Almost Daily Cannabis Compensation Update

30 September 2020

Before you read my “10 Common Compensation Mistakes” article, read “6 Cannabis Business Lessons We Learned Too Late”

Before you read my “10 Common Compensation Mistakes” article, read “6 Cannabis Business Lessons We Learned Too Late”

Return to Cannabis Compensation Consulting Services

26 January 2020

“What are companies like us doing?” – Revisiting compensation peer groups

From the NCIA Blog

“As we research executive compensation in the cannabis sector, we find a blend of compensation practices from these diverse industries, defying the notion that there is a “norm” or a “median” in the cannabis sector.”

23 January 2020

Are your cannabis company’s employee compensation expenses tax deductible? You may have to ask the US Supreme Court or US Tax Court. If you are trafficking in controlled substances, that is.

From Marijuana Business Daily
and a previous article on Section 280E

 Cannabis Compensation Consultants Observation:

Cases in California and Colorado have ascended to the federal appeals level.

As explained by Mr. Nick Richards, a cannabis tax attorney with Greenspoon Marder, some cannabis companies have been assessed income taxes under Internal Revenue Code Section 280E that exceed the firm’s income and net worth.

Be sure to confirm that your compensation consultant or adviser understands Section 280E and the alternatives for optimizing tax-effectiveness of executive and employee compensation in cannabis companies.

No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.

22 January 2020

Does a terminating CFO get a severance package?
(Read the fine print)

Jan. 17, 2020 /CNW/ – Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) announced that
Mr. Michael Carlotti’s employment with the Company as Chief Financial Officer has been terminated
effective January 16, 2020.

 Cannabis Compensation Consultants Observation:

If Mr. Carlotti was terminated by Australis Capital without cause or he terminated for “Good Reason” he would receive:

“an amount equal to one and one half times the annual salary at the time of termination (which is equal to one year’s annual salary and the minimum target year-end bonus,
the Executive would be eligible to receive) and any vested stock awards or grants.”

But, if he was terminated “For Cause” or he resigned, then he gets…any money due to him as of the date of termination.

  • Mr. Carlotti joined in 2018 with
    – a base salary of US$240,000
    – annual bonus ranging from US$120,000 to US$192,000
    – 1,800,000 stock options (1.1% of the company) at a strike price of $0.20
    – 450,000 RSUs (0.3% of the company) granted at a price of $1.59AUSA.CN closed January 16 at US$0.45.

So Mr. Carlotti may receive US$360,000 and the rights to vested stock options that would be 19cents in-the-money. It appears he would have been 1/3 vested in his 180,000 options so 60,000 x 19 cents = $15,600.

This highlights the importance of well-defined terms in an employment agreement:  “For Cause” and “Good Reason” and “Without Cause” – and even “disability”.

22 October 2019

Executive Equity Compensation in the Cannabis Industry Sector:
Silicon Valley on Steroids (or on something…)”

“Cannabis companies are attracting broad public interest and their executive pay issues and practices are likely to be in the headlines”

Presented at the 2019 Global Equity Organization
Americas Regional Conference

View the Presentation
(includes animation requiring manual advance)