As the Cannabis industry grows and thrives in new states and new legislation is proposed every day, is your accounting practice keeping up with the times. With cannabis still not federally legal, there are many ins and outs of accounting that needs to be updated frequently.
With many cannabis companies working in the legal arena, and some still in the illegal market, it is critical that your books are up to date and done correctly. Many accountants in the industry are aware that it is ever changing, and we need to keep our clients aware of the changes. Especially the ins and outs of what constitutes great accounting, and what can help keep costs down. Keeping costs down is a great way to pass savings onto customers, which will maintain them as loyal customers.
There are so many variables in the cannabis accounting industry! A good accountant should be able to help with taxation, software, banking, and merchant services. These are all basic services that every business needs, but are equally difficult to find in the cannabis arena. And many times you are not just looking at a single entity, but something that will work for many entities as vertical integration is rampant. There is also different accounting needs for each vertical entity.
There are many hurdles that need to be overcome, and it does not matter if you are an accountant, bookkeeper, CPA, or business owner.
Vendors may not service the cannabis industry (POS Systems, Payroll, Accounting, Merchant Services, etc)
There is a major lack in accounting tools, workpapers, guidelines, GAAP guidance, chart of accounts, etc.
Lack of knowledge in the software providers, including bugs, downtime, and poor customer service.
"Seed to Sale" tracking software that can be difficult to use.
Strict reporting for monthly, quarterly, and yearly requirements
This all requires some workarounds to stay up to date, which also requires reconciliations of cash and inventory daily.
With so many requirements and hoops that need to be jumped through, it is incredibly important to have the best accountants on your team. Many firms will state that they know all about the cannabis industry, but they are trying to apply their accounting methods to a industry that is ever changing. You need to make sure your accounting team is trained in cannabis accounting, and can update your accounting books and procedures.