When Is the Sales Tax Holiday?

The Ohio Sales Tax Holiday runs from Friday, August 7 through Sunday, August 9, 2026. During this limited window, certain back-to-school items can be purchased tax-free.

What Items Qualify?

To help shoppers plan ahead, the Ohio Department of Taxation has outlined specific categories and price limits for eligible items:

• Clothing priced at $75 or less per item
• School supplies priced at $20 or less per item
• School instructional materials priced at $20 or less per item

What’s Different This Year?

Unlike the broader exemptions offered in 2024 and 2025—when most items under $500 qualified—the 2026 holiday is more limited in scope. Only the categories listed above are eligible.

Additionally, purchases made for use in a trade or business are not exempt, even if they fall within the price thresholds.

Avoid Confusion: Know Before You Shop

Sales tax rules can be nuanced, especially when it comes to definitions of qualifying items. The Ohio Department of Taxation provides a detailed FAQ page that clarifies:

• What counts as “clothing”
• Which items qualify as school supplies or instructional materials
• Answers to common shopper questions

You can review the official guidance here: Ohio Sales Tax Holiday 2026 | Department of Taxation

Make the Most of the Holiday

With proper planning, Ohio shoppers can take full advantage of this tax-saving opportunity. Reviewing eligible items ahead of time ensures a smoother checkout experience—and helps avoid unexpected costs.

Need Guidance?

If you have questions about Ohio’s Sales Tax Holiday or other state and local tax (SALT) matters, HBK’s experts are here to help.

Contact the HBK SALT Advisory Group at: hbksalt@hbkcpa.com

We are excited to announce that BB&K, Brimmer, Burek and Keelan, LLP, a Tampa-based accounting firm, has joined HBK CPAs & Consultants, effective May 1, 2026. This combination brings together two firms that share a deep commitment to client relationships, technical excellence, and the communities they serve.

Strengthening Our Florida Presence

BB&K has established a strong presence in the Tampa Bay market, serving clients with sophisticated accounting and advisory services delivered with the personal attention that defines trusted professional relationships. The firm’s reputation for responsiveness and deep client knowledge is a natural fit with how HBK works.

With BB&K, HBK now operates 21 offices nationwide and serves clients across six Florida markets: Boca Raton, Fort Myers, Naples, Stuart, Sarasota, and Tampa. The addition of BB&K’s 22 professionals reflects our commitment to strategic growth in markets where we can deliver meaningful, lasting value.

“The Tampa Bay market is one we have had our eye on for some time, and BB&K is exactly the kind of firm we look for,” said Thomas Angelo, Managing Principal and CEO of HBK. “Their commitment to client relationships and technical excellence is the same foundation HBK has been built on since 1949. This combination gives clients in Tampa access to the full depth of HBK’s resources, and it gives our broader client base a trusted local presence in a market that matters.”

Leadership

BB&K’s Managing Partner, Donald Keyes, CPA, will join HBK as Principal and Market Leader for the Tampa office.

“Joining HBK gives our team access to capabilities and resources that will meaningfully expand how we serve our clients,” said Keyes. “We have spent years building deep relationships in this community. Joining HBK lets us offer those clients a broader range of services without changing anything they value about working with us. This is the right next step for our people and for our clients.”

Heather Kovalsky, CPA, joins HBK as a Principal in the Tampa office, bringing more than twenty years of tax experience to the firm. Heather’s depth of technical expertise and her dedication to client service strengthen HBK’s tax practice in Florida and add meaningful capacity to our growing team in the region. Susan Evans, CPA, Kara Keyes, CPA, Terry Kuhn, CPA, and Cong Nguyen, CPA will be joining the firm as Senior Directors.

Clients will continue working with the professionals they know and trust. BB&K’s team is joining HBK and will maintain the same commitment to understanding each client’s unique needs and delivering tailored solutions.

Looking Ahead

This combination is part of HBK’s broader growth strategy: thoughtful, values-aligned expansion into markets where we can deliver exceptional service and build on strong local foundations. Tampa Bay is a market with significant momentum, and we are proud to grow our presence here with a team of this caliber.

We are grateful to Don, Heather, and the entire BB&K team for choosing to build their future with HBK. We look forward to what we will accomplish together for our clients, our people, and the Tampa Bay community.

Your Team Just Received an Email from Your CFO Requesting an Urgent Wire Transfer. It Looks Legitimate. The Voice on the Follow-Up Call Sounds Exactly Right. What Happens Next Could Cost You.

Every day, business owners face a reality that feels straight out of a spy novel. AI-generated emails replicate executive writing styles perfectly. Deep-fake voice calls sound identical to your leadership team. Fraudsters know your vendors, your payment cycles, and your organizational structure better than some of your own employees.

Sophisticated AI tools have made financial fraud nearly indistinguishable from legitimate business communications. Your accounts payable team processes dozens of payment requests weekly. Your procurement staff manages vendor relationships with multiple suppliers. Any one of these touchpoints becomes a potential fraud vector when criminals deploy AI that can mimic voices, forge documents, and craft emails that pass every visual authenticity test.

You’re frustrated by the constant tension between operational efficiency and security protocols. Every new verification step feels like it slows down business, and your team already complains about approval workflows. Adding another layer of fraud prevention sounds like throwing sand in the gears of productivity.

But you shouldn’t have to choose between running an efficient business and protecting against sophisticated fraud. Your operation deserves security measures that work with your processes, not against them.

The good news is, effective fraud prevention isn’t about creating bureaucratic obstacles. It’s about training your team to recognize specific red flags and establishing smart verification workflows that catch threats before money moves.

