Latest / The Inspired Stories Podcast / From Accidental Sales Tax Accountant to Cannabis CPA and Casino Game Inventor: Daryl Jendras's Unlikely Journey

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From Accidental Sales Tax Accountant to Cannabis CPA and Casino Game Inventor: Daryl Jendras's Unlikely Journey · The Inspired Stories Podcast

0:04
Welcome to another edition of the Inspired Stories podcast,
0:08
where leaders share their experiences so we can learn from
0:11
their successes and be inspired by how they've overcome
0:14
adversity. As you listen today, let one
0:17
idea shape what you do next. My name is Anthony Kotaspodi and
0:21
today's guest is Darrell Gendres, founder and managing
0:24
member of Salt Cap, a boutique firm that helps companies handle
0:28
state and local tax challenges across the US Launched in 2021,
0:34
their clients range from family owned shops to Fortune 500
0:38
giants. They remove multi state tax
0:40
headaches so business owners can stay focused on growth.
0:44
He's also the managing director of Green Rush Accounting and
0:48
Tax. They are the complete cannabis
0:51
accounting firm in a box from gap compliant bookkeeping all
0:55
the way to fractional CFO services and everything in
0:58
between. They provide world class
1:01
accounting, tax and M&A tax planning services to the
1:05
industry. But before we get into all that
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back benefits.com. All right, back to our guest
2:06
today, the Managing Director of Salt CAB, Darrell Gendres.
2:09
Thanks for making the time to Share your story today.
2:12
Anthony, thank you for letting me participate.
2:15
I'm outer to be on your podcast. So Darrell, before we talk about
2:19
the two businesses that by the way you started at the same
2:22
time, let's lay the foundation for your expertise.
2:25
What was the path that led for you, led to you becoming an
2:29
expert in state and local taxes? Oh, wow, That's a great
2:34
question. So what had happened was I had
2:38
graduated from Purdue University.
2:41
I was going to go there for engineering and then switched
2:44
over to accounting after like, you know, one week of like,
2:47
yeah, this isn't this isn't for me.
2:49
So we got into accounting, graduated and I came out in 92
2:54
and there was the recession going on.
2:55
So, you know, got a got a job as an internal auditor at a bank,
3:02
did one full year. One of my friends reached out
3:04
and said, hey, my company has an opening for an entry level sales
3:13
tax account and I go, I have no idea what sales tax is.
3:17
He goes, you'd be perfect for the job because it's not no one,
3:21
no school offers that. So it was basically learn on the
3:25
fly. So you know, there was, there
3:29
was lots of swelling there. It probably took me 6 months to
3:31
just understand the basics. And this was in a construction
3:35
industry and construction for sales tax is really complex.
3:40
And then so that's how I got in. And then when I saw an
3:48
opportunity to expand my horizons, I took a took another
3:54
job at a, at a startup boutique where, you know, you would go to
3:59
the field. They had some decent sized
4:01
companies and all that. So I started, I started there
4:04
and, you know, travel was involved and, and all that.
4:07
And one day, you know, my partner goes or the, the, the
4:12
manager of the office said, Hey, I want you to go, you know, to
4:16
this project. And I'm like, you know, I'm just
4:19
a few months and I really am not comfortable like doing it on my
4:22
own. He pulls me in the office, you
4:25
know, sort of says, you know, we're trying to help you, trying
4:29
to help you grow. And I think ever since then that
4:33
then I would never say, you know, he basically taught me
4:35
never say no. So like when I was there for
4:39
four or five years, I got to see the entire country go to pretty
4:44
much almost every industry and that.
4:47
And then that's why I just, you know, it was fun going to
4:52
different manufacturing facilities.
4:54
And by the time I would see like a few of them, like, you know,
4:58
10-15 years later, I can go to other locations.
5:04
Yeah, it's a food manufacturing facility.
5:07
I could walk in before the plane tour started and go, OK, you
5:11
guys make this, this, this, this, this and this through
5:13
your, you know, stainless steel beds and all that.
5:16
And the guys, I can't work here before.
5:17
I'm like, no, no, no. But I've seen your competitors
5:20
because basically we would represent all the companies
5:24
through sales tax audits. So that's how I grew into, you
5:29
know, into that level. And as I kept progressing,
5:32
actually back in 2012 when I was at a company and my boss, I
5:38
said, you know, why are we working here?
5:40
You know, you, you basically are doing the selling, I'm doing all
5:43
the work. Let's go out on our own.
5:44
So that's how we started going out on our own from from 2012 to
5:49
then 2021, where I just, it was coming off the COVID, you know,
5:55
it was mig COVID and it was just like, it's it's time to go.
5:58
I, this isn't working for me. And that's how I got out on my
6:02
own. So basically I've been doing
6:04
sales juice tax for 30 years. I know every state I've been to,
6:13
to every industry and then just doing work up in Canada and
6:17
Cohen, all those things start realizing that VAT tax is a
6:21
whole lot easier and less complicated than sales tax.
6:24
So, So what? Is it that makes sales state and
6:28
local tax here in the states so complicated, just give us sort
6:31
of a high level for people outside the industry?
6:33
I, I I can explain it perfectly because the the best one is I
6:38
had a client. I I still have client.
6:40
They're headquartered in the Netherlands and they have this
6:44
location here just outside Chicago where I'm located.
6:48
And they're just so used to that tax being one simple rule in
6:53
this. And I said no, there's 50
6:56
states, but five of them don't have sales tax, but the District
7:00
of Columbia does. So technically there's 46 and
7:03
each state is there's no consistency.
7:08
There's the the way the laws were written in the Thirties,
7:12
40s and 50s aren't up to date. You don't have every possible
7:17
scenario addressed in law. So it's basically, you know,
7:20
subject to interpretation. And you know, like I would
7:23
always tell all my clients it's if it was black and white, you
7:27
wouldn't need me. It's the shade of Gray.
7:29
Now how light or dark is your shade of Gray?
7:34
So that's where he he's still having a hard time struggling
7:38
because he's just asking the questions of like, but why isn't
7:41
it all the same? Like it is if it was a regular
7:44
country and I'm like, it's, it's, it's not each.
