We recently spoke with Eric Altstadter the Audit Partner Partner at Eisner Advisory Group LLC and Chair of the firm’s Cannabis and Hemp practice within the Manufacturing and Distribution Group.
With over 30 years of experience working with public companies and privately held businesses throughout the country, he has assisted his clients through the complex financial reporting and compliance issues associated with the filing of registration statements with the Securities and Exchange Commission (SEC) and raising capital
Eric is also a frequent speaker on accounting, auditing, and business topics. Actively involved in cannabis industry events he was recently named an amNewYorkMetro Cannabis Industry power Player.
Eric, first up for our readers could you give us a little bit of background about Eisner Amper. How old is the firm? Where are you based and what is the main focus of the firm’s work?
We’d love to learn a little more about your professional career too.
How long have you worked at the firm, and what was your background prior to Eisner?
I have now been at EisnerAmper for more than 16 years and currently chair the firm’s Cannabis and Hemp Group.
In addition to my work in that sector, I have also worked extensively with companies raising capital via public markets or privately.
There is some rather difficult accounting related to capital raising. Before EisnerAmper, I worked at a large regional firm (Goldstein Golub Kessler, which became part of RSM) for 19 years, also focusing on companies that were raising capital.
Dating back to the 1960s the firms of Eisner and Amper, Politziner & Mattia merged in 2010 to form EisnerAmper.
EisnerAmper now has more than 2,200 employees and 200 partners globally. Our clients are diverse and include sophisticated financial institutions, large public companies, middle-market enterprises, entrepreneurial startups, high-net-worth individuals, family offices and nonprofits.
We are also part of Allinial Global, which helps us service our clients internationally as Allinial Global has affiliations in 60-plus countries.
You appear in the main to provide SEC, tax, and audit advice.
How long have you been doing this in the cannabis industry and has the work you do taken you countrywide or just on the east coast?
Our cannabis and hemp practice serves clients throughout the USA.
In general, we currently do not provide attest work, but our services to the industry include, but are not limited to, tax planning, tax compliance, accounting and bookkeeping, technical accounting advice, and valuation.
We can, in certain circumstances, perform attest services to funds that invest in cannabis companies and on employee benefits plans of cannabis companies.
In your line of consultancy, how difficult has it made things without overall federal legislation?
The lack of federal legislation does limit some of the services we can provide.
We, as a firm, took the approach that without federal legalization, we would not perform attest services. So that means no audits, reviews, or compilations of plant-touching entities. All other services are services, we will consider.
When do you think Washington will finally pass some form of financial / banking bill and do you think it will be a sea change for the industry?
I don’t see it happening for a while.
I initially thought that when the Democratic Party took control of the White House, the Senate and the House, legalization was imminent. It seemed like the Democratic Party, on the whole, was a supporter of legalization.
Now, the midterm elections are around the corner, and the hold on the House and Senate by Democrats is somewhat precarious. And, with the pandemic, the conflict in Europe, and the continued political infighting in the U.S., it seems like there are more important issues on the table than cannabis legalization.
Now that NY has set the wheels in motion for state legislation, what challenges do you see lying ahead, how do you think NY legislation stacks up against other east coast markets NJ, Mass, Maine?
NY legislation is still being written. There has been a lot of talk in NY and NJ about legalization, but nothing is set in stone yet.
NY Governor Hochul has accelerated the state’s plans, which seemed to be slowing down under Governor Cuomo who had pushed for legalization for years.
NY, and for that matter, NJ, have the ability to see what has worked and what hasn’t worked in other states.
One state to take a closer look at is Massachusetts, which legalized adult-use recreational cannabis about six years ago and is close geographically to NY.
The big licensure challenges are who should be eligible to receive a license, taxation, how and how much to tax, how to use the funds, and social equity in trying to make the law just for all while giving those who suffered disproportionally be afforded the opportunity to participate in this new legal industry.
The last 14 months have seen an increasing amount of SEC actions against overreaching cannabis companies and some acting way beyond the realms of the law.
Do you think there has been a natural progression of the SEC, learning to understand the sector and identifying the bad apples combined with the patchwork of state by state regs & the general wild west feel to the industry especially from 2019-2021, or do you think that deeper underlying factors make the cannabis industry “worse” than other sectors of the economy.
I think the SEC is still learning about this industry. In 2021, Ascend Wellness, a vertically integrated multi-state operator that cultivates, manufactures and distributes cannabis packaged goods through their own dispensaries and other licensed dispensarie, had their registration statement declared effective.
This was the first time I remember the SEC letting a cannabis offering proceed.
Now, many special purpose acquisition companies (SPACs) are looking at cannabis companies as acquisition targets. This would allow the cannabis company to go public via SPAC acquisition and registration.
With your experience of the industry so far, how does it stack up?
Cannabis companies are becoming more and more professional. The days of having a few people with no experience start a cannabis company really don’t exist anymore.
The companies today have CPAs, attorneys, and investment bankers as members of management and their boards.
They prepare budgets, compare results to budgets, and make appropriate changes when not achieving their budgets results.
They perform tax planning and do all the things other companies in other industries are doing.
Should cannabis companies be looking at recruiting more professionals, lawyers, CPA’s etc earlier in the game to get on top of compliance issues
Absolutely….. The more professional the organization the more investors will look at them as viable investments.
The systems that are put in place to safeguard the companies’ assets, along with the legal and tax issues being dealt with timely, make cannabis companies look like a more solid investment today than it was yesterday.
What are your hopes for the sector in 2022
My hope was, and continues to be, that federal legalization happens. I hope more and more states move forward on legalizing adult-use recreational cannabis in their states.
This will put pressure on the House and the Senate, and just maybe we’ll see cannabis moved off the list of Schedule 1 drugs.
Thankyou Eric, for taking the time to talk to Cannabis Law Report
Eric can be contacted at