Red Flags Your Team Must Recognize

Urgent Payment Requests That Bypass Normal Procedures

AI-generated fraud almost always includes urgency. “We need this wire processed by end of day” or “The vendor will cancel our account if we don’t pay immediately” are designed to short-circuit your normal verification steps. Train your team on one simple rule: urgency is a red flag, not a reason to skip verification.

If a payment request claims to be urgent, it requires additional verification, not less. Legitimate business emergencies can wait 30 minutes for a callback to a known number.

Changes to Vendor Payment Information

When a vendor emails an employee requesting updated banking information, your team should treat it as high-risk by default. Fraudsters frequently impersonate vendors, sending official-looking emails with new wire instructions. The email address might be one character different from the legitimate vendor contact.

Establish this protocol immediately: any request to change payment information requires verbal confirmation via a phone number from your existing records, not the number listed in the email. Make an outbound call to the vendor using contact information you already have on file.

“Executive” Communications Outside Normal Patterns

The CFO doesn’t typically email the accounts payable clerk directly. The CEO doesn’t usually bypass the controller for wire transfer requests. AI fraud exploits organizational hierarchies by impersonating executives communicating with employees who rarely interact with them directly.

Your team needs to understand normal communication patterns. When an executive reaches out to someone they don’t typically contact, especially about financial transactions, that’s a verification trigger.

Requests That Create Isolation

Fraudsters often include instructions like “Please handle this confidentially” or “Don’t mention this to anyone until it’s complete.” This isolation tactic prevents the natural checks that occur when team members discuss unusual requests with colleagues.

Build a culture where confidentiality requests about financial transactions automatically trigger verification protocols. Real executives understand that financial controls require multiple people knowing about transactions.

Establishing Clear Reporting Protocols Right Now

Designate a Fraud Response Contact

Today, identify one person in your organization as the primary contact for suspicious activity reports. This could be your controller, CFO, or office manager. The key is that every employee knows exactly who to contact when something feels wrong.

Make this contact information visible: post it near accounts payable workstations, include it in email signatures, reference it in team meetings. Removing friction from reporting suspicious activity is critical.

Create a Simple Reporting Template

Your team doesn’t need a complicated form. They need a simple way to document what raised their concerns:

• What was the request? (payment, information change, urgent transfer)
• Who initiated contact? (name, email address, phone number used)
• What felt unusual? (bypassed procedures, unusual urgency, out-of-pattern communication)
• What action was requested? (specific dollar amount, account changes, deadline)

Email or Slack works fine. The goal is documentation, not bureaucracy.

Build a Non-Punitive Reporting Culture

Here’s a critical principle that protects your business: false alarms are victories, not failures. Every suspicious activity report that turns out to be legitimate is still a win because it means your team is paying attention.

Make this explicit to your employees. If someone reports a potential fraud attempt that turns out to be a real executive request, thank them for following protocol. Never create an environment where employees hesitate to report because they fear looking foolish.

Establish 30-Minute Response Protocols

When suspicious activity gets reported, someone needs to respond within 30 minutes during business hours. This doesn’t mean resolving the situation; it means acknowledging the report and beginning verification.

Quick response time serves two purposes: it prevents fraud from succeeding while delays occur, and it reinforces to employees that their reports matter.

Creating Quick-Start Verification Workflows

The Two-Channel Verification Rule

Any financial transaction over your threshold amount (many businesses use $5,000 but set yours based on risk tolerance) requires verification through two separate communication channels.

If the request comes via email, verify by phone. If it came via phone, verify via email or in-person. Never verify through the same channel where the request originated. A fraudster who sent you an email can answer the phone number listed in that email.

The Known Contact Rule

Verification calls must go to phone numbers from your existing records, not numbers provided in suspicious communication. This single rule stops most AI voice fraud immediately.

If your “CFO” emails requesting a wire transfer, you call the CFO’s cell phone number from your contact list. You don’t call the number in the email signature. You don’t call a number the “CFO” texted you during the exchange.

The 24-Hour Delay for New Vendor Accounts

When adding a new vendor to your payment system, implement a mandatory 24-hour waiting period before the first payment can process. This delay allows time for verification and gives fraudsters impersonating vendors a window where their scheme might unravel.

Yes, this occasionally creates minor inconvenience. It also creates a documented pause that stops fraud.

Multi-Person Approval for Unusual Requests

Define “unusual” for your business. This might be:

• Payments above a certain threshold
• Changes to existing vendor banking information
• Wire transfers to new accounts
• Payments outside normal business relationships

Whatever your criteria, unusual requests require two people to verify and approve. This isn’t about distrust; it’s about catching AI-generated fraud that might fool one person but rarely fools two.

Take Action This Week

You don’t need months to implement basic fraud protection. Start with these three steps this week:

Step 1: Schedule a 30-Minute Team Meeting

Gather your accounts payable, procurement, and administrative staff. Walk through the red flags outlined above. Answer questions. Identify your fraud response contact.

Step 2: Implement Two-Channel Verification

Set your threshold amount and communicate the new requirement: payments above this threshold require verification through a second channel using known contact information.

Step 3: Post Reporting Protocols

Put the fraud response contact name and number where your team can see it. Create a simple reporting template. Make it easy to report suspicious activity.

These three steps don’t require software purchases, consultants, or major operational changes. They require clear communication and consistent execution.

Experience Protection Without Sacrificing Efficiency

Imagine your accounts payable clerk receives an email from your CFO requesting a $15,000 wire transfer for a new vendor relationship. The email looks perfect, down to the signature block. But your clerk remembers the training. She recognizes the red flag: the CFO doesn’t normally email her directly about wire transfers.

She picks up the phone and calls the CFO’s cell number from the company directory. The CFO answers and has no idea about any $15,000 wire transfer. Fraud attempt stopped. Total time invested: four minutes.