7:48
And then if you really want to, you get to the granular level,
7:52
then there's local state. Some of these states have home
7:56
rules where like city of Chicago has rules that sort of
8:02
contradict what's going on in the state of Illinois, just for
8:05
example. So there's just it's.
8:07
So give us. An example of.
8:09
Where some of the Gray area exists.
8:12
Maybe just like a specific example of.
8:14
Sure, it could mean this. It could mean that.
8:18
There there's one way you could just say, you know, it's
8:21
manufacturing and and the perfect example is and we are
8:26
struggling while we're doing the software implementation for the
8:30
beginning of the year. Texas allows an exemption for
8:36
restaurant equipment that if you use it and processed food.
8:42
So let's just say it's a chicken rotisserie.
8:43
Say you walk into your Costco, Texas says that's manufacturing
8:49
equipment. If you walk into a Costco in
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Arizona and I had a client who you know, isn't that had like a
8:58
convenience store was trying to claim that same exemption.
9:02
And I said, no, you can't because there's a court case in
9:05
Arizona that says that's taxable.
9:08
Like if it was like a Little Caesars mixing, mixing the
9:13
dough, that's not manufacturing equipment.
9:15
So there's just so many nuances from state to state and some,
9:19
some businesses interpreted it wrong and and all that and it's
9:25
just, you know, you're trying to educate them.
9:27
I try to help mitigate just any how can I put it?
9:32
Any way I can just bring down the stress because sometimes I
9:37
hear a lot of opinions coming from either clients or the
9:42
things customers and I'm like, but here's the law and I'll lay
9:46
it out. So, Dara, how do you possibly
9:48
stay on top of all the laws? I mean, you're not just talking
9:51
about 46 different states. You're talking about these
9:55
little subsections in their laws about, you know, manufacturing
10:00
equipment is taxed differently than something else.
10:03
And then you're talking about within states, a lot of
10:07
municipalities will add on their own tax rate.
10:11
And like you're saying like this, sometimes there's
10:14
contradicting information. How do you keep on top of this?
10:18
Is there like a giant database that you're constantly querying?
10:22
There there is. I use third party soft workers
10:25
that, you know, pull in court cases and just help guide me,
10:29
get me through some things because it's like, you know,
10:31
there was what was it? Just recently Louisiana changed
10:37
the taxability for software as a service and or Illinois removed
10:43
the economic Nexus threshold from, you know, where it was,
10:48
you know, 100,000 or 200 transactions.
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They removed the 200. So it's just, yeah, I, I think,
10:57
I think I'm, I, I would say I would know probably 95% of the
11:01
stuff because most of stuff usually doesn't change.
11:04
But then when you have a client and they start asking a
11:06
question, you look to see if anything changed.
11:09
Well then it's like, let's let's research it and get the answer.
11:15
Because most of the time. When they ask, I'm I'm sorry,
11:17
but most of the time, like when they ask a question, I usually
11:20
defer and go. I, I know the answer.
11:22
Let's just see if the law changed.
11:24
Let's double check. So I don't know if I answered
11:25
the question you were going to say.
11:27
Yeah. I'm just help me understand what
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it is that you're typically doing.
11:33
Like, are you advising most of your clients as they're moving
11:37
into a new category of product? Are you helping them once
11:42
they've made a mistake and now the state is auditing them?
11:46
Is it kind of all of the above? It's, it's all of the above and
11:50
then some because there's somewhere maybe they're looking
11:54
to sell their company or maybe they're looking to acquire a
11:58
company. So it's sort of like doing the
12:00
due diligence, you know, are there any sillotans in the
12:03
background? If we acquire this company, are
12:05
they doing their sales tax correctly?
12:09
You know, and that's so I mean, I've, I can, I can do the audits
12:16
and then I can also repre, you know, be proactive and do like
12:21
an internal audit to clean everything up.
12:23
So it's, it's, it's that and then on top of consulting.
12:27
So it's like, you know, last month I, I was able to speak at
12:32
a PPA conference in Las Vegas. It was for the promotional
12:36
industry. There were, there are so many
12:40
small promotional industry companies.
12:44
And I never had a presentation where as I started talking, one
12:49
person asked a question. I stopped to answer it.
12:52
And then it was like, you know, feeding time at, at the pond,
12:57
everyone was just, you know, raising their hands and, and
13:00
that and just, you know, because I think a lot of people are
13:04
intimidated. They're afraid to make a
13:05
mistake. No, you're going to make
13:07
mistakes, but how damaging are those mistakes going to be to
13:12
your bottom line? So.
13:16
Yeah, I pretty much do everything for sales tax.
13:19
Yeah. When you were getting started,
13:22
you'd have a lot of experience, you'd work with a lot of
13:24
clients. How did you get your first
13:26
clients for Salt Cap? Actually referrals from CPA
13:32
firms because most CPA firms, they don't have a state and
13:37
local tax practice. You know that it's just, you
13:39
know, when it comes to the sales use tax, I would, I would look
13:43
at it and I always use this analogy.
13:46
Picture me as Bing in your bullpen.
13:49
I'm your left-handed reliever. Then we have bases loaded.
13:52
Nobody out is the bottom of the knife.
13:54
Can you please, you know, and we're winded by 1.
13:56
Can you please come in, get us out of this jam And and that and
14:02
and usually most of the time it's like, yeah, you walk in and
14:04
it's like, OK, we need to fix this, this and this or I see
14:08
where the auditor is going. Let's see how we can clean it
14:10
up. How can we how can we minimize
14:14
the damage or how can we implement new things that you
14:18
may not have thought of or you weren't aware that you could do?
14:22
Are there things that you found that you can say or produce for
14:28
the auditor that I don't know? Smooths some ruffled feather
14:32
feathers, makes this go a little bit smoother.
14:35
Yeah, yeah, there's been sometimes where I've come in and
14:40
either the client or someone else that was representing them,
14:44
you know, would, would just butt heads a lot.
14:47
So I would just come in with a just calming thing and just go,
14:50
OK, I, I see where you're coming from.
14:53
Here's my interpretation of the law, because a lot of this stuff
14:56
too is, is subject to interpretation.
