When CBE set out to create the Ancillary Business 100, we specifically avoided a few categories like law & accounting firms because of the sheer number and local nature of the businesses. On the CBE Business Directory, we currently have 29 firms listed as providing accounting services and 77 listed under the legal services category.

Only two of the 29, including New Era CPAs LLC, indicated that they offer services in more than one state. New Era CPAs reached out to CBE and shared their background information. Since their revenue qualified for what was generated in 2015 (they would have been ranked in the $1 million to $2.5 Million category), we decided to bring them to our readers attention.

Last week, I caught up with founder Mario Ceretto and his new partner Joseph Baily. I had the opportunity to learn about what was driving their business, the markets, and the clientele they serve, as well as what’s next for the firm.

As a Portland-based Price Waterhouse Cooper (PWC) auditor doing tax work for multi-nationals, Mario moved to San Diego due to a family illness after the real estate bubble in 2009-2010. The job market during that time was pretty weak in Southern California, even for young hungry well-trained CPAs. Like any smart guy with a strong professional base, he put two-and-two together and started knocking on doors of the dispensaries that he found off of the NORML website (WeedMaps hadn’t started yet!). He began doing accounting work for a couple of shops owned by guys that eventually got raided and shut down by the Drug Enforcement Tax Force.

In the early days, Mario was literally a one man band. He was brought into court to testify, which led to other attorney’s referring clients his way due to the visibility. Mario told CBE that the relationship of working with gray market clients, and eventually collectives, and their stores was almost always based on trust. His clients weren’t always the trusting types, but relationships were built directly with Mario doing the bulk of the strategic financial planning and tax work for his clients. Since the work wasn’t initially delegated to staff, he found it difficult to find good talent willing to jump into the emerging space. Mario quickly became an IRS 280E and cannabis operation accounting expert with almost all of his clients coming exclusively from the industry—until opposition came.

In late 2011, Laura Duffy, the US Attorney to the region, the San Diego Police Department (SDPD), Drug Enforcement Administration (DEA), and the San Diego County Sheriff’s Department began closing what at the time were legal operations throughout California. Unlike the legal profession, his CPA business didn’t receive retainers. This meant that as his clients were shutting down, so was his cash flow. Fortunately, he was able to weather the storm by talking about his cannabis accounting expertise at events as the industry continued to develop.

As Mario rebuilt his business, the credibility and word of mouth network he established helped land him two solid partners and to expand into Seattle where he is now based. Paul Rutledge, a colleague from PWC, replaced his original partner and is based in San Diego.

Joe Baily joined the firm in Portland after leaving Deloitte. The firm has an in-house counsel team, another CPA and three core staff members, as well as seasonal help during peak tax season.

They expect business in core markets to continue to flourish and look forward to opening an additional office this year in Humboldt County. They hope to expand to Colorado through a possible merger or franchise model. Since they need to be hands on, they want to balance their expansion nationally versus the opportunity that California presents. They have also taken on a client in Arizona and Nevada within the past year.

New Era CPAs got CBE’s attention. With other accounting firms like MGO entering the space, look for multiple multi-state canna-accounting firms in the not too distant future—especially with the big boys looming as legalization and industry credibility spread.

Background Information

Company Name: New Era CPAs LLP

Year Founded: 2009

Ownership structure Limited Partnership

Management Team: Mario Ceretto, Founder, Paul Rutledge, Partner, Joseph Bailey, Partner

Headquarters: San Diego, CA

Website: www.neweracpas.com

Industry Segment/Category: Accounting/Tax/Consulting

Current Markets/States Served: Cannabis/ WA, OR, CA

Current Number of employees: +10

Market Strategy/Goal:  New Era CPAs already covers the entire West Coast at present. Our goal is to eventually cover the balance of the States with legal cannabis markets until we are able to usher in the full Federal legalization of this amazing plant.

2015 Revenues: $750,000

2016 Projected Revenues: Greater than $1,000,000

Expansion Plans: Humboldt office, Nevada, Colorado, and beyond

Financing strategy: Self Financed