Your team doesn’t work in constant fear of fraud. They work with clear protocols that catch threats before money moves. Operations continue efficiently because verification steps are quick and targeted, not bureaucratic obstacles applied to everything.

For more background and context, be sure to check out Part 1 and Part 2.

The landscape of the American cannabis industry has reached a historic turning point. Thursday, April 23 the Trump administration officially announced the reclassification of medical marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA).

Acting Attorney General Todd Blanche signed the order this morning, executing a directive from President Trump’s December 2025 Executive Order. For cannabis operators, this is not merely a symbolic victory; it is a fundamental shift in the financial and regulatory gravity of the industry.

The Most Significant Change: Section 280E Relief

For years, the single greatest hurdle to profitability in the cannabis sector has been Internal Revenue Code Section 280E. This provision prohibited businesses dealing in Schedule I or II substances from deducting ordinary business expenses—such as rent, payroll, and marketing—from their federal taxes.

With the move to Schedule III, Section 280E no longer applies.

What this means for your bottom line:

• Reduced Effective Tax Rates: Many operators currently face effective federal tax rates of 70% or higher. Under Schedule III, cannabis businesses will be taxed like standard corporations, typically around 21% to 28%.
  
• Immediate Cash Flow Injection: Estimates suggest this change will unlock billions in after-tax cash flow across the industry.
  
• Revised Entity Structures: The complex, multi-tiered organizational structures many businesses used to mitigate 280E may no longer be necessary.

What Rescheduling Is (And Is Not)

It is critical to distinguish between rescheduling and legalization. While this move acknowledges the medical utility of cannabis, it does not create a federal “free-for-all.”

Feature	Impact Under Schedule III
Federal Status	Remains a federally controlled substance, but at a lower risk tier (similar to ketamine or Tylenol with codeine).
Interstate Commerce	Still generally prohibited. State-legal programs remain isolated by state lines for now.
Banking	Expected to improve. While not a replacement for the SAFER Banking Act, Schedule III reduces the “reputational risk” for major financial institutions.
FDA Oversight	Likely to increase. Schedule III substances are subject to higher levels of federal oversight regarding manufacturing and labeling standards.

Strategic Considerations for 2026

The transition to Schedule III is an “event-driven” planning moment. At HBK, we are advising our clients to focus on the following areas immediately:

1. Tax Planning & Amended Returns: We must evaluate the effective date of the rescheduling to determine if refund claims or amended returns for the 2025/2026 tax years are viable.
2. Accounting Method Changes: Moving away from 280E requires a shift in how you track inventory and overhead. Modernizing your accounting systems now is vital to ensure compliance with standard GAAP and IRC rules.
3. Audit Readiness: Increased profitability often brings increased scrutiny. As more traditional capital enters the space, having “audit-ready” financials becomes a prerequisite for growth and M&A activity.
4. State-Level Impacts: Be mindful of state-specific changes. For example, in Michigan, businesses are navigating a new 24% wholesale excise tax effective January 1, 2026. Rescheduling relief at the federal level must be balanced against evolving state tax burdens.

The Path Forward

This move signals that the federal government is finally aligning with the reality of state-legal markets. However, the regulatory “dust” has not yet settled. Litigation from opponents and further rulemaking by the DEA and DOJ are expected in the coming months.

Expert Insight: “The elimination of 280E is the ‘Great Normalization’ the industry has waited for. It transforms cannabis from a high-risk cash-and-carry business into a legitimate, scalable asset class.” — HBK Cannabis Solutions Team

If you have questions about how this rescheduling affects your specific tax position or corporate structure, please reach out to your HBK advisor.

Contact HBK Cannabis Solutions Our team specializes in helping cannabis operators navigate the complexities of tax, accounting, and strategic growth in this rapidly evolving environment.

How has your business’s cash flow projections changed in light of today’s Schedule III announcement?

As of this update, this information applies only to medical marijuana and does not extend to recreational use. Additional clarity is expected following the hearings scheduled for June 29.

High-net-worth individuals seeking tax reduction strategies may encounter investment pitches promising extraordinary charitable deductions, sometimes five or more times their initial cash investment. While they often come with tempting promises backed by legal opinions, the opinions are generally weak and supported by questionable legal analysis. Many opportunities have caught the attention of federal regulators and tax enforcement officials, raising serious questions about their legitimacy and the potential consequences for participants.

Understanding these structures and recognizing warning signs can protect you from costly tax compliance problems down the road.

How These Schemes Typically Work

These charitable contribution strategies follow a pattern that tax professionals find troubling. Promoters establish networks of shell companies, with multiple entities across investment plans, that acquire interests in digital technology or intangible assets at relatively low valuations.

Investors purchase membership interests in these limited liability companies and then vote to donate the technology to charity at an appraised value significantly higher than their original investment. The result: substantial charitable deductions that can exceed the investor’s cash outlay by a multiple of five or more.

According to Bloomberg Tax reporting, which covers the current whistleblower report against Solidaris Capital LLC, a $50,000 minimum investment could potentially generate a $250,000 charitable deduction under these arrangements. The technologies involved have ranged from navigation systems for visually impaired individuals to digital coloring books for pediatric cancer patients to crime-fighting artificial intelligence.

Red Flags: When “Charitable” Becomes Questionable

Several characteristics distinguish legitimate charitable giving from potentially abusive tax shelters:

Disproportionate Deduction Multiples. When an investment promises a tax deduction several times larger than your cash contribution within a single tax year, scrutiny is warranted. The IRS has established rules limiting charitable deductions in similar contexts. For syndicated conservation easements, regulations generally disallow deductions exceeding 2.5 times the investor’s initial basis in the donated property.

Complex Multi-Entity Structures. Legitimate charitable contributions typically involve straightforward transfers of cash or property. Schemes requiring participation in multiple shell companies, special purpose entities, or complex partnership arrangements often serve to obscure the economic substance of the transaction.