14:58
I mean, you cannot, you know, when you're writing laws, you
15:02
know, 20-30 years ago, you know, no one was thinking of software
15:11
as a service. You know, that was just, you
15:13
know, evolving and all that. So that, you know, people are
15:16
trying, you know, lawmakers are trying to write laws to catch up
15:19
or, or stay current. So yeah.
15:24
Specific stories can help the audience kind of wrap their
15:27
heads around things. Darryl, I'm wondering if you can
15:30
share a particularly challenging multi state tax issue that you
15:35
were able to help solve? Yeah, there was, there was one,
15:40
one of the things is I had a client, they were an electric
15:46
company. And I mean, granted it's a
15:48
little too specific, but let me just say, OK, they were, they
15:50
were a company, they were audited.
15:53
They couldn't find an exception certificate.
15:56
And because this was one of their larger companies, it was
15:59
worth, you know, like $3,000,000 in an audit assessment.
16:03
And, you know, everyone's panicking and I go, well, where
16:08
is it? It's like, I, we don't know
16:11
because back then it was all paper copies, you know, no one
16:14
saved it to PDF. And then I call the number and
16:19
they're out of business. So then I'm like researching and
16:22
I'm like, OK, it's a, it's a different company now.
16:27
It's the same owner. He's at a different company.
16:32
So I call him and he's like, yeah, I just absolutely hated
16:36
that company, blah, blah, blah. And I'm like, well, I'm sort of
16:42
outside your door. Did you just come in and sign
16:46
this exemption certificate? He's like, yeah, signs it.
16:50
I just leave. So what I did was I flew from
16:53
Chicago to Texas hoping this guy would sign it so I can save my
17:00
client $3,000,000 just by holding holding a sheet.
17:04
Help me. Understand though Daryl, what
17:06
position was this person in to be able to sign because I'm he
17:10
was like of the of the company prior.
17:15
Of the company that went out of business.
17:20
OK, I'm not connecting the dots here.
17:21
Why did you need a sales tax exemption certificate for a
17:24
company that went out of business?
17:26
Because we didn't have on hand because during the period the
17:30
company was still active. Got it.
17:33
OK. Because some of these some of
17:34
these sales tax audits it's it goes back like four or five
17:38
years. I mean granted when it starts,
17:40
you know, there there's like an audit period of three to four
17:43
years. Most this audit was also taking
17:46
three more years to complete. So, so we're looking six years.
17:49
So this was like, you know, what was it?
17:53
Probably 19/19/99 and we're working on it still in like
18:00
2004, 2005, and the company goes out of business, you know, in
18:05
like 2002. Got it.
18:07
Yeah. When you look in there, because
18:08
if you don't have it, have that exemption certificate, you can't
18:11
claim, you should have charged them tax and everything.
18:14
Well, they're out of business. So what are you going to do?
18:17
And hey, let's be creative. Let's not tell, let's not tell
18:21
anyone what I'm doing. And then when I make the call,
18:25
just say, hey, I'm outside your door.
18:27
So. So you didn't give this previous
18:31
CFOA heads up. You just hopped on a plane,
18:35
you're outside his door, you call from your cell phone and
18:38
you roll the dice and it worked and you saved your client
18:40
$1,000,000. That's, I love that.
18:43
That's a heck of a of a flight there.
18:46
Yeah, that. Was, I mean, I'm looking at that
18:48
as well. It's risk reward.
18:49
Where are we going to do, you know, spend 1000 for, you know,
18:53
flight travel and, and that because they, they had, I mean,
18:57
I was just like reading notes. It was just like a very toxic
19:00
relationship. And I'm just like, well, here's
19:03
one way to fix it. Let's just roll the dice.
19:06
And the worst thing he can tell me is no.
19:09
It's kind of hard to say no when you're at the front door.
19:11
Yeah. It's much harder that way.
19:13
I love that. So years ago I had multiple
19:18
e-commerce brands and so I became very familiar with the
19:22
Wayfair ruling. Can you walk the audience
19:26
through what that is? Sure.
19:28
So the Wayfair ruling, I I call it as its economic Nexus.
19:34
So when it comes for sales tax, before Wayfair, you had to have
19:41
physical presence in the state to have Nexus.
19:44
And if you had Nexus or if you do have Nexus and you're making
19:48
sales, you have to charge charge sales tax or unless you know
19:55
there's a valid exemption certificate to receive so.
19:58
I'm in Ohio. I'm selling my, you know,
20:01
e-commerce goods into the state of Illinois.
20:04
Prior to that, I wasn't required to collect pay report sales tax,
20:10
right? Yeah.
20:11
And for Illinois transactions, right, right.
20:14
So, so basically back then, you know, we'll use your example,
20:18
you're Ohio, you're Ohio based. And if that was the only place
20:22
where your office was located, you know, say you just had, you
20:26
know, a, a warehouse in Ohio and you were just selling your
20:30
goods. All you had to do is collect
20:32
Ohio. So then and it was it was pretty
20:36
funny to sort of geek out when you got to see the Supreme Court
20:43
take up Wayfair as a case. And I'm like, Oh my God, sales
20:47
tax now is actually in the Supreme Court.
20:49
This is pretty cool. You're on the.
20:51
Big stage. Yeah, yeah, I'm on the big.
20:53
Stage so it was it was interesting then to see how
20:56
ruling was. The ruling was states couldn't
20:59
set their economic Nexus threshold.
21:03
So I would say probably over half the states, it's $100,000,
21:13
but there's a handful of states where it's $100,000 or 200
21:18
transactions. And this is where, no matter
21:23
what history, whether it's manufacturing, online sales,
21:28
hemp, CBD, you know, if you're making in those states where
21:34
there's, you know, we can, I've, I've got my list right here of
21:38
one of the ones I'm working on with the client.
21:40
Let's just use, you know, like Kentucky as an example.
21:45
It's, it's 200 transactions, even if they're, you know, sales
21:51
were only $20 each and 200 transactions, you know, that's,
21:56
that's not you're nowhere near 100,000, but because you
21:59
exceeded 200 transactions, that's where you had to start
22:03
charging sales tax. Get registered involved from
22:05
there. So Wayfair opened the door to
22:09
all of these states being able to claim something new, this
22:12
economic Nexus that didn't exist before.
22:16
And now for small businesses, you know, a lot of them are E
22:19
com there's this burden of how do we figure this out?
