Although medical and recreational marijuana consumption and businesses are becoming more commonplace, marijuana products remain on the federal government’s list of controlled substances. As a result, cannabis businesses need specialized bookkeeping services to stay compliant with evolving regulations and the IRS tax code.
Optimize Efficiency while Minimizing Costs
To optimize a cannabis company’s efficiency while minimizing costs, it’s best to hire a CFO who’s knowledgeable about the industry and its unique tax code. With a team of expert certified public accountants on your side, your operation’s finances will be in good hands as they assist with budgets, forecasts, financial strategy, treasury management and operational analytics.
280E restricts the deductions cannabis businesses can take, which means bookkeepers must track expenses with greater precision. Proper allocation to Cost of Goods Sold (COGS), detailed documentation, and accurate categorization are essential to minimize tax exposure and remain compliant.
Popular cannabis‑friendly accounting tools include QuickBooks Online (configured for cannabis), Xero with cannabis add‑ons, Canix, Flourish, BioTrack, and LeafLogix. These platforms integrate with seed‑to‑sale systems, support inventory costing, and help maintain compliance with state regulations.
COGS should be calculated using accurate inventory costing methods such as FIFO or weighted average. Effective inventory tracking requires integrating your accounting system with seed‑to‑sale systems to ensure production, packaging, and wastage are recorded correctly for tax and compliance purposes.
Each state requires cannabis businesses to maintain detailed records of sales, inventory, production, waste, and taxes. These rules can affect reporting frequency, chart-of-accounts structure, and documentation standards. Ensuring your records match state-mandated tracking systems (such as METRC) is critical.
What is Bookkeeping in the Cannabis Industry?
Cannabis is a complex and evolving field. While medical and adult-use marijuana consumption and businesses are becoming more commonplace, these products are still on the federal government’s list of controlled substances.
For this reason, it’s essential to have a cannabis CFO knowledgeable about the highly regulated cannabis space and its unique tax code. These services assist with budgets, forecasts, financial strategy, treasury management, and operational analytics to optimize efficiency and minimize costs.
Maintaining Compliance with Local Licensing
At Northstar, we offer specialized cannabis bookkeeping and other compliance-related services. With our team of expert certified public accountants on your side, you can rest assured that your operation’s finances are in good hands.
Book a free consultation to learn how our cannabis-specific certified public accountants will guide your business with expert insight into local licensing rules and the Internal Revenue Service.
Cannabis Accounting Firm Forecasting for Growth
Forecasting future trends and demands is key to positioning a cannabis business for sustainable growth. Accurate forecasting helps optimize resource allocation and allows businesses to seize opportunities proactively.
The medical marijuana space and recreational cannabis industries are some of the most complex and rapidly-growing sectors in the United States. As a result, cannabis businesses need specialized accounting and bookkeeping services to stay compliant with the IRS tax code while forecasting for growth.
Our cannabis clients understand that bookkeeping and tax services are essential to keeping their cannabis companies on track for success. Through proper financial reporting and maintaining proper accounting records, a cannabis business can thrive in this highly regulated marijuana industry.
Whether you operate in adult consumption or medical only cannabis dispensaries, Northstar is ready to help! Book a free consultation to learn all about how our CPA firm will scale your company with expert cannabis accounting and bookkeeping services.
Why are Proper Accounting Records Important?
Proper accounting records are essential for those operating in the legal medical marijuana and cannabis space. As the federal government maintains the Controlled Substances Act, cannabis business operators must adhere to strict guidelines due to the federal tax code.
However, the support Northstar provides as a cannabis accounting firm ensures your operation never has to worry about an audit. Maintaining meticulous accounting records is a surefire way to keep your business operating, even with the legal marijuana industry remaining illegal at the federal level.
Accounting and tax records are essential for those buying, distributing, manufacturing, cultivating, and selling cannabis. In some cases, even ancillary services must have their books in order to steer clear of an audit.
The federal government maintains a close eye on the cannabis space, and the only way to guarantee you’re prepared in case of an audit is with expert cannabis accounting practices.
