Wilting Flowers At “Growers Network” Perturbed By Clarity, Directness & Informed Opinion

Before we get on to the article, a little background.

Jordan Zoot has been providing feedback on a number of complicated  accountancy and regulation issues , with regard to California, on the Growers Network forum.

This week he was given his marching orders with some classic west coast passive aggressive language and semantics . The long and short of it being, “we respect your opinion.. but we don’t really want it…. if you still want to contribute we will moderate you so as not to upset anyone”

Storm in a teacup: well, maybe?

But it all  digs into a deeper well and begs the question, how much advice out there can be considered concrete?

It’s hard enough in the regulated CA cannabis market  with the sands of regulation constantly shifting and we’d suggest now is the time to be as clear as a bell otherwise further down the line some people are going to suffer in the courts because of misplaced and even bad advice.

And.. we can be pretty sure it’ll be the client not the “advisor” who’ll be out of pocket at the end of the day.


Jordan writes…

Muzzled By GrowersNetwork

Muzzled By GrowersNetwork – yep can anyone imagine anyone having a reason to put a muzzle on yours truly?

Well, Hunter Wilson at GrowersNetwork.Org found a reason…and we aren’t even going to have the extended debate…their website, their TOS, their rules, fair enough.

We think its much more effective to lets some examples speak for themselves.

[The examples contained in this post are an unedited word for word copies of what had been posted.]

It is truly too bad, they have a great core group of members that certainly got substantial benefit out of our contributions. They just don’t appreciate it when garbage is identified as garbage…even when they privately acknowledge it themselves.

Not going to debate my being abrasive..hell my Facebook profile uses the exact description that a client used to describe me.

“The attention span of a small sea animal, the spirituality of a cobra, the gravitas of a belt sander”

So.. what am i talking about..

First Example –https://forum.growersnetwork.org/t/cannabis-is-a-controversial-sector-for-captive-insurance-professionals/13696– my post which was called out to the moderators.

My post “verbatim”

Gentlemen: We have had this conversation a couple of times before…everyone isn’t going to always agree when it comes to technical subjects…but I will continue to draw the line when I read is clearly misinformation and NONSENSE.

BUNK…There are plenty of options available in some markets, [once again, I will speak about the California market] where we have substantial knowledge. There are plenty of legal licenses cannabis businesses in California, several of which are our clients that have paid their insurance premiums within the last six weeks WITH US CURRENCY otherwise known as cash. An assertion otherwise is NONSENSE. The reference to “Anti-Money Regulations” is NONSENSE.

After the nullification of the Cole Memorandum, FinCEN specifically, indicated that the FinCEN Guidance [BSA Expectations Regarding Marijuana-Related Businesses FIN-2014-G001 1, was still in effect, and banks were expected to comply with its compliance procedures, including continuing due diligence and the filing of the three special categories of marijuana-related SARs.

To summarize the FinCEN Guidance, a bank providing deposit or lending services to a cannabis business must conduct certain due diligence concerning the business, which includes:

  • Verifying with the appropriate state authorities whether the business is duly licensed and registered;
  • Reviewing the license application (and related documentation) submitted by the business for obtaining a state license to operate its marijuana-related business;
  • Requesting from state licensing and enforcement authorities available information about the business and related parties;
  • Developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served ( e.g. , medical versus recreational customers);
  • Conducting ongoing monitoring of publicly available sources for adverse information about the business and related parties;
  • Conducting ongoing monitoring for suspicious activity, including for any of the red flags described in the FinCEN Guidance or the Cole Memorandum; aand
  • Updating due diligence information on a periodic basis and commensurate with the risk.

A bank must also determine whether a cannabis business violates state law or implicates one of the Cole Memorandum’s priorities, which include:

  • Preventing the distribution of marijuana to minors;
  • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;
  • Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  • Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
  • Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
  • Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
  • Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
  • Preventing marijuana possession or use on federal property.

If the due diligence identifies state illegality or if the business conflicts with a Cole Memorandum priority, as noted above, the FinCEN Guidance requires that a bank file a SAR detailing the possible illegal conduct. If not, a bank providing deposit or lending services to a cannabis business must file a SAR notifying FinCEN that the bank is conducting banking business with a cannabis-related entity that is operating in accordance with state law.

The California Insurance Commissioner, David Jones has stated “**_

Our mission remains insurance protection for all Californians, which includes insurance for California’s legalized cannabis businesses and customers. We encourage more insurance companies to file cannabis business insurance products with the department to meet the needs of this emerging market,” .


Read it again, that is a very clear message, and the California Dept. of Insurance posted a list of brokers that are active in the commercial insurance market for cannabis in California less than two weeks ago. It is right here. *Cannabis Insurance List – Updated 8/3/18

I can bet what will follow about “what does a CPA know about insurance, yadda, yadda, yadda”. However, for those of you that know me…feel free to describe me as abrasive…I don’t think anyone will describe me as stupid.

Let’s try NOT to perpetuate myths, and stick to discussing facts that can verify. The notion that wire transfers are rarely used is a wonderful example of a complete disconnect from commercial reality. There is no magic, there are now “Insurance wizards out there”, time to get over it and stick to real life practical solutions.

Hunter’s comment on the post

The following is from First Merchant Bank’s own website.We will let that speak for itself and readers can draw their own conclusions.

First Merchant Bank Card Services – All Rights Reserved. FMBCS is a non-bank representative of banking and processing partners, does not have a banking license and is not supervised by any national or international banking regulatory agency. 



Secondly,  we have the discussion about IRC Sec. 280E


We have two observations on the post from Denali Accountants.

  • It was PLAGIARIZED 100% from a post by Derek Davis from California Cannabis CPA and you can see that here 1.

Here is the link to the post that is was plagiarized from https://www.californiacannabiscpa.com/blog/marijuana-business-cost-of-goods-sold-cogs-overview 

We can accept a mistake like that every once in a while, and Carole of their office took it in stride and acknowledged the mistake. Thank you, Carole, for doing the right thing. 

Finally, we published [which the site appears to have deleteded]

How to Offer An Investment Opportunity and Get Slapped With A Lawsuit


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