Accounting Services
for
Cannabis Companies
Accounting for Cannabis:
The Niches within the Niche
There are several different types of “niches” within the cannabis industry:
- Retail
- Agriculture/Farming
- Manufacturing/Processing
- Wholesale/Distributions
- Management Companies
In addition to each variety of operations, each niche has different compliance issues to manage. Master each one and be first to market to become the recognized industry leader in your region!
Cash and Inventory Controls -
Cannabis businesses are prohibited from using federally insured banking institutions, most cannabis operations are forced to keep large amounts of cash onsite. In addition to the obvious challenges of managing large volumes of cash, a simple bookkeeping error can cause a license to be revoked. Failure is not an option!
Manual Accounting and Data Management
Access to accounting software and integrations can be very limited. Employees are handling thousands of dollars in cash on a daily basis. Every dollar and every ounce of inventory is scrutinized. Consistent processes that produce expected results are already created for you.
Monthly & Quarterly Compliance Reporting:
The movement of inventory, every ounce of inventory, is tracked through a regulatory compliance agency. Though the names of these agencies vary from state to state, compliance guidelines are very consistent.
The accounting services required for this niche include:
- Segment 1: Concepts, Terms and Tasks
Tasks vary based on the type of cannabis operations you serve. From retailer to farmer, each vertical has different types of product sold. Everything changes based on how revenue is recognized, how 280e costs are need to be captured, and the specific requirements for tracking the movement of cash and inventory.
Segment 2: Burden of Proof and Closing the Books
Movement of Inventory: Since cannabis a controlled substance, the state compliance agencies and auditors are exceedingly meticulous in their review of records, processes and your ability to meet their defined “Burden of Proof”.
Segment 3: Financial Statements and Compliance Reporting
Banking Compliance: If a cannabis business is fortunate enough to have an account with an accommodating credit union, they must meet strict reporting requirements. Account holders can have their accounts closed for the slightest of errors. Audits happen if a cash deposit exceeds $10,000 in a single deposit. There is little room for error when proving services to this niche.
Momentum BK can support your accounting practice in the following ways:
- Simplification: With Momentum BK, you don’t have to figure out a complicated accounting method on your own.
- Peace of Mind: With our support, you won’t lose sleep wondering if your accounting processes are correct and if you can answer your clients’ questions.
- Risk Mitigation: Proper management of cash accounts, manual tracking and recording of daily transactions, and maintaining compliance requirements is crucial in the cannabis market. Failure in these areas can lead to serious consequences, including loss of license. With Momentum BK, you can be confident that these aspects of your practice are being handled correctly.