Operating a business in the cannabis space? Contact us now to book a free consultation and learn how our cannabis accounting services will support your company’s goals today.
More on The Importance of Accurate Record-Keeping
Accurate record-keeping is vital for cannabis businesses. It ensures:
Compliance with IRS and State Regulations: Stay on the right side of tax laws and licensing rules.
Smooth Audits: Well-organized records make audits easier and less stressful.
Informed Decision-Making: Track finances, cash flow, and profitability.
Strategic Planning: Plan for growth and navigate changes in regulations.
Investor Confidence: Build trust with potential investors.
At Northstar, our expert CPAs will help you maintain precise records, giving you confidence in your financial health. Schedule a free consultation to learn more.
Cannabis Business Tax Deductions
As a cannabis business owner, understanding the tax deductions specific to your industry is crucial for optimizing your financial strategy and minimizing tax liabilities. Cannabis businesses face unique challenges due to the federal government’s classification federal legalization of marijuana as a controlled substance. However, with the expertise of our cannabis-specific certified public accountants, you can navigate the complexities of tax deductions in the evolving cannabis sector.
Some common tax deductions available to cannabis businesses include:
Cost of Goods Sold (COGS): Properly calculating COGS is essential to comply with Section 280E and reduce taxable income.
Business Expenses: Our team will help you identify eligible expenses and ensure proper documentation for these deductions.
Section 199A Deduction: Pass-through entities, such as partnerships and S corporations, may qualify for the Section 199A deduction, allowing for a potential deduction of up to 20% of qualified business income.
Does the IRS Really Go After Cannabis Businesses?
Yes, the IRS targets cannabis CEOs and the cannabis businesses they lead. Section 280E of the tax code makes it easier for this to happen – and more difficult for legal cannabis industry businesses to obtain the same deductions as businesses operating outside of the marijuana industry.
Navigating Section 280E
Section 280E of the tax code poses challenges for cannabis businesses, limiting their ability to deduct certain expenses. However, with strategic planning and proper accounting practices, businesses can find legal ways to minimize tax liabilities and optimize their financial position.
Section 280E was added to the tax code in 1982; it prohibits businesses that sell a Schedule I or Schedule II drug from claiming any business expenses. This can be a major challenge for cannabis businesses, as most standard business deductions are not allowed.
Fortunately, there are ways to work around Section 280E. A cannabis operation can achieve deductions and minimize its tax liability with the right guidance.
Our team of experts can help you navigate the complex world of cash flow management and bookkeeping in the cannabis space. Keep your business finances on track and in compliance with Northstar by booking a free consultation today.
Why Do Cannabis Businesses Use Northstar?
At Northstar, you’re always working with a cannabis-specific accounting professional; our team of experienced accountants is well-versed in cannabis taxes and bookkeeping. We understand the unique challenges that cannabis businesses face, and we’re dedicated to helping them stay compliant with the IRS tax code.
From calculating the cost of goods sold to facilitating a bank account for cash-only operations and finding credit unions for your operation, our ancillary services are designed to support your cannabis business. In addition, our team can help you prepare for potential tax audits and even file past tax returns.
The legal marijuana industry comes with its own set of nuances and challenges, which is why it’s essential to work with an experienced cannabis accountant. Northstar has been providing cannabis bookkeeping services since the industry began, and we’re proud to be one of the leading providers of these services.
Cannabis businesses choose Northstar because we’re a full-service CPA firm with a team of experts who understand the complex financial landscape of the marijuana industry. With our help, you can focus on
At Northstar, we help cannabis business owners stay on top of their finances without the risks of working with generalized accounting firms. If you’re looking for expert cannabis business accounting services to help you manage your finances, book your free consultation today.
Northstar’s Cannabis Bookkeeping vs. Generalized Accounting Firms
Northstar’s Outsourced CFO Services in a Growing Industry
Operating cannabis-related businesses means local and federal law will impact your operation. While you might be tempted to find a generalized CPA firm, business administration in the cannabis space is a highly specialized field that demands more than generally accepted accounting principles.