22:24
Like at scale, you know, cuz we're shipping to ostensibly all
22:28
50 States and different jurisdictions within each state.
22:32
So how do since Wayfair? How are clients managing this?
22:37
There's there's third party software out there that they can
22:41
they can use and you know, I can recommend some I can implement,
22:45
you know, whatever. There's some briefly, I wouldn't
22:48
say the candlelight. Well, there's there's the higher
22:52
end ones, but those are the ones where you know they're selling
22:56
products, but you know, depending upon if you're selling
22:59
baby products and food, you know baby food and you know that
23:05
their software product is really good.
23:08
But most of the ones just Shopify, you know, people
23:12
selling Shopify, you know, turn, turn on the sales tax.
23:17
Well, don't turn to that yet. You know, they, there's software
23:22
that just monitors your transaction and double edging.
23:32
Oh, there we go. OK.
23:35
So let's give some airtime to Green Rush business you started
23:40
at roughly the same time. What was the idea here?
23:44
What was the problem you were trying to solve?
23:47
Well, in 2020, Illinois came on board with making cannabis legal
23:56
in the state. So I was looking at that as
23:59
another opportunity to to get into the cannabis space and
24:05
learn it. And you know, there aren't that
24:08
many CP as in the industry. So I, I saw niche and said, hey,
24:16
you know, I have nothing to lose.
24:18
Let's let's jump in on it and and go from there.
24:23
OK. And so are you now focusing
24:26
exclusively on cannabis businesses in the state of
24:31
Illinois? Oh no, I'm all over the place.
24:34
I've got I've got license holders in Delaware,
24:38
Massachusetts, Maryland. I'm helping California companies
24:44
with like some of their renewals of their licenses by doing
24:49
independent audit reports and all that.
24:51
So, so I look at it as I'm extremely strong in sales tax.
24:57
Well, let's expand the scope and just become a full blown
25:01
accountant on that. And then also to like doing some
25:04
business valuations for cannabis CBD companies have because with
25:11
cannabis you can't ship, you know, everything has to be
25:16
intrasate. But when it comes to hemp CBD,
25:20
because it's below the the federally level, you know, the
25:25
federal level, you can ship to your state just like yeah, the
25:29
THC you can ship, yeah. And do Interstate commas with
25:34
that. So let's help our audience
25:38
understand some of the specific complexities around the cannabis
25:41
industry. Maybe a good place to start is
25:44
by explaining 2 Ade and 471-C. So with with two Ade look at it
25:53
as you know, a regular let's look at it as a regular
25:56
manufacturer, they get to claim all these, you know, exemptions
26:02
to grant marketing, you know, payroll for like non non
26:07
production people are, you know, professional fees or insurance
26:11
utilities and that that's not available to the Canada space.
26:18
So like anyone that's plant touching, they're subject to
26:23
280. So they're at a huge
26:26
disadvantage, like the profits, the profits that they would have
26:32
as a normal business isn't there in the cannabis space right now.
26:38
So they can't deduct rent, they can't deduct marketing expenses.
26:44
They can't deduct, you know, admin salaries or, or like, you
26:49
know, the insurance and, and the utilities.
26:52
So their tax bill is much higher.
26:55
So instead of having, you know, your profit being this to them
26:59
paying tax on that, it's it's here's the let you know the less
27:06
amount that you can deduct for. Can they have any deductions at?
27:12
All there are. Some there are.
27:15
What are they? If, if.
27:22
Let's see. Why you think on that?
27:28
I'm just going to sort of bottle this up for the audience in case
27:31
this isn't landing. You know, let's say you've got a
27:34
company, a cannabis company that's making $1,000,000.
27:38
Let's say you've got a calculator company that's making
27:42
$1,000,000. Well, that calculator company,
27:44
maybe at the end of the year, they've got 15% net profit.
27:47
I'm just making up numbers here. So they're going to owe income
27:50
tax on that $150,000, not on the $1,000,000 in sales.
27:55
But for a cannabis company, roughly speaking, it sounds like
27:59
there are some exceptions. But they're going to owe income
28:01
tax on that $1,000,000 in sales, even though that was nowhere
28:05
near what their actual profit number was.
28:08
Right, right, right. And, and pretty much like 1 for
28:13
280 EAAI think the easiest way to say it is just if, if it's,
28:18
if you're, if you're touching inventory production, I mean,
28:21
it's, it's really, really limited.
28:25
And that's like dispensaries, you know, that are popping up,
28:31
you know, throughout the country where it's where it's legal.
28:35
It's, you know. So a dispensary can can write
28:42
off their business expenses or cannot.
28:45
Can I it it would be like only anyone in the bank room.
28:48
There would be actually, you know, like touching the
28:50
inventory, you know it there, but like, that's the front of
28:54
the room, you know, like all the cash registers, oh, all the bud
28:59
tender salaries. And that you won't be able to
29:02
deduct where, you know, just picture as if you were going to
29:05
a grocery store, you know, OK, here's here's your utilities,
29:09
you can deduct. Yeah, here's, you know, you're,
29:13
you're not going to be paying, you're not going to be paying
29:15
federal income tax on your utilities and your and your
29:19
wages to your, to your and your and your employees and that.
29:25
And the reason this exists is because cannabis is still
29:28
illegal at the federal level. It's just individual states have
29:32
kind of come up with their own laws on OK, recreational or
29:36
medicinal is OK. And so because it's still
29:39
illegal at the federal level, you're not allowed to make write
29:43
offs, but apparently you're still allowed to pay taxes on
29:45
something that the federal government considers illegal.
29:49
Yeah. And, and, and right now the
29:53
president signed like an executive order to reschedule
29:56
this. So it hasn't, you know, as of
30:00
this recording, it hasn't gone through and everyone's trying to
30:04
look to see how that would be under the impression that it
30:09
would make it the same as a normal legal manufacturing
30:16
facility or a normal like store or a grocery store.
30:21
And, and that's so, and, and then also too, and I don't know
30:24
if you're familiar with this either, is we're also trying to
30:31
work on the Safe Banking Act. So like you have to pay cash for
30:37
this stuff and you know, you can't use Chase, Bank of
30:42
America, Wells Fargo. So you know, they don't those,
30:47
those large banking companies do not accept anything that's
30:50
cannabis related. So you have to use like credit
30:54
unions or small, you know, startup banking, you know,
31:01
companies that can handle those transactions.
