Cannabis is still Federally illegal due to it’s schedule 1 drug classification, which creates some major issues for cannabis business owners. From banking to transportation of goods; from seed to sale; from payroll to paying bills, there are challenges that most businesses do not have to deal with that hinder day-to-day operations. Cannabis accounting professionals need to be aware of these challenges and must be able to help their clients navigate and find solutions so that they can properly operate their business.
Larger accounting firms at this point in time are not heavily involved in cannabis, meaning these multi-million dollar operations must find smaller firms that are willing to help them with their accounting.
Accounting in and of itself is a challenge because software is truly lacking and doesn’t cater to the specific needs of cannabis businesses. Quickbooks and other accounting software do no have a chart of accounts tailored to cannabis entities for example. Xero, a competitor to Quickbooks, does serve cannabis companies. There are four sub-industries in cannabis: farming, food production, chemical manufacture, and retail, and many cannabis companies involve all 4 of these. Additionally, most set up complex multi-entity structures, use cost and consolidated accounting, and have complex inter-company transactions.
To serve them well, a bookkeeper or accountant needs to understand these industries, cannabis, the state/federal issues, and have a good work papers. In addition, there are even more industry issues such as lack of banking, complex software, state seed to sale tracking, cash management issues, investor reporting, GAAP accounting and inventory management.
The Problem
Legally-licensed cannabis companies are being shut down and/or are facing outrageous penalties and fines, after having invested hundreds of thousands of dollars, due to poor accounting practices.
Cannabis companies require complex, accurate accounting in order to remain compliant and audit ready.
With our diverse expertise, we can help your cannabis businesses thrive!
We have Quickbooks and Excel-ready chart of accounts specifically tailored to the unique needs of various cannabis business entities:
grow/farms, chemical/extract, dispensary/retail, and entities with multiple business types.
Create a perpetual data room with our highly detailed template file that reconciles and ties out every balance sheet account and significant P&L account.
We make sure your cost accounting meets the complex State and IRS rules required to maintain adherence to 280e tax rules.
Easily transition from GAAP to tax accounts, including allocations between cannabis and non-cannabis divisions, which ties directly to tax return COGS.
We Empower our clients with critical dashboards and reports that will allow them to make better decisions and manage the financial health of their company.
WHY OUTSOURCED ACCOUNTING AND CFO SERVICES?
A long-term contract with accounting outsourcing companies increases shareholder value and reduces the costs of functions that aren’t directly related to your business. If you’ve found that you’re spending too much time on bookkeeping, other aspects of business are being neglected, or you could use professional expertise from accountants, then outsourced finance and accounting services are the perfect solution for your business.
We are multi-platform