Emphasis on Tax Benefits Over Charitable Purpose. Marketing materials that lead with tax deduction guarantees rather than the charitable mission suggest the structure’s primary purpose is tax avoidance, not philanthropy.

High Fee Structures. Bloomberg Tax’s analysis of one Solidaris offering showed approximately 25% of investor funds actually purchasing the technology donated to charity, with 62% allocated to legal, accounting, management fees, and licensing costs, and 13% paid as commissions. When fees consume the majority of your investment, question whether the arrangement serves genuine charitable purposes.

Guaranteed or “Effectively Guaranteed” Outcomes. Legitimate investments carry risk. Promoters who guarantee specific tax benefits or deduction multiples may be overpromising on outcomes they cannot control.

The IRS Perspective on Similar Strategies

Federal tax enforcement officials have expressed significant concerns about these structures. Miles Fuller, a former senior counsel at the IRS Office of Chief Counsel, told Bloomberg Tax: “One dollar does not turn into five dollars overnight. And if it did, it is unlikely the beneficial party would then donate the five dollars to charity rather than sell and pocket the profit.”

The comparison to syndicated conservation easements is instructive. Those arrangements, where investors acquired stakes in entities holding land with development restrictions that were then donated to charity at inflated appraised values, have been designated by the IRS as “listed transactions” requiring special disclosure. Many participants have faced audits, penalty assessments, and substantial legal costs defending their deductions.

Brian Galle, a University of California, Berkeley law professor and former Justice Department tax prosecutor, warned that strategies “can be replicated easily and that’s the kind of thing you want to shut down pretty fast.”

What High Net Worth Individuals Should Know

The charitable contribution deduction serves an important public policy purpose when used appropriately. Legitimate charitable giving provides valuable support to worthy organizations while offering tax benefits commensurate with the economic sacrifice the donor makes.

These multiples-based schemes invert that relationship. Rather than making a gift and receiving a corresponding tax benefit, participants make a modest investment hoping to extract outsized tax deductions. The charitable organization becomes almost incidental to the transaction.

Even when promoters provide legal opinions supporting their strategies, those opinions do not bind the IRS or protect you from potential consequences if the structure is later challenged. The determination of whether a tax shelter complies with federal law can take years of auditing, litigation, and adjudication. During that time, participants face uncertainty, legal costs, and potential penalties.

Questions to Ask Before Investing

If you encounter an investment opportunity emphasizing charitable deductions:

• What is the economic substance of this transaction beyond the tax benefit?
• How is the appraised value of the donated property determined, and is that valuation defensible?
• What percentage of my investment actually funds charitable purposes versus fees and commissions?
• Has the IRS issued any guidance or taken any enforcement actions regarding this type of structure?
• Am I comfortable defending this deduction in an audit, potentially years from now?
• Would I make this investment if there were no tax benefits involved?

Getting Sound Tax Advice

Effective tax planning involves understanding legitimate strategies that align with your financial goals and comply with tax law. Year-end charitable giving can be a meaningful part of your tax strategy when approached thoughtfully.

Before committing to any investment promising outsized tax benefits, consult with advisors who can evaluate the arrangement objectively. At HBK CPAs & Consultants, our tax professionals help high net worth individuals navigate complex tax situations and distinguish between legitimate planning opportunities and arrangements that carry significant risk.

If you’ve been approached about a charitable contribution strategy that seems unusually favorable, or if you have questions about charitable giving as part of your year-end tax planning, we’re here to provide objective guidance based on current tax law and IRS enforcement priorities.

Source: Bloomberg Tax, “Whistleblower Targets Tax Shelter Promoting Do-Good Technology,” March 23, 2026

Ohio’s cannabis regulatory landscape shifted significantly on March 20, 2026, when Senate Bill 56 took effect, fundamentally altering where and how intoxicating hemp products can be sold in the state. For business owners operating in Ohio’s cannabis sector, understanding these changes is critical to maintaining compliance and adapting operations.

The Regulatory Shift

Senate Bill 56, signed by Governor Mike DeWine on December 19, 2025, reclassifies any product containing more than 0.4 milligrams of total THC per container as marijuana¹. This means intoxicating hemp products—including delta-8 gummies, THCA flower, and THC-infused beverages—can no longer be sold at gas stations, smoke shops, convenience stores, or other unlicensed retail locations. These products are now restricted exclusively to Ohio’s licensed cannabis dispensaries, which are regulated by the Division of Cannabis Control².

The law represents Ohio’s response to what state lawmakers and regulators identified as a regulatory gap: the proliferation of untested, unregulated intoxicating hemp products in retail environments where age verification and product safety oversight were inconsistent³.

Federal Context and Implementation Timeline

Ohio’s ban occurred against the backdrop of federal regulatory changes. In November 2025, Congress passed legislation limiting legal hemp products to 0.4 milligrams of total THC per container, with a one-year implementation delay extending to November 2026⁴. This created a compressed timeline for Ohio: while the federal government allowed states a full year to adapt, Ohio moved more quickly, giving businesses just over three months from the law’s signing to full enforcement on March 20, 2026.

This shorter implementation window meant rapid operational changes for affected businesses. Retailers carrying intoxicating hemp products faced decisions about returning inventory, halting orders, and communicating the regulatory shift to customers accustomed to purchasing these items at convenience locations⁵.

What Changed on March 20, 2026

The practical impact of Senate Bill 56 includes:

Product Reclassification: Any product exceeding 0.4 mg total THC per container is now legally classified as marijuana, regardless of whether it was previously marketed as hemp-derived.

Retail Restriction: Intoxicating hemp products can only be sold through Ohio’s licensed cannabis dispensaries. The state has capped total dispensary licenses at 400 locations⁶.