31:06
So there's, there's the big debt, you know, deficit or
31:10
detriment to the industry. Well, and you know, from the
31:13
industry that I play in the insurance space now, our product
31:17
isn't like this, but you know, a lot of other insurance
31:20
companies, they won't work with the cannabis space.
31:22
And so, you know, I hear a lot of them have trouble getting,
31:24
you know, any kind of coverages. So, so right, we're recording
31:30
this in February of 2026. I think it was just earlier this
31:33
year that the administration announced that they were going
31:37
to reschedule cannabis from schedule one to schedule 3.
31:41
And the hope is that that also effects this 280 E designation.
31:46
But nobody's really sure how that's going to unfold or what
31:49
the timeline is for that. How about 471 C?
31:52
So do you have something else you wanted to say on that,
31:54
Daryl? Oh no, no, no, because I was
31:56
going to transition to 471 C and and that one, that's more it,
32:03
it's more geared towards the the grow of the plant.
32:08
So and the cannabis space. It's it's called verticals.
32:12
Like if someone owns a license for cultivation processing,
32:17
which would, so cultivation would be grown, plant processing
32:21
would be taking the plant and converting it to, you know,
32:26
finished goods, whether it's gummies, CBD, you know, creams
32:34
or anything that's that. And then and then everything
32:38
would be sold at a dispensary if it's, you know, truly cannabis.
32:42
But then there's also somewhere like it's like you said earlier,
32:46
below the THC .3 threshold you can sell at Interstate commerce.
32:51
So, so really on the cultivation side, it's it's a lot of 471 is
32:59
more geared towards anything where it's just plant based
33:05
touching. So like you're like examples
33:09
would be the raw materials or the direct production boss, you
33:13
know, like, how can I put it like the nutrients for the plant
33:19
and and that so it that stuff there because it's you're you're
33:27
growing a product. So so really pretty much
33:29
anything in in cost of goods for for inventory is is deductible.
33:36
So I mean, I would say, you know, inventory costs, you know,
33:40
on there and just, you know, having real good details just
33:43
shows like, OK, yeah, we bought the pot.
33:47
We bought, yeah, the the pot for the plant to grow in the soil.
33:52
Then we add the nutrients, here's the seed, here's here's
33:56
the water. So basically because you're
33:58
processing it or or making a plant grow that's.
34:03
So the cost of goods in the cannabis industry are
34:06
deductions? Right, right.
34:10
But, but like when you're going to dispensary all that stuff,
34:13
all that stuff has already been established, you know, and, and
34:17
that you're, you're not growing anything at dispensary, you're
34:19
just selling the finished products.
34:21
So that's why like a dispensary has, you know, very little
34:27
deductions available, so. How are these cannabis
34:29
businesses staying alive? How are they making money?
34:35
It's it's a lot of struggle right now and it's been a
34:38
struggle for a while. Like California, very mature
34:40
market. They're they're doing well, but
34:42
the prices have come down and, and that and it's like, you
34:46
know, saturation. So it's just like anything like
34:48
one of my clients is in Della. What's a new one?
34:51
We're expecting, you know, price for pound to be going up, but
34:55
then eventually, you know, as more cultivators come on and
35:00
more product is out there, they'll just drive the cost
35:03
down. So it's, it's sort of like the
35:04
true economics of supply and demand.
35:07
You know, if, if it's one of the newer states, you know, like New
35:11
York just came on, you know, within the last couple years,
35:14
you know, and you know everything, I'd say pretty much
35:18
everything east of the Mississippi has come on board
35:21
within the last five to eight years.
35:25
So this two ADEI want to go back to, is there any Gray area in
35:30
here? I've heard some folks making a
35:33
claim that we don't really think 280 E applies to the cannabis
35:38
space. We're going to go ahead and make
35:40
deductions anyways. Yeah, those are the ones I I
35:46
backpedal from. Sounds like I, I would rather
35:51
it's, it's black and white until, until there's some kind
35:57
of court case that explicitly lays it out.
36:00
Like if it's someone that's thinking, yeah, here's a area,
36:04
here's where we can make it a little bit murky.
36:07
I don't know. The, the way I read it, I'm not
36:12
like if it was a sales tax thing.
36:13
Yeah, I I know where I can do this.
36:16
This one here is federal and it's such a high dollar amount,
36:20
I could say, yeah, we can go for it.
36:24
But here's what's at stake if you lose.
36:27
So like if you take a, if you take the deduction and your tax
36:32
base goes from, let's use your example of like a million and
36:36
you say, well, you know, we could probably get it down to
36:38
500,000, OK. But then I would say what's your
36:44
delta? That's the 500,000.
36:46
So if you're going to lose, you're going to have tax on that
36:50
plus interest and penalty. So what's your risk reward?
36:55
I mean, that's where I'm just like, OK, if if you're adamant
37:01
to sort of push the push the outflow, you better set aside a
37:07
reserve just in case you lose. Tell us about your casino table
37:13
game. Now that one completely.
37:15
Shift gears. Yeah.
37:17
Yeah, that one, that one's kind of wild in here.
37:20
I'll give you a little bit of background.
37:22
Back in September, I went to the AICPA headquarters to work on
37:31
getting thoroughly understanding business valuation for the
37:36
cannabis, but just business valuation in general, using it
37:39
for like the cannabis space. And it was the, the first day
37:46
everyone goes in there and introduces yourself.
37:48
And I said, yeah, I'm, I'm not like, you know, some of these
37:53
people that only work with feds or work with doctors for
37:55
business valuation. I go, I'm a local, you know, I
38:01
have a state local practice. I have a cannabis practice.
38:06
And then I go. And on top of that, I developed
38:10
a casino table game with one of my, with one of my friends, the
38:14
Sinai's I got for most of the people, I felt like the black
38:18
sheep. Yeah.
38:20
And, and then like one of the instructors is like, oh, you're
38:22
the Tulsa king. And I'm like, yeah, I never
38:27
really keep that a thought. It's like, you know, you know,
38:30
it's like, yeah, I enjoyed gambling and all this other
38:33
stuff. And when it happened was this
38:38
was this goes back a long way too.
