
Canna Care, Inc. v. Commissioner of Internal Revenue 
Californians Helping to Alleviate Medical Problems, Inc. (“CHAMP”) v. Commissioner of Internal Revenue 
Jeff rey Edmondson v. Commissioner of Internal Revenue 
Feinberg v. Commissioner of Internal Revenue 
William Franklin v. Commissioner 
Alberto Gonzales, Attorney General, et al. v. Angel McClary Raich, et al. 
Green Solution Retail v. United States 
Loughman vs. Commissioner of Internal Revenue 
Dharminder Mann v. Sara Gullickson 
Northern California Small Business Assistants Inc. (“NCBSA”) v. Commissioner of Internal Revenue 
Olive (“Olive”) v. Commissioner of Internal Revenue 
Richmond Patients Group (“RPG”) v. Commissioner of Internal Revenue. 
Standing Akimbo, Inc. v. United States 

APPENDIX C: Sample Chart of Accounts 

APPENDIX D: Sample Request for Documentation. 

APPENDIX E: Sample Risk Assessment Analysis 

APPENDIX F: Sample Report  

APPENDIX G: Finding a Qualified Valuation Analyst 

Interview Questions 

APPENDIX H: Top Resources for Cannabis Industry Information  

Conferences and Events 
Market and Industry Research Reports 
Online Sources and Newsletters - General. 
Online Source and Newsletters – Business
and Investing 
Organizations (Federal) 
Cannabis Books 
Valuation Books 

APPENDIX I: Banking and Financial Resources for the Cannabis Industry 

Merchant Services 


“This book is an essential tool for every C Suite executive in the US Cannabis Industry – not just accounting and legal.  If you want to be fully prepared for the ever-changing landscape and structure of the US’s fastest growing sector – this book must be on your desk.  Personally, the first version prepared me for new CEO and Chairman roles and the volatility of the cannabis capital markets.  Now that we are seeing many young professionals transition to cannabis or a student starting their career in our industry - I highly recommend this book as a cornerstone of their learning.”

Ross Bevevino
Chairman & CEO
Mollitiam New Jersey LLC


“From entity selection to fundraising to tax and accounting to valuation, The Cannabis Industry and Appraisal Guide is a useful and easy to read “must have” reference for those interested in the cannabis industry. Take it from someone who has been in the cannabis industry over ten years.”

Tony Gallo
Managing Partner
Sapphire Risk Advisory Group

“I am a licensed attorney who spends more than 75% of his practice on cannabis law: from helping companies obtain licenses to operate cannabis businesses in State’s where it is legal to facilitating nine-figure sales transactions to participating in the inevitable rising crescendo of shareholder oppression lawsuits. With the plethora of issues that arise in this burgeoning industry, I always have the Cannabis Industry Accounting and Appraisal Guide within arms-reach. It is my go-to source whenever I need to educate a client on; reliable methods of appraising the value of a cannabis company, options to consider when deciding how to structure a development-stage cannabis enterprise, or accounting methods to consider. I would recommend this book to anyone considering becoming involved in the growing United States legal cannabis industry.”

Fruqan Mouzon, Esq.
Fox Rothschild LLP

"Anyone involved and especially new to the cannabis sector should have a copy of The Cannabis Industry Accounting and Appraisal Guide in their collection. In addition to covering accounting-related topics, it offers helpful information and resources on subjects unrelated to accounting, such as the industry's history, what makes it unique, and banking, all in an accessible way. It’s a go-to resource as I interact with clients."

Marshall Ogen
VP of Business Strategy
Cannabis BPO

"Navigating the cannabis industry is like swimming with sharks. You have to know unique local, state, and national regulations. You have to ensure that your business is compliant at every turn. And one of the best ways to do this is to invest in a copy of The Cannabis Industry Accounting and Appraisal Guide. Be safe out there and rely on the expert advice of Seigneur, Clarke, and Udell."

Rob Mejia
Teaching Specialist
Stockton University, Cannabis Studies