Geographic Requirements: Dispensaries must maintain specified distances from schools, playgrounds, and churches, which may affect where new licensed locations can open⁷.

Enforcement: Selling intoxicating hemp products outside licensed dispensaries now constitutes a first-degree misdemeanor on first offense and a fifth-degree felony on subsequent offenses⁸.

Age Verification: Licensed dispensaries enforce age 21+ requirements for all purchases, eliminating the previous scenario where these products were accessible to minors in unlicensed retail settings⁹.

Implications for Cannabis Business Owners

For dispensary operators, Senate Bill 56 represents a market consolidation opportunity. Products that were previously sold in thousands of unlicensed retail locations across Ohio are now channeled through the state’s regulated dispensary system. This shift may increase foot traffic and revenue opportunities for licensed operators.

For businesses previously selling intoxicating hemp products outside the licensed system, the law requires an immediate operational pivot. Some may pursue cannabis retail licensing if eligible and if licenses remain available under the 400-location cap. Others may focus on non-intoxicating hemp products that remain compliant with the 0.4 mg threshold, though this represents a significant narrowing of product offerings.

Manufacturers and distributors must also recalibrate. Products formulated to comply with previous federal hemp definitions (less than 0.3% delta-9 THC by dry weight) may no longer be viable in Ohio if total THC per container exceeds 0.4 mg. Product reformulation or market exit become the available options.

Compliance Considerations

Cannabis business owners should verify:

Product Testing: All products sold through dispensaries must meet Division of Cannabis Control testing and safety standards, which differ from the largely unregulated environment in which many hemp products previously operated.

Inventory Management: Licensed dispensaries should confirm that any newly added hemp-derived products comply with both the 0.4 mg threshold and all other state cannabis regulations.

Documentation: Maintain clear records demonstrating compliance with licensing requirements, product testing protocols, and age verification procedures.

Interstate Commerce: Ohio law prohibits bringing marijuana into the state from other states, even if purchased legally elsewhere, as federal law still classifies marijuana as an illegal substance¹⁰.

Looking Ahead: Federal Implementation in November 2026

While Ohio’s law is now in effect, the federal hemp regulations will become fully enforceable nationwide in November 2026. This creates a dual compliance environment where Ohio businesses must meet state requirements now while preparing for federal enforcement later this year. Business owners operating across multiple states should track both timelines to ensure comprehensive compliance.

The regulatory landscape for hemp-derived products has narrowed significantly, and Ohio cannabis businesses must adapt quickly to the new framework. Those with questions about licensing, compliance requirements, or business restructuring should consult with HBK Cannabis Solutions who are familiar with both cannabis law and the evolving regulatory environment.

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Footnotes:

¹Ohio Capital Journal, “New Ohio law banning intoxicating hemp products, THC and CBD beverages takes effect,” March 20, 2026.

²Spectrum News 1, “Ohio’s marijuana and hemp rules take effect,” March 20, 2026.

³ABC6 On Your Side, “What to Know: Ohio’s hemp ban takes effect, clearing shelves for non-licensed retailers,” March 22, 2026.

⁴Ohio Capital Journal, “New Ohio law banning intoxicating hemp products, THC and CBD beverages takes effect,” March 20, 2026.

⁵13 ABC, “New Ohio law means THC-infused drinks won’t be available on many store shelves,” March 6, 2026.

⁶News Talk Cleveland, “Ohio Cannabis Law Update 2026: 10 Major Changes You Should Know,” March 19, 2026.

⁷Spectrum News 1, “Ohio’s marijuana and hemp rules take effect,” March 20, 2026.

⁸Cannabis Business Times, “Ohio Senate Passes Bill to Limit Hemp Product Sales to Licensed Dispensaries, Liquor Stores,” 2025.

⁹Spectrum News 1, “Intoxicating hemp ban in effect in Ohio — what you won’t see on shelves anymore,” March 24, 2026.

¹⁰News Talk Cleveland, “Ohio Cannabis Law Update 2026: 10 Major Changes You Should Know,” March 19, 2026.

A privately held company doubles its revenue over five years. Headcount expands, new markets are entered, and the organization feels larger and more sophisticated. Yet when the business is evaluated for a potential transaction, ownership transition, or financing event, the valuation conclusion is lower than expected. The reaction is often disbelief: how can a company that has grown so significantly not be worth materially more?

The assumption that revenue growth automatically creates value is deeply embedded in business culture. Scale signals progress. Market share implies strength. Expansion suggests momentum. However, valuation is not a measure of size; it is a measure of expected, risk-adjusted future cash flow. Growth that weakens cash generation or increases risk can leave enterprise value unchanged, or in some cases, reduced.

The issue is not growth itself. It is the economics of growth.

Revenue Is Not Value

Enterprise value is driven by the amount of future cash flow, the timing of those cash flows, and the risk associated with achieving them. Whether through an income approach or observed market multiples, buyers are pricing durability and convertibility of earnings, not revenue scale.

The relevant question is not whether revenue grows. It is whether incremental revenue produces incremental free cash flow above the company’s cost of capital.

Revenue is an input. Value is an output of capital efficiency and risk.

What Actually Moves Value (Beyond Revenue)

Mechanically, revenue growth affects value only through its impact on cash flow and risk. Several variables determine whether growth strengthens or weakens those drivers.

First, working capital intensity. As revenue rises, accounts receivable and inventory typically expand. If each dollar of new revenue requires a disproportionate increase in working capital, free cash flow compresses, even when EBITDA rises. Growth that consumes liquidity reduces distributable cash and increases financial strain.

Second, margin durability. Expansion strategies that rely on pricing concessions, lower-margin segments, or premature overhead growth may increase top-line performance while weakening unit economics. Buyers do not reward revenue volatility or margin compression. They reward sustainable earnings power.