38:40
And this was like it in 2005 where we flew out to Vegas
38:43
because you could only gamble in in Vegas or Atlantic City to bet
38:47
on sports back then. You know, nowadays and shoot,
38:50
you can just get on your phone and, you know, make a bet from
38:53
anywhere it, you know, in the states where it's legal.
38:56
And we've fought there to go bet on the Bears game.
39:00
And we all lost our money before we could bet on the Bears game.
39:04
So we, we're sitting at the airport going, hey, if we can't,
39:07
if we can't own a casino, how can we make money?
39:10
And that's what started the brainchild of creating Matcham,
39:16
Matcham High, low. And that's what's it called.
39:19
Say it again. Matcham high low OK matcham What
39:23
is the game? It's basically the player gets 3
39:28
cards. The point value is just like
39:32
blackjack, except face cards are 0.
39:35
So if it's ace, ace can be one or 11/2 through 10's.
39:40
The value of through 10 face cards are zero.
39:45
You add up your three cards, the dealer gets 5 and sets them up
39:50
in order of creating of the five cards.
39:54
He uses 2 and a community card for the low value than the
39:58
community card and the other two for the high value.
40:01
And you just have to determine is your point total higher or
40:06
lower than than the dealers. And ties win on this.
40:11
So yeah, there isn't there isn't any game out there where ties
40:16
win. Usually ties always push.
40:18
So then he has a side bench. Exactly.
40:22
And then it has a side bed of three card poker.
40:27
But because we're playing out of a blackjack deck, you know where
40:31
it can be 6 or 8 blackjack shoe where it can be 6 or 8 decks.
40:35
You can have like suited three of a kind and that pays like 100
40:40
to 1. And then and then there's the
40:43
matching. But that's what that's how we
40:45
came up with matching was if you match the there's rank.
40:52
So say I would have 256 and on the dieters 5 cards that were 32
41:00
and A5 and A6. Then you would match all 5 and
41:03
that would be, you know, 100 to 1 payout.
41:06
So it's it's a unique cable game.
41:09
It's not a derivative of blank deck.
41:11
It's not a derivative of Pope that wound up being like a, a
41:17
mess, a, a mix of a whole bunch of games where it's like, you
41:21
know, it has some part of baccarat, it has some part of
41:24
blackjack, it has some part of poker.
41:27
And yeah, it's been in an Iowa casino for over 12 years and
41:37
like three or four other Iowa casinos during that time.
41:42
And then, of course, COVID hit and I had, we had some good
41:45
traction. I was getting ready to get it
41:47
into Minnesota and Missouri. COVID hit shut down the whole
41:51
casino space. Then, you know, when they
41:54
reopened, they still had those plastic panels, some casino
41:59
dividers and people wearing face masks.
42:01
So if it's a new game and you're wearing a face mask, no one's
42:04
going to be able to explain it. So then that's how we we created
42:09
an app for that game. So what stage is the business in
42:13
and what's the revenue model? For that game it's basically
42:18
leasing it monthly to casino it just you know, so they can have
42:24
it on their floor on that. So we get no revenue from, you
42:30
know, whatever profits the they seem just a flat.
42:34
Monthly charge for them having it on the floor.
42:36
And a casino's reason for wanting to add this is, hey,
42:40
it's a different game. It's variety, right?
42:43
Let's shake things up for our customers.
42:45
Yeah, and and it's actually simpler than blackjack because
42:49
you don't have, you don't have any different cards.
42:52
You don't have to think. Should I hit, should I stay?
42:54
It's basically here's your three cars and then you just determine
42:58
if you're going to go high or low.
43:01
Your decision doesn't impact anyone else playing.
43:04
So we've actually seen and it's, it's pretty funny when I would
43:09
go to some of the casinos and play and I wouldn't, I wouldn't
43:12
wear my stuff. I would just walk and go, oh,
43:14
hey, how do you like this game? And then they would tell me it's
43:16
like, yeah, you know, it'd be 3 ladies.
43:19
It's again, usually we go out to a movie, then we go to dinner.
43:24
But it's like, you know, you can't talk during a movie.
43:27
So it's like, you know, we come here and play this for, you
43:30
know, a couple hours because we just sit, talk and, you know,
43:34
play it. It's it's like since sitting on
43:36
the stock machine. Exactly.
43:38
Exactly. Yeah.
43:41
OK. And there's an app as well, so
43:43
people can download this from an App Store and they buy it or
43:46
they play it for free with ads or it's.
43:49
Play it's. Play it for free.
43:51
You can't win any money on what what we're working on right now
43:55
is trying to get relationships with other casinos to where it's
44:01
like, OK, if you play enough that you can get credit for like
44:05
a free dinner and and a casino in that.
44:09
So that's that's what we're working on right now.
44:11
Right now it's the app more to help educate the people because
44:15
it's a completely new game. It's not blank Jack.
44:18
It's not poker and I think once everyone starts realizing it's
44:23
not, it's like, oh, this is different.
44:25
This is pretty fun because the the how can I say it?
44:31
They're the company that did podcasts on it.
44:34
And I didn't even realize it for like 2 years later when when
44:39
they were explaining the game, they didn't have cart.
44:42
They were doing a really good job and they said, you know,
44:46
this game is simple, but there's some thought to it.
44:50
And then there's the suspense at the end because you don't know
44:53
what you have until the dealer flips over the five cards.
44:58
So like if you had three face cards, that's zero ties win.
45:05
Plus you can double down. So not many places.
45:08
It's like, well, I already got, I already got three face cards.
45:11
I already know I won and I'm doubling down.
45:13
You know, that's one of the uniquenesses to the game, so.
45:17
Daryl, what's the plan to grow this business?
45:20
We're going, and this is February of 26, we're going at
45:25
the end of the month to present the, we're exhibiting the game
45:29
at the game conference at Hard Rock in Tulsa.
45:34
So there's going to be a lot of casino executives out there.
