Building financial foundations: Todd Hindrichs of Seed to Sale CFO
When Todd Hindrichs founded Seed to Sale CFO, his mission was clear – help cannabis businesses build strong financial foundations and navigate one of the most complex regulatory environments in modern commerce.
It was a personal experience that first drew Hindrichs to the industry. After seeing a family member finally find relief from chronic pain through medical cannabis, he was inspired not only by the plant’s therapeutic potential but also by the glaring need for financial expertise in the rapidly emerging market.
“Cannabis businesses had great products, great people, maybe a great location, but few had a really great CFO: a trusted, experienced accountant with real industry knowledge to provide them with the information and guidance necessary to create a world class business in every sense of the word,” Hindrichs explained. “The decision to concentrate our efforts on serving the needs of cannabis owners was obvious at that point.”
Seed to Sale CFO was created to fill that void, offering specialized accounting and financial services designed to help cannabis operators thrive despite the unique challenges they face.
Tackling Section 280E and cannabis-specific accounting hurdles
“Sure. I think the obvious answer must be the challenge of finding our clients some form of tax savings despite the presence of IRC § 280E,” Hindrichs said. “You know, everyone’s favorite section of the tax code that prevents cannabis companies from claiming the standard business deductions other types of businesses get to claim. As a result, cannabis companies who are otherwise lawfully operating within their respective states end up with higher effective tax rates. That doesn’t seem like fair treatment given the current situation surrounding cannabis.”
“The challenge for us then is to navigate the rest of the tax code with absolute scrutiny and find other areas where we can save our clients’ money. That’s where it really pays to have an experienced, specialized accountant by your side,” he continued. “Reaping the savings available through these other areas requires thoughtful, robust accounting and, oftentimes changing the way a functional area of a business operates. It’s not just a box you can check and be done. It requires careful planning, meticulous setup, and a long-term commitment to detailed record-keeping in order to stay compliant and really see the benefits. All is possible with the right help.”
“Many companies we see either don’t have a CFO, or their CFO has a limited knowledge of cannabis,” Hindrichs added. “As a result, there’s no one well-equipped to design and implement policies and procedures related to financial management, control, and risk; tasks that typically fall under the purview of a CFO. This actually presents us with a great opportunity to sit down with clients, examine their current structure, identify deficiencies, and devise a strategy for improvement. It’s a challenging process but a satisfying one as it results in a well-informed client who understands and appreciates the importance of having a world-class accounting system.”
From startup to scale
“What do I like most about working in the cannabis space—it’s definitely the people,” Hindrichs said. “This industry is made up of such a diverse group of people, and they all seem to enjoy what they’re doing. I’ve yet to meet anyone in the cannabis industry who doesn’t love their job. Their enthusiasm and energy are infectious. I love being a part of it, and I really like helping them realize their goals.”
“As far as our services are concerned, I’ll try to cover everything,” he continued. “If I miss something, keep in mind that the idea for Seed to Sale CFO came from our desire to provide a comprehensive accounting and financial solution for our clients. So, Seed to Sale represents the Alpha and the Omega, if you will.”
“In the early stages, we assist clients with business planning, structure, and strategy,” Hindrichs explained. “This can often involve recognizing the functional areas of the business and developing policies and procedures to help ensure efficiency and accuracy while mitigating risk. We then set our clients up with a world-class accounting system that accurately tracks their income and expenses while addressing risk, and compliance on multiple levels. An important part of this is the establishment of a virtual data room to facilitate the storage and sharing of a wealth of information that the business will generate in the future. In an effort to provide a comprehensive solution for our clients, we’ve partnered with some of the best service providers in the industry including leading human resources, payroll, and payment processing firms to name a few.”
“With a robust system in place, we then shift our focus to providing our clients with timely, accurate, relevant financial reporting upon which to confidently base their decisions. And who can forget about taxes? From monthly sales tax filings to annual income taxes, we are here to support our clients’ needs.”
Navigating compliance and limited banking access
“Our approach begins from the ground up, establishing an accounting system for our clients that conforms to GAAP, (Generally Accepted Accounting Practices),” Hindrichs said. “As a result, the information produced by that system is used to generate financial statements that can be relied upon as accurately representing the financial state of the business.”