Third, capital intensity. Some growth models require recurring reinvestment in equipment, facilities, technology, or human capital simply to sustain revenue. When maintaining scale requires continuous capital deployment, the business becomes structurally less cash generative.

Fourth, risk profile. Rapid expansion often introduces operational complexity, customer concentration shifts, geographic exposure, and execution risk. Increased uncertainty raises the required return applied to projected cash flows. A higher required return can offset the benefit of higher nominal earnings.

Each of these variables operates mechanically in valuation. If growth increases capital requirements or risk faster than it increases durable cash flow, enterprise value does not rise proportionately. In some cases, it declines.

Revenue alone does not move value. Cash efficiency and risk do.

The Real Test: Return on Incremental Capital

The clearest way to evaluate growth is through return on incremental invested capital.

Every expansion initiative, whether hiring, acquisition, new facility, or market entry, requires capital. That capital may come from retained earnings, debt, or equity, but it has a cost regardless of source.

Growth creates value only when incremental investment generates returns above that cost.

Many privately held companies do not explicitly measure incremental return on capital. Expansion decisions are often justified by revenue targets, market share goals, or competitive positioning rather than by return thresholds. Over time, this can lead to businesses that are larger but not more valuable.

This is where valuation thinking becomes strategic rather than transactional. Modeling incremental returns forces discipline:

• How much capital is required to support projected revenue?
• How quickly is that capital recovered through cash flow?
• What happens to returns if margins compress or working capital expands?
• Does the initiative strengthen pricing power and durability, or dilute it?

These are capital allocation questions, not accounting questions. They determine whether growth compounds value or erodes it.

Practical Decision Triggers

Before committing to significant expansion, owners should evaluate growth as an investment decision.

Model incremental free cash flow rather than relying solely on EBITDA. Assess how working capital scales under realistic operating assumptions. Determine whether new revenue requires permanent capital support.

When leverage increases to fund growth, reassess the company’s risk profile and required return. If margin volatility increases or capital intensity rises structurally, expected valuation multiples may compress, even if earnings increase.

Most importantly, establish explicit return thresholds for growth initiatives. If projected returns do not exceed the company’s cost of capital with a reasonable margin of safety, expansion may be dilutive to value.

These conversations are most effective before strategic momentum builds. Once resources are committed and expectations set, discipline becomes more difficult.

Reframing Growth as Capital Allocation Discipline

Growth is not inherently valuable. It is a use of capital.

Enterprise value increases when capital is deployed into opportunities that produce durable, risk-adjusted returns above their cost. It stagnates, or declines, when expansion absorbs capital without strengthening economic fundamentals.

The distinction is subtle but consequential. A business can grow rapidly while weakening its underlying economics. It can also grow modestly while compounding value through disciplined reinvestment.

Valuation is not simply a transaction exercise. It is a framework for evaluating whether strategic decisions strengthen or dilute long-term value.

The most valuable companies are not necessarily the fastest growing. They are the most disciplined allocators of capital.

When Daily Operations Mask Strategic Gaps

Your company is growing. Revenue is up, you’re landing bigger clients, and your team has expanded from 15 employees to 50 in just three years. HR basics are handled—payroll runs on time, benefits are in place, and you’ve got an employee handbook somewhere on the shared drive.

But turnover is higher than you’d like. Your best project manager just gave notice, citing “better opportunities.” Another employee expressed concern because they felt their recent pay increase wasn’t large enough. And you’re spending five hours a week fielding employee questions that feel like they should be someone else’s job.

They seem like isolated incidents but are actually symptoms of a costly gap. According to Gallup research, voluntary turnover costs U.S. businesses a staggering $1 trillion annually—and most of this damage is self-inflicted through preventable turnover.

We Understand the HR Blind Spot

At HBK CPAs & Consultants, we work with business owners who’ve built successful companies through financial discipline, operational excellence, and strategic vision. You’ve mastered your market. You know your numbers. But HR often remains the one area where “good enough” persists because the true costs stay hidden until they show up as turnover, regulatory penalties, or missed growth opportunities.

HR doesn’t generate revenue directly, so it’s easy to defer investment until a crisis forces your hand. By then, you’re paying premium rates to solve problems that systematic HR capabilities would have prevented.

We help business owners see beyond firefighting to the strategic advantage that proper HR infrastructure creates—not just compliance and risk mitigation, but genuine competitive advantage through workforce capabilities aligned with growth objectives.

Why Leading Firms Treat HR as Financial Infrastructure

With decades of experience as a Top 50 accounting firm and recognition for client satisfaction through ClearlyRated’s Best of Accounting™ award, we’ve seen how the most successful mid-sized companies approach HR differently. They don’t treat it as administrative overhead, they build it as financial infrastructure that protects margins and enables growth.

Five HR Capabilities That Directly Impact Your Bottom Line

1. Compliance Architecture That Prevents Six-Figure Exposures

Most business owners don’t realize that a single misclassified employee can trigger back-wage liability, penalties, and legal fees exceeding $100,000. Multiply that across multiple employees or years, and the exposure compounds rapidly.

What good compliance looks like: Current employee handbooks that reflect federal and state law changes, properly completed I-9 forms with audit trails, documented job descriptions that support classification decisions, and required workplace posters displayed correctly. These aren’t administrative checkboxes, they can help prevent costly claims.

Bob Floreak, MSIR, Principal and National Director of HR Business Advisory Services at HBK CPAs & Consultants, notes: “The businesses that treat compliance as paperwork end up treating lawsuits as surprises. The ones that build compliance architecture treat it as risk management with measurable ROI.”

