Accounting for Cannabis: A New Industry With Huge Potential
The cannabis industry in the United States is poised for explosive growth. In 2017, licensed marijuana businesses generated between $5.8 and $6.6 billion in revenue. With the availability of legal cannabis ever increasing—currently 9 states and D.C. have legalized cannabis for recreational use, with an additional 21 approving it for medical use—it’s hard to project exactly how big the industry will get, but there’s no doubting it will get a whole lot bigger. With so many businesses rushing into this space, accounting professionals who understand the industries nuances stand to benefit massively.
What makes this world even more attractive to accountants and consultants is the hyper-regulated nature of cannabis. Any cultivator, distributor, or dispensary that wants to keep its doors open better have rock-solid record keeping. Without detailed accounting software that integrates seamlessly with inventory information, these businesses can end up becoming what Bruce Andersen, CPA, calls “fresh meat for the auditors.”
An insider’s perspective
Andersen, who runs California Business Developers, a division of his practice specifically devoted to helping legal marijuana businesses with consulting and tax preparation, understands the intricacies of cannabis-related accounting as well as anyone in California. He sees an industry on the cusp of exponential growth, but one with many potential pitfalls for business owners.
“It’s a very detailed environment,” Andersen notes. “You basically have to report through four layers: Metric [the regulatory software used in California], the cannabis software, the accounting software, and then plain old tax reporting.” Because of the unique nature of the industry, most businesses that handle cannabis use software custom designed for them. However, Andersen notes, very few businesses use accounting software which offers adequate inventory management. That’s why he sees AccountingSuite™ as the perfect fit for the growing world of legal cannabis.
How AccountingSuite™ can help your business Grow
“AccountingSuite™ and its robust inventory integration functionality is a serious asset for cannabis companies,” says Andersen. “It offers a check and balance to what’s happening in the cannabis layer software, ensuring accurate, detailed reporting.” The number of cannabis products, from flowers and edibles to balms and oils, is constantly on the rise, so inventory management is crucial. No matter which vertical of the cannabis space a client is in (cultivation, manufacture, distribution, or retail), they should keep exacting records of every transaction.
That’s true of any business, but especially so for companies venturing into this new, controversial industry. Simply by selling cannabis, a business has a target on its back in the eyes of regulators and auditors. Any whiff of negligence or malfeasance could result in swift and decisive action. Therefore, companies in the cannabis space understand the value of detailed, cloud-based accounting that communicates with all the other essential aspects of their business. The question is: Can your firm be the one to provide these businesses what they need?
AccountingSuite™ offers best-in-class inventory management integration as part of AccountingSuite™ Professional With Ecommerce. It’s the perfect accounting software for businesses that rely on inventory data to make informed decisions, whether they sell cannabis, clothes, or cookies. Head to our pricing page to find out more.
The contents of this article are for informational purposes only. The use and sale of cannabis is illegal under Federal law. YELLOW LABS SOFTWARE, INC. does not endorse participation in any illegal activities. Consult with an attorney to determine if your business activities are legal under the laws and regulations of your jurisdiction.