Cannabis has become one of the fastest-growing industries in the United States and is experiencing many changes and developments as the industry evolves. Since cannabis dispensaries are often a highly cash business (due to banking restrictions), internal controls related to managing cash are critical. Due to the nature of the business there are strict rules for accounting, compliance, and taxation. Here are three reasons why accurate finance records are extremely important in the cannabis industry.
Tracking Your Sales
In most States, maintaining a license for cannabis includes having thorough financial accounting and detailed record keeping as part of the State Law license requirement. If you are not keeping accurate books and finances, there are extremely high penalties. For example, the guidelines in Oregon state read, “In addition to any other recordkeeping requirements in these rules, a marijuana licensee must have and maintain records that clearly reflect all financial transactions and the financial condition of the business. The following records must be kept and maintained for a three-year period and must be made available for inspection if requested by an employee of the Commission.“
Good Reporting Increasing Business
Having a very detail oriented accounting department helps businesses produce timely, complete, and accurate statements, which in the end helps to lower costs in accounting. An excellent reporting solution for businesses would include electronic storage of all documents, including invoicing, sales, bank records, and receipts paid to customers. Good reporting also provides cash flow insights and tax forecasts so you can keep track of your financial health. With the level of scrutiny a cannabis company’s books can be under, an accounting solution that easily meets GAAP requirements while providing flexible reporting can also make life much easier over time, opening the doors to more capital, easier audits, and fewer accounting headaches.
Employees with Proper Skills
Having strict rules with financing requires having a skilled accounting staff that is able to learn quickly and keep up with the rapidly changing regulatory environment being experienced in the cannabis industry. Be sure to keep an open mind when looking for new candidates to fill accounting positions. Don’t limit your selections to those with experience in the cannabis industry but rather look for experienced, enthusiastic accounting team members from a wide variety of industries.