The cannabis industry is big business – by 2026, cannabis is on track to become a $52.6 billion dollar industry. That’s a lot of cash to manage, and one of the biggest challenges in cannabis right now is a lack of access to traditional banking and financial services. That can make it tough to choose an accountant that fits the needs of your cannabis-related business (CRB). With an accountant that isn’t seasoned in the industry, your CRB could face any number of problems. Lack of cannabis industry experience can result in accidental oversights and errors or get overcharged by a firm cashing in on “weed greed.”
When shopping around for the right accounting services for your CRB, you’ll need to know what questions to ask. With this information, you’ll be able to decide if an accounting firm can deliver the results you need to succeed.
For CRBs, money management is even more complex and nuanced than in other industries. Cannabis taxation and compliance law is highly regulated, complex, and in a constant state of change until the industry is fully mainstream. Errors and oversights can lead to pricey penalties and headaches for your business, even years later.
Tempting as it may be to choose a general accounting firm or accountants who are new to the cannabis industry, it could be an expensive mistake. You can’t afford to pay a cannabis accountant to learn the ropes of the industry at the expense of your business.
What a cultivator needs is different from a dispensary’s needs, so not only will your cannabis accounting firm need to be industry experienced, but you’ll need to know what kind of accounting services you’re looking for. There are a lot of types of CRBs, and they all have a specific set of financial needs, compliance standards, business expenses, and tax concerns. CRBs are subject to inconsistent and often conflicting tax laws across every state, which makes staying in compliance a challenge. There isn’t an exact residency requirement for every state, and not every state applies IRS code 280E. To ensure that your CRB maintains compliance and protects itself from oversights that could result in penalties, you’ll need to choose the right kind of cannabis accountant.
A Certified Public Accountant (CPA) is a state-licensed professional that may advise, audit, review, and certify financial statements that are reviewed by third parties, such as bankers, investors, and the IRS.
A bookkeeper reviews, manages, and prepares business transactions for day-to-day operations. Bookkeepers may also prepare state tax returns and government filings.
Enrolled Agents (EAs) are IRS-licensed agents that have the specific experience required for IRS audits and nuanced tax issues. EAs may prepare tax returns and are specifically trained to represent their clients in dealings with the IRS.
The right cannabis accountants will be up-to-date with industry innovations in FinTech.To make the most of your relationship with your cannabis accounting firm, you’ll need to have a clear understanding of the information your CRB will need to deliver. Integrated accounting technology adds a layer of security, data backup, and functionality to your CRB’s daily operations. By utilizing FinTech solutions and recommending the right integrated accounting software for your CRB, your cannabis accountants make it easier for you to track, manage, and deliver the information they need.
With an accounting firm that’s experienced in the cannabis industry, your CRB can not only avoid fines and penalties, but also plan for the future with a sustainable plan for growth. You need to engage the services of accountants with a successful industry track record, specific experience with the type of CRB you operate, and one who can prepare your CRB for IRS audits.
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Call our accounting pros today, and see what Accountabis can do for you!