45:37
Basically, you vote and you know which games you would like and
45:42
then the game that wins would then get placed at the
45:45
Stratosphere in Las Vegas. So fingers gust our game's the
45:50
best one there. We win and that will help take
45:53
it, take it, take off. Or if at at least we were able
45:59
to show it to like maybe 20-30 casino executives and it's it's
46:06
easy because they're coming to us instead of me trying to go go
46:10
out and try to market it. Everybody's in the same place
46:13
together at the same time. Yep, captive audience.
46:16
Let's. Shift gears, Daryl.
46:18
I'd be curious to hear about a big challenge that you've
46:21
overcome in your life, how you got through that, and what you
46:25
learned going through that process.
46:29
There was, I think it was probably sometime, maybe like
46:35
May OF23I ramped up a Zoom call with, with a client and all of a
46:41
sudden I had like this heartburn and I was just like, Oh yeah,
46:46
that that came out of nowhere and the paint was still there.
46:50
And I went to late. I went to bed that night and I'm
46:54
like, I just roll over. I'm like, wow, this is really
46:56
bad. I'm just going to, you know, I'm
46:58
thinking it was gas or something.
47:00
I'm going to go to, you know, immediate care.
47:05
But you know, it's 10/10, 11:00 at night.
47:07
It's not immediate care. So let's go to, you know, the
47:14
local hospital, you know, just figure it's it's gas.
47:17
You know, they start running stuff on me and that probably
47:21
about 5:00 in the morning, I get transported to a different
47:24
hospital and they start running X-rays that there was a little
47:29
tumor like the size of a eraser head on my pancreas.
47:35
So, so then when they walk in, like one person says it's
47:38
cancerous and all of a sudden I'm like, OK, here I am by
47:41
myself. It's like, OK, pancreatic
47:42
cancer, this isn't good. And, and then so you know, I had
47:47
more tests done and all this other stuff and when they said I
47:52
had to have this surgery, it's like a distal pancreas.
47:58
Pancreas. I probably can't even pronounce
48:00
it correctly. Maybe you could, could help.
48:03
It's it's a distal pancreas, pancreated pancreas to me,
48:09
however, something like that. Well, what it does is it removes
48:15
the tail of the pancreas and the spleen too.
48:19
So. So when I went, when I went for
48:23
a second opinion on it, I went to a hospital in downtown
48:27
Chicago. The surgeon goes, yeah, if you
48:31
and my brother, I would haven't recommend you have it because
48:35
you'll be dead by the end of the year.
48:36
So I looked at it because I always had like this dull pain
48:41
on my, on the lower side. He goes right, the, the tail's
48:45
dead. So I look at it as I got AI got
48:49
an extra life. Let's, let's use it, you know,
48:53
to the best of my abilities. And that's where, you know, hey,
48:57
I, I should have probably passed away like 2 years ago and wow,
49:04
we're still going strong. So I'm actually probably in the
49:07
healthiest, you know, the the best health life because I have
49:10
to eat cleaner because I've only having a half a pancreas.
49:15
Yeah. So you've been having pain in
49:19
your side for a while, just kind of dismissed it.
49:21
And then one night you start having, you know, these.
49:23
No, no. No, no, no, no.
49:24
That. It was it was the where I
49:27
thought it was heartburn, but that was I think when they said
49:31
it was pancreatitis, but no one told me.
49:33
Yeah, no one told me it was pancreatitis or anything.
49:36
No one had told me that the tail because from the pancreatitis
49:41
had had basically become dead, you know, dead part of the
49:47
organ. So I just had like this faint
49:48
pain, not thinking anything of it, you know, walking around
49:52
with it for a couple months. Wow.
49:55
And that's that's what I went for a second opinion They and.
49:58
So he was a. Really good actually.
49:59
A tumor then because like you said, like you hear pancreatic
50:03
cancer, you're like that. You know there's no coming back
50:05
from this, right? Yeah, it was a tumor.
50:09
It wasn't. It wasn't cancerous, but because
50:13
my tail was, because I had part of a dead organ, it would have.
50:17
If it wasn't removed, it would have happened again.
50:21
And this time it wouldn't fail. Wow.
50:24
Because. It was already, it was already
50:26
part of a dead organ in there. You.
50:28
Got the surgery just in time. You've made a full recovery.
50:32
You're actually healthier now, right?
50:34
Kind of forced. To make.
50:36
Make different choices in your diet because you've got half a
50:39
pancreas. What?
50:41
What else have you noticed that's different about the way
50:44
that you approach life? It's just hey, livid.
50:49
I mean, I always, I was always happy go lucky.
50:52
Now I just, I say now I'm happier go lucky, you know, now
50:55
I just want to hey, if people are looking for, you know,
50:59
health guidance and I've been doing a lot of mentoring for
51:02
social equity, People on the cannabis side are just mentoring
51:06
in general. You're like, if you want to
51:08
learn sales tax, I can take you under my wing.
51:11
Just grab an intern. You know, it's it's going to be
51:15
complex. You're not just anyone that
51:17
anyone that wants to better themselves.
51:19
I look at it as you know, let's let's go.
51:22
You know I've Why not? You want to pass along a lot of
51:27
this wisdom and expertise that you've accumulated over the
51:30
years or. Right.
51:32
Or, or just the mindset of, you know, this is, this is hard, you
51:36
know, I'm struggling in a business.
51:39
Now let's go back and think of why did you want to get into
51:42
that business? You know, and, and just keep
51:46
keep going towards it, You know, never try to stop the self
51:51
doubt. There was a reason why you
51:52
wanted to be an entrepreneur and that and there's going to be
51:57
some good days and there's going to be many bad days.
51:59
But if you can just do fighting through that, then yeah, that's
52:05
that's how you succeed. Just one, one step at a time.
52:08
Baby steps there's. A lot of life coaching in there.
52:11
You're not the typical tax guy, are you, Daryl?
52:13
No, no, no. On top of yeah, you're.
52:17
This isn't the stuffy accountant you know, someone's probably
52:20
looking at going oh, great, you're interviewing ACPA.
52:23
This will be a sneeze fest. No, no, no, no, no.
52:26
Far from it. You're cut from a different
52:29
cloth. What do you consider to be your
52:31
superpower, Daryl? And that that's that's a good
52:39
one. I'm really good with members.