“Following GAAP standards helps ensure compliance with regulations and makes it easier for us as accountants to identify, categorize, and track inventory,” he continued. “This helps us allocate the maximum amount of expenses allowable into the only category that can help our clients retain more of their money, Cost of Goods Sold.”
“Talking about banking, it’s not a level playing field by any means, and won’t be until cannabis is descheduled, but it has gotten better,” Hindrichs said. “We’ve partnered with several financial institutions from banks and credit unions to payment processors who have opened up to cannabis operators. Capital is more readily available than it has been in the past, and there are better alternatives for processors. There’s still a gap to close, but there are solutions and we can help our clients find them.”
“One piece of advice we give to all of our clients is to establish and maintain accounts at multiple financial institutions,” he added. “This makes it much easier to maintain business continuity should the climate at a particular institution change abruptly. We’ve seen it happen with cannabis operators across the country and without redundancy in place it will disrupt business.”
Scaling with Missouri’s rapid growth
“The growth of the industry has been really exciting,” Hindrichs said. “As our business has grown, so have our skills and our network. Our national network has given us the ability to collaborate with other cannabis industry professionals throughout the country and allowed us to develop a set of best practices. The framework we’ve created allows us to efficiently and effectively serve the needs of clients both large and small at any stage, anywhere in the country.”
“Although we’re a remote firm, and are able to provide services anywhere in the country, we are from Missouri, we live in Missouri, and are working on growing our client base here,” he continued. “We are members of MOCann Trade, and We are JAINE. We think it’s important to do what we can to support cannabis businesses and help move the industry forward. Last year we had the pleasure of working with Jage to sponsor the Missouri Microbusiness Association breakfast at MJ Unpacked in St. Louis. Opportunities like this allow us to get to know one another and further refine our services to meet the needs of all cannabis businesses, both large and small.”
Common pitfalls and advice for operators
“The number one financial pitfall happens to be the number one killer of businesses—insufficient cash flows,” Hindrichs said. “Many new businesses underestimate their start-up or expansion capital needs. A start-up company, especially cash-focused cannabis companies, can take quite some time to become cash-flow positive, so it’s important that the business plans include all anticipated costs along with a contingency to ensure continued operations. Unexpected costs can add up quickly, resulting in a scramble to bridge the gap. Avoid that scenario with planning.”
“Another financial burden relates to regulatory and tax burdens—as we have already discussed, cannabis businesses face unfavorable tax codes which means they must run as lean as possible to remain profitable,” he continued. “In doing so, many business owners underestimate costs associated with regulatory compliance such as licensing, reporting, audits, inventory tracking, and security. Also, since cannabis businesses are cash focused, they require additional security measures, more robust internal controls, and substantial record-keeping to ensure risk is mitigated.”
“Another financial pitfall cannabis businesses should be aware of are banking limitations,” Hindrichs added. “Many traditional banking and financial institutions are still wary of working with cannabis businesses making it difficult to ensure continuous access to accounts, affordable funding options, credit card processing and other services. As mentioned earlier, we encourage cannabis businesses to have accounts with at least two separate banks to ensure continuing access to services during times of change.”
A philosophy of partnership
“The cannabis industry is unique, it demands more from its operators, requires them to navigate complexities other businesses don’t face, but it rewards those who get the fundamentals right,” Hindrichs said. “At Seed to Sale CFO, we’ve built our practice around the core belief that every cannabis business, no matter their size or stage, deserves to work with a firm that truly understands this industry and genuinely cares about their success.”
“From that first conversation about business structure and tax strategy, through building robust accounting systems that minimize your tax burden, to providing the financial clarity you need to scale with confidence, we’re right there beside you,” he continued. “Seed to Sale CFO represents the Alpha and the Omega of cannabis accounting. We don’t just close your books; we help you build a world-class financial foundation that positions your business for sustainable growth and long-term success.”
For more information or to connect with Seed to Sale CFO, visit seedtosalecfo.com.
