Accounting for cannabis growers is a hot topic among members of the cannabis community and accountants. As cannabis laws are changing in the United States, more people than ever are growing marijuana to cash in on the green rush.
But what does accounting for cannabis growers entail?
In this post, we cover the ins and outs of accounting for cannabis growers, outline some of the most frequently asked questions, and explain the benefits of bringing a CPA in to handle cultivation operations’ financials.
QuickBooks for Farmers, But What About Cannabis Cultivators?
Quickbooks Online for Cannabis Growers
QuickBooks Online (QBO) can assist in creating a cannabis cultivator’s chart of accounts. While this accounting software was expected to be a significant part of the cannabis industry, it does not replace CPA insights and Excel sheets.
However, for small operations, it offers a budget-oriented product. But its inventory features are sub-par.
Workarounds are essential for seed-to-sale products and it doesn’t adequately track the various cannabis taxes. QBO is limited when it comes to state excise and local taxes on cannabis.
QuickBooks Premier Desktop for Cannabis Growers
Alternatively, some believe that accounting for cannabis growers can involve QuickBooks Premier Desktop (QBPD). This can be a good alternative to QBO as the operator can choose between having it on a server in-house or have it hosted outside of their office.
Once this decision has been made, it’s time to learn about the features. Inventory management is possible for small cannabis grow operators. But for businesses with multiple verticals, this won’t work.
QBPD also allows for setting up and tracking of various cannabis-related taxes. This can include sales tax, city taxes, distro excise, and cultivation excise. All in all, this is a good software for financial reporting if you’re an owner, manager, or investor of a cultivation operation.
QuickBooks Enterprise Solution
QuickBooks Enterprise Solution (QBES) can help cannabis cultivators who have multiple lines or locations of their operation. For instance, if you handle cultivation and distribution, or have a full microbusiness.
Setting this system up allows all licenses under a single QuickBooks account. But there’s also the option to break them up into multiple accounts depending on volume and staffing.
Similar to Premier, QBES is a desktop product. It can be hosted on an in-house server or you have the option to set it up on a remote server.
Here’s a list of features that make QuickBooks for cannabis cultivators valuable:
- Inventory system
- Multiple warehouse locations, either physical or virtual, to allow for full accountability of inventory.
- Easy transfers
- Product drop-shipping capabilities
- Price levels for products and/or by customers
- Manage various taxes to include sales, excise, and local
- Combined reporting across QB files.
- Includes P&L reporting for the entity and all licenses
- Offers Sales reports for various distro arrangements, or multiple cultivation locations
- Allows for multiple users with over 100 access features
- Works with the state METRC system
Accounting for Cannabis Growers FAQ
Does QuickBooks work with cannabis companies?
While QuickBooks can work with cannabis companies, it does not include cannabis industry charts of accounts. This also does not integrate with other cannabis software, which makes it challenging for CPAs and cannabis business operators looking to incorporate visibility into their finances.
Is QuickBooks an option for cannabis growers?
Even though QB is a good option for small dispensary owners, it’s also not the best solution when you’re looking to keep track of your inventory across multiple facilities. We recommend our clients document everything using Excel sheets. While we can use QB, it’s not robust enough for most cannabis cultivators.
Does METRC integrate with QuickBooks?
METRC integrates with Quickbooks. But cannabis growers will still need an inventory management software that integrates with METRC to make this work. Think of the inventory management software as a middleman bridging METRC with QB.
Is gusto cannabis-friendly?
Gusto is cannabis-friendly, facilitating payments from cannabis growers to their employees. It’s also quite easy to upload this information into accounting software. CPAs and other accounting professionals serving the cannabis space are even able to become certified partners with Gusto, allowing them to provide this solution to cannabis clients when they cannot find support elsewhere.
Benefits of Having a CPA Accounting for Cannabis Growers
For cannabis growers, having a CPA is an advantage. Even if you’re planning on keeping things simple by only using QuickBooks for your financial reports, having access to a proper chart of accounts and other features that are built into QB software will be beneficial.
Northstar’s CPAs can spot mistakes that may have been made in order entry or how data was input into QuickBooks. We have first-hand experience working with and without QB, allowing us to help our clients avoid these mistakes altogether.
Furthermore, when it comes to deductions, it’s challenging for cannabis growers to deduct their expenses. This is something we help with, ultimately saving our clients thousands – even hundreds of thousands – of dollars in taxes.
And then there’s the data and analytics. The software can provide some of this information, but without an experienced CPA analyzing the progress, it’s difficult to know what you’re looking at and the best course of action to take. Our CPAs take the guesswork out of scaling cultivation operations.
Looking to grow your cannabis grow? Northstar is ready to help.
Contact us now to speak with one of our specialized experts about how we’ll scale your operation with the right accounting practices.