2. Strategic Hiring Systems That Cut Replacement Costs

Gallup research shows that replacing an individual employee costs between one-half to two times their annual salary. For a $75,000 position, that’s $37,500 to $150,000 in direct and indirect costs—recruiting, training, lost productivity, and knowledge transfer. In a 100-person organization with average salaries of $50,000, annual turnover and replacement costs can reach $660,000 to $2.6 million.

What strategic hiring delivers: Structured interview processes that identify the right fit before the offer letter, comprehensive onboarding programs with 30/60/90 day milestones that accelerate productivity, and recruitment strategies that go beyond job postings to tap passive candidates and professional networks. Companies with systematic hiring approaches experience measurably lower replacement costs and faster time-to-productivity.

3. Performance Infrastructure That Retains Your Best People

Here’s a sobering statistic from Gallup: 52% of voluntarily exiting employees say their manager or organization could have done something to prevent them from leaving. Even more troubling, 51% say that in the three months before they left, nobody, not their manager, not any other leader, spoke with them about their job satisfaction or future with the organization.

When goals are unclear and feedback is inconsistent, high performers disengage and poor performers persist. The result: your A-players carry B and C performers, creating resentment and eventual turnover of exactly the people you can’t afford to lose.

What performance infrastructure creates: Annual performance reviews linked to compensation decisions, documented performance improvement plans applied consistently across the organization, clear expectations set for each position, and managers trained to conduct effective performance conversations. Most importantly, it creates regular touchpoints where employees feel heard before they start looking elsewhere.

4. Compensation Strategy That Retains Top Talent Without Overpaying

Compensation decisions made ad hoc, matching a departing employee’s outside offer, giving raises based on who asks loudest, create pay equity issues, budget unpredictability, and turnover when top performers realize they’re underpaid relative to market or internal peers.

What compensation strategy delivers: Market-based compensation structures that ensure competitiveness, pay equity analysis that identifies and corrects internal disparities before they trigger claims or resignations, and annual compensation review processes with clear methodology tied to performance and market movement. Strategic compensation planning helps organizations control total compensation costs while remaining competitive for top talent.

5. Workforce Planning That Turns HR Into Competitive Advantage

The difference between operational HR and strategic HR is forward visibility. Operational HR fills open positions. Strategic HR anticipates workforce needs 18-36 months out and builds talent pipelines, succession plans, and organizational structures that support business objectives before gaps become crises.

What workforce planning enables: Succession plans for key leadership positions so client relationships and institutional knowledge aren’t held hostage by individual departures, leadership development programs that build your next generation of managers internally, and workforce metrics connected to business outcomes so you can measure HR ROI the same way you measure every other investment.

Want to see where your HR capabilities stand today? Our 5-minute HR Assessment Checklist shows exactly where operational improvements or strategic development could create value in your business.

Moving From Firefighting to Strategic Advantage

Imagine making workforce decisions with the same confidence you bring to financial decisions. Picture succession plans that ensure business continuity when key employees transition. Envision HR metrics that tell you exactly which investments in talent development deliver measurable returns.

This is how companies with strategic HR capabilities operate. They don’t scramble to fill positions because workforce planning anticipated needs months earlier. They don’t face surprise compliance issues because their HR architecture includes regular audits and updates. They don’t lose top performers to compensation issues because their pay strategy is market-informed and equitable.

When HR evolves from administrative function to strategic infrastructure, the operational benefits compound: reduced turnover, improved compliance, reclaimed leadership time, and workforce capabilities aligned with business objectives. That’s the vision of what’s possible when HR becomes strategic advantage rather than administrative overhead.

Ready to Turn HR Into Strategic Infrastructure?

HBK’s HR Business Advisory Services helps mid-sized businesses build HR capabilities that protect margins and enable growth. Unlike traditional HR consultants, we understand how HR decisions impact your financials. We can quantify turnover costs, connect workforce planning to business objectives, and implement solutions that improve both operational effectiveness and financial performance.

Backed by the vision of what’s possible, we help you move beyond reactive HR to strategic workforce capabilities that drive competitive advantage.

Start with our HR Assessment Checklist to see where your capabilities stand today, then schedule a consultation to develop a practical roadmap for improvement.

Contact Bob Floreak, MSIR, Principal and National Director of HR Business Advisory Services
Tel: 724-419-8728
Email: bfloreak@hbkcpa.com

New Jersey has enacted comprehensive legislation regulating hemp-derived products containing intoxicating levels of THC. Governor Phil Murphy signed Assembly Bill 4509 into law on January 12, 2026, with general provisions taking effect January 13, 2026. The law’s excise tax on intoxicating hemp beverages becomes effective April 13, 2026—giving cannabis operators less than one month to prepare for compliance.

What the Law Establishes

Regulatory Framework Now in Force

A. 4509 creates a structured regulatory scheme for hemp-derived cannabinoid products containing intoxicating THC levels, aligning New Jersey regulations with federal law. The legislation clarifies definitions around hemp, intoxicating hemp products, and total THC concentration—addressing ambiguities that have complicated product development in New Jersey’s cannabis market.

Excise Tax Takes Effect April 13

The law imposes a $3.75 per gallon excise tax on wholesale sales of intoxicating hemp beverages, effective April 13, 2026. The Legislative Budget and Finance Office estimates this could generate between $350,000 and $1 million annually, depending on market adoption.

Cannabis operators manufacturing or distributing intoxicating hemp beverages have less than 30 days to integrate this tax into pricing structures, accounting systems, and wholesale agreements.

Enforcement and Penalties

The law strengthens enforcement provisions and establishes civil penalties for violations, signaling New Jersey’s commitment to regulatory oversight.