52:42
You can just throw things at me, like just sit there or you know,
52:46
like every time I go out to eat, I'm like, how much money are
52:48
they? How much money are there they
52:50
making in that? But also too, I think what I
52:53
enjoy is I have two boys. So once 23, once 12, I was
52:58
helping them have a lot. I never pitched in high school
53:03
and never played baseball in college.
53:04
I've learned pitching and now just helping kids become better
53:10
and improving their mechanics to help them throw faster and feel
53:14
better and their arm isn't achy and that.
53:16
So I don't know, I think I have a few powers where, yeah, it's
53:21
it's numbers. I enjoy poker, I enjoy
53:24
blackjack, I enjoy analytics. I enjoy when things start
53:28
becoming more EV, more expected value towards me.
53:35
So now it's like, OK, now it's time to shove and and then, you
53:38
know, instead of just random gambling, Oh, I see an
53:41
opportunity where I can really take advantage of the situation.
53:46
So. I'm just, I'm spraying all.
53:47
I'm spraying to all fields Anthony, I'm sorry.
53:50
I love it. Yeah.
53:51
We can't put you into one single box, Daryl.
53:53
You know, and I'm thinking back to your casino table game and
53:56
you know, you're saying you're really good with numbers.
53:58
And one thing that strikes me is for casino to take this on,
54:02
obviously there's got to be a house advantage, right?
54:04
And they want to they want to know what that advantage is,
54:08
right? They want to know like what that
54:09
that number looks like. How do you calculate that?
54:13
Well, what's funny is when I was when we were doing the game on
54:16
that I was doing, I have a stance minor shocker.
54:20
So, so I I did the whole statistical analysis and then
54:26
when we went to our patent attorney, yes, I have a patent
54:30
on the game too. So yeah, yeah, we're all over
54:34
the place on that. They the patent and I didn't
54:41
realize had a really well known three card poker estimate where
54:47
he had wrote a couple books and we started dealing him the first
54:50
version of the game and we're like 15 seconds and he's like,
54:53
stop. We just sat there and looked at
54:55
him. He goes, well, this is where
54:56
usually people yell at me and tell me, you know, go # sand and
55:02
we're like, no thanks, You saved us a whole ton of ton of money.
55:05
He's like, well here and he started telling us, you know,
55:10
trying to try to find a house edge where it's, you know,
55:14
between 2 and 5%, trying to make it to where people can win
55:20
frequently in that. And it took like 7 iterations.
55:24
I can't tell you how many times I would work on it, shelf down
55:27
the bookshelf for like 2-3 months, then pull it down and
55:30
start working on it again. So then I give him my
55:33
statistical analysis and he goes, who did this?
55:36
And I go, I did. He goes, well, you did
55:38
everything right except you didn't take out your first three
55:41
cart that you'd be playing. And I'm like, he's like, OK,
55:45
yeah, this game, this game will work.
55:47
That's flat mate. Oh, and, and and then too, and
55:50
sorry, then to also, let's go way, way back.
55:55
I used to race harness horses in the Chicagoland area.
56:00
So one of my friends, his parents, and that's how I got
56:03
into gambling in high school. His parents used to raise
56:09
standard bred. So these aren't the
56:11
thoroughbreds, they're the ones with the the buggy, you know,
56:15
the guy basically driving the horse.
56:18
And I'm like, hey, I think I might want to buy 1.
56:21
So I bought a horse. The next week I race it and
56:25
before I go to the track I'm working and telling all my
56:28
friends about it and they give me money and it's Halloween of
56:35
95. It's raining, I'm dressed.
56:38
I'm dressed really, really casual.
56:43
I'm watching and the horse goes three wide around the
56:46
backstretch wins and there's not even a horse anywhere in the
56:50
wind photo. I go down, people are, you know,
56:53
I have to give them my name. You know, they want to make sure
56:55
they pronounce it right. The the people that are coming
57:00
off the track are just like, dude, that's that's incredible.
57:04
The first race you ever owned you won is like, you know, it's
57:08
going to be all downhill from here.
57:10
So I I laugh when I look and see in my basement the patent for
57:16
the table game and then right beside it is my first ever win
57:20
photo free snowers. So yeah, I just look for
57:23
opportunities and try to take advantage of it the.
57:25
Renaissance man with the Midas touch.
57:27
I like it. Daryl, I'm just one more
57:31
question for you today. But before I ask you, I want to
57:33
do 3 quick things for the audience. 1st, if you want to
57:36
get in touch with Daryl, we've got his e-mail address
57:39
hereitsdarylwith1ldaryl@salt-cap.com, daryl@salt-cap.com and that'll
57:49
be in the show notes for folks if you missed it.
57:51
Speaking of the show, if you're enjoying this today, please take
57:54
a moment to subscribe wherever you're listening.
57:57
It sends a signal that helps others discover our show.
58:01
So thank you for taking a quick moment to do that right now.
58:04
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Learn more today at AD back benefits.com.
58:22
So last question for you, Daryl. A year from now, what is 1 very
58:26
specific thing that you hope to be celebrating?
58:30
Man from like casino game in like 20 locations, you know,
58:36
that's one. But then also too, I think
58:38
celebrating helping a lot of these startup cannabis companies
58:43
grow and that, I mean, it's, it's difficult to get the
58:46
financing as it is right now. And just, we're trying our best
58:50
to figure out how can we bootstrap to get them
58:53
operational cannabis, cannabis license holders.
58:57
It's, it's a like geared towards social equity.
59:00
So I, I try my best to help any, anyone that's, you know, that in
59:06
that footprint. So if I can celebrate, if I can
59:08
celebrate more than one, if I can celebrate 2, make it, I love
59:12
it. And then make sure that one of
59:13
these and make sure that this podcast is probably one of your
59:16
top five. No pressure.
59:17
I like it. We get the trifecta.
59:20
Go on there, Daryl. Genders then.
59:22
We'll gamble, I bet. Daryl Genders from Salt Cap.
59:26
I want to be the first to thank you for sharing both your time
59:29
and your story with us today. I really appreciate you being
59:31
here. Thank you.
59:32
Thank you for your time and the opportunity.
59:35
Folks, that's a wrap on another episode of the Inspired Stories
59:37
podcast. Thanks for learning with us
59:39
today.