The Advantages of Outsourced CFO Services
Utilizing outsourced CFO services tailored to the cannabis industry can be a game-changer for businesses. Expert CFOs bring specialized knowledge, financial insights, and strategic guidance, empowering cannabis companies to make informed decisions and drive growth.
Scaling Your Cannabis Operation
Scaling a cannabis company requires a well-thought-out strategy. From expanding operations to entering new markets with higher startup costs, businesses must carefully plan for growth to remain successful.
At Northstar, our cannabis CPA firm focuses on scaling cannabis companies according to their needs. The services we provide to our clients operating in the cannabis industry remain flexible because we understand how this flexibility helps throughout the high and low months.
Looking for a reliable cannabis accounting firm focused on your success? Book your free consultation with Northstar to learn how we’ll grow your cannabis business today.
General Accountants & The Cannabis Industry
Regardless of whether your cannabis business is small or a massive company, general accountants serving the cannabis industry can be problematic. Even something that should be simple, like cannabis tax preparation, becomes more complex.
While certified public accountants can become knowledgeable about cannabis industry nuances, they must remain up-to-date on all state and federal legislation that could impact their clients.
The cannabis plant is not federally legal just yet, and it’s created a highly regulated industry that should only be navigated by certified public accountants and accounting professionals that specialize in the cannabis sector.
Until the Controlled Substances Act no longer has such a profound impact on every aspect of the cannabis industry’s operations, one small error made by a general accounting firm has the potential to shut an operation’s doors permanently. Cannabis accounting firms understand the nuances of this space.
Providing accounting and bookkeeping services to the cannabis industry means understanding which state laws impact small businesses. But it also means staying on top of legislative changes, tax cuts, cannabis banking changes, cannabis tax laws and more.
Understanding State Regulations
Complying with state-specific regulations is essential for cannabis businesses operating in different regions. Understanding these nuances ensures smooth operations, avoids penalties, and maintains a positive reputation within the industry.
Ordinary business expenses aren’t always applicable for cannabis industry business operators. And even with the National Cannabis Industry Association focused on changing the way legal cannabis businesses operate, this national association has a long way to go before general accounting for this controlled substance will suffice.
At Northstar, our cost accounting and tax professionals have decades of combined experience working with cannabis-related businesses. Book your free consultation to learn how our cannabis-specific certified public accountants will scale your operation in this budding space.
Northstar’s Cannabis Accounting Services
Northstar’s cannabis accounting services are designed to help marijuana businesses comply with the IRS tax code. Our team of experts has decades’ worth of combined experience helping the cannabis industry, and we’re dedicated to helping our clients thrive despite federal law.
Between tax services and other accounting services, Northstar stands out among other accounting firms in how we specialize in servicing cannabis businesses. We understand that generalized accounting services don’t suffice for our cannabis clients, which is why we maintain knowledge on everything that might impact you as a cannabis business owner.
Overcoming Cannabis Banking Challenges
Accessing banking services remains a major challenge for cannabis entrepreneurs and businesses due to federal restrictions. Overcoming these obstacles requires creative solutions and working with financial institutions experienced in the cannabis sector.
Our mission is to ensure those operating in the cannabis industry have access to the accounting services they need, without being forced to work with accounting firms that aren’t well-versed in state and federal regulations.
Looking for cannabis-specific certified public accountants to guide your operation’s success? Book your free consultation now to learn how we’ll scale your business with financial reporting and data insights.
Getting Started with Northstar
If you need assistance with your cannabis bookkeeping, Northstar is here to help. We understand all nuances of the cannabis bookkeeper space, including accounting for the cost of goods sold, excise/sales tax, and more.
If you’re looking for reliable accounting services and payroll professionals that help many cannabis businesses succeed, Northstar is here to help. Our team of experts has years of experience in the cannabis industry and specializes in helping businesses comply with the IRS’s compliance demands.
Northstar is ready to help you with your bookkeeping needs. To book a free consultation, contact us at NstarFinance.com or call (888) 999-0280. Be sure to also like and follow us on Facebook, Instagram, and LinkedIn.
