A New Leaf: Students Break Down the Cannabis Industry

What kind of class needs a disclaimer in the syllabus?

For an undergraduate course analyzing the cannabis industry, Clinical Professor of Accounting Stacy Kline, CPA, thought it was best to set the tone from the start.

“To me, it was important to get students into the mindset that this is a touchy topic, and we’re going to approach this from a professional standpoint,” Kline said.

Emerging Industry Analysis: Cannabis: Challenges & Opportunities (ACCTFIN 480), a special topics class offered this summer by the Accounting and Finance departments, attracted students curious about the topic and others intrigued by the dual-department, cross-disciplinary approach. Students honed their research, writing and presentation skills in assembling a group project on topics ranging from consumer perceptions of cannabis legalization and product marketing to the impact of legalization on tax revenues and the black market.

Throughout the course, students heard from guest speakers who have been on the leading edge as legalization has spread: analysts from Deloitte’s Canadian cannabis practice, including practice founder Jennifer Lee; accountants from Citrin Cooperman, which has advised cannabis businesses in states where medical or recreational use has been legalized; and Associate Professor of Accounting Curtis Hall, who recently published an analysis of audit fees in states where cannabis has been legalized.

Kline and her co-teacher for the course, Assistant Clinical Professor of Finance Bradford Sodowick, MD, MBA, developed the class as part of LeBow’s ongoing College Research and Curriculum Innovation (CRCI) initiative, a strategic effort to assess and re-envision LeBow curricula.

“There’s no textbook for this,” Sodowick said. “We’re really breaking down silos to model the business.”

Because cannabis is still criminalized at a federal level, businesses face unique challenges, including operating on a cash basis and complying with strict regulations, Kline said. In each class and in their research throughout the term, students explored how these businesses and the firms that work with them — accounting firms, consulting firms and others — navigate the regulatory environment, as well as the potential for existing cannabis companies to expand as additional states move toward legalization.

Carson Bailer, a senior majoring in economics and finance, said the opportunity to explore an industry at such an early stage was too good to pass up.

“So many new industries flame out over their first few years of existence, and I don’t think that cannabis will be one of those,” Bailer said. “I really wanted to learn about how experts view individual firms and also explore the social aspects of legalization and how prohibition has harmed so many communities in this country.”

What does the future of the legalized cannabis industry look like? Judging by the course’s case studies and guest speakers, look north for the answer: Canada legalized marijuana for recreational use in 2018. According to Rishi Malkani, a guest speaker who’s cannabis practice leader with Deloitte Consulting in Toronto, cannabis companies in Canada, with an eye to future growth, began ramping up years earlier, and the industry is now entering a transition phase with numerous mergers and acquisitions.

Vanessa Stoltzfus, a senior majoring in economics and finance, had only taken basic accounting courses prior to this one but was excited by the multidisciplinary approach and the opportunity to explore complex business topics in greater depth. “The course really exceeded my expectations because I loved the research component,” she said. “That’s what I was seeking in taking a special topics course.”

Kline and Sodowick plan to offer the course again in the winter 2021 term, and to adapt it to address other emerging industries in the future.