Immediate Action Steps for Cannabis Operators

With the April 13 deadline approaching, cannabis businesses should prioritize:

1. Product inventory analysis to identify all hemp-derived items subject to the new framework
2. Tax accounting systems implementation capable of tracking wholesale volumes and calculating the $3.75 per gallon excise tax
3. Wholesale agreement updates to address tax obligations and pricing adjustments
4. Labeling verification for compliance with clarified THC concentration definitions
5. Recordkeeping procedures for tax reporting and enforcement audits
6. Consultation with cannabis-specialized accountants to ensure proper tax remittance

Strategic Considerations

Pricing and Margin Analysis

The excise tax creates a new cost component in the production and distribution chain. Operators must determine whether to absorb this cost, pass it through to customers, or adjust product margins to maintain competitiveness.

Market Positioning

The regulatory framework may influence competitive dynamics between intoxicating hemp products and other cannabis or alcohol products. Operators should assess whether hemp-derived products represent substitutes for existing offerings or create distinct market opportunities.

Time-Sensitive Compliance

With less than one month until the excise tax takes effect, cannabis businesses must act quickly to establish compliant tax systems, update product documentation, and adjust financial planning. At HBK CPAs & Consultants, our cannabis practice group helps operators navigate regulatory changes, integrate new tax obligations into accounting systems, and maintain compliance across evolving frameworks.

To discuss how the intoxicating hemp law affects your operations and ensure compliance before April 13, contact our cannabis practice group.

This article is provided for informational purposes only and does not constitute legal advice. While HBK CPAs & Consultants provides accounting, tax, and compliance services to cannabis businesses, we recommend consulting with a qualified attorney regarding legal interpretation of New Jersey’s intoxicating hemp law, regulatory compliance obligations, and contractual matters. Each business situation is unique, and professional legal counsel can provide guidance tailored to your specific circumstances.

On March 10, Governor Mikie Sherrill unveiled her budget proposal for New Jersey’s 2027 fiscal year, which begins July 1. The $60.7 billion spending plan, a 1.6% increase over the current budget includes significant tax changes, property tax relief adjustments, and a $1.7 billion structural deficit that could impact businesses across the state.

For New Jersey business owners, this budget proposal carries important implications for tax planning, operational costs, and strategic decision-making over the coming fiscal year. Understanding these changes now allows you to prepare and adjust your financial strategies accordingly.

At HBK CPAs & Consultants, we’ve reviewed the proposal to help our New Jersey clients navigate what these changes could mean for their businesses. Here’s what you need to know.

Corporate Tax Changes: New Limits on NOL Deductions

One of the most significant business tax provisions is the proposed $1 million cap on the corporate tax deduction for net operating losses (NOLs) and prior net operating losses (PNOLs). This change would primarily affect larger corporations that have historically carried forward substantial losses to offset taxable income.

What this means for your business: If your company has accumulated NOLs exceeding $1 million, you’ll need to reassess your tax projections and consider alternative strategies for managing your effective tax rate. This cap could accelerate tax liabilities for companies emerging from periods of loss or those with significant carryforwards.

Alternative Business Calculation Amendments

The budget proposes changes to the alternative business calculation that would affect pass-through entities:

• Businesses with gross income between $500,000 and $1 million: The deduction would be reduced to 25%
• Businesses with gross income above $1 million: The deduction would be eliminated entirely

What this means for your business: If you operate a pass-through entity such as an S-corporation, partnership, or LLC, these changes could significantly increase your New Jersey tax liability. Business owners in this income range should model the impact on their after-tax income and consider whether structural changes or timing strategies might help manage the transition.

New Healthcare-Related Fee for Large Employers

The proposal includes a new per-employee fee on employers with more than 50 employees enrolled in NJ FamilyCare (New Jersey’s Medicaid program). While specific fee amounts weren’t detailed in the initial announcement, this represents a new cost category for qualifying employers.

What this means for your business: If you employ more than 50 workers who are enrolled in NJ FamilyCare, budget for this additional per-employee expense. This may also influence decisions about employee benefits packages and compensation structures.

Property Tax Relief Adjustments

The budget modifies the Stay NJ program.

• Stay NJ income threshold: Reduced from $500,000 to $250,000
• Stay NJ maximum benefit: Capped at $4,000

These adjustments to property tax relief programs reflect the state’s effort to target benefits more narrowly while managing the overall budget deficit.

The Structural Deficit Question

The $1.7 billion structural deficit represents a significant challenge. A structural deficit means the state’s recurring expenses exceed its recurring revenues—a situation that typically requires either revenue increases or spending cuts in future years.

What this means for your business: While this year’s proposal includes specific tax changes, the structural deficit suggests potential for additional revenue measures in future budget cycles. Business owners should stay attuned to legislative developments and maintain flexibility in their long-term tax planning.

Other Business-Friendly Provisions

The budget also includes several provisions designed to support business operations:

• Reduced filing fees for corporations and nonprofits
• Additional staffing for the New Jersey Business Action Center
• Continued funding for the Main Street Recovery Fund
• Additional NJDEP staff to expedite permitting
• Creation of a permitting dashboard for transparency

These administrative improvements could ease compliance burdens and accelerate project timelines for businesses navigating state regulatory processes.

Timeline and Next Steps

The proposed budget must be approved by both the Assembly and the Senate and signed into law by June 30. During the legislative process, provisions may be modified, removed, or added based on negotiations between the Governor and legislative leaders.

What you should do now: Don’t wait until the budget is finalized to assess its impact. Work with your tax advisors to model scenarios based on the proposed changes, particularly if your business would be affected by the NOL cap or alternative business calculation amendments.

If you have questions about how these proposed changes might affect your business, our team at HBK is here to help you analyze the implications and develop strategies to minimize adverse impacts. Contact us to discuss your specific situation and ensure you’re prepared for whatever provisions ultimately become law.

Understanding and planning for tax changes before they take effect gives you the greatest flexibility to respond strategically rather than reactively.