Cannabis Accounting Programs: An Introduction
First, we must understand what cannabis accounting software is! What does it do, and why do business owners in the marijuana business need it? Many tech tools have gained a foothold in cannabis production, such as digital medical cannabis, which is gaining recognition in the scientific community. Similarly, several accounting solutions are also becoming popular in this niche.
As the marijuana industry expands and evolves – this growth is highlighted by a sales forecast of USD 61 billion by 2026 – traditional accounting practices won’t keep pace with the modern models being used in this niche. That’s where cannabis accounting software solutions come in!
This software changes how business finances work in the weed industry. Whether it’s calculating taxes, monitoring inventory, complying with regulatory requirements, or tracking worker performance, all can be done with a single platform. A cannabis accounting program has distinct features & functionalities to help business owners streamline complicated accounting processes. They improve efficiency and ensure compliance with the FDA (a hard nut to crack if you rely on traditional accounting!).
This discussion takes us to the next question: What do cannabis accounting solutions do? What are the most prominent features of a marijuana software program? Let’s explain it in the next section.
The Need for Cannabis Accounting Software Explained
We learned that a cannabis software solution will take care of all your accounting needs. After all, when you run a marijuana business, you have to tackle a set of regulations & compliance requirements unique to this niche. But that’s not all! Cannabis business owners also have to deal with regular audits and years of litigation along with legal fees if found non-compliant. That’s why business owners have to invest in a software solution designed to address these problems. You’ll need cannabis accounting because:
Helps You Stay Compliant
When it comes to running a cannabis business, local/state, and federal authorities have imposed several strict guidelines that can often be very confusing. You have no choice but to adhere to these regulations even if they seem to be changing all the time and are contradictory to each other. However, the perfect cannabis software & accounting solution will ensure regular compliance by automating this process. It’ll update itself whenever new marijuana regulations are passed by the government.
Keeps Your Inventory Full
Cultivating and manufacturing cannabis products ain’t easy, for sure! Distributors have to make sure that their inventories are full. However, inventory tracking can be a doozy without automation. The cannabis accounting software market comes to the rescue once more and provides stout inventory management features that can
- Tracking stock levels
- Monitoring product availability
- Keeping an eye on product movement
- Facilitating backtracking of in-demand items
In short, cannabis accounting solutions tell you what you have and don’t have in your inventory. You can also see when you’ll be running out of a certain item.
Calculates and Reports Taxes
Now, tax reporting isn’t really easy, especially in the cannabis industry. Either you pay expense legal fees to a lawyer who specializes in this niche or buy an affordable cannabis accounting software package. It’s up to you! If you invest in cannabis accounting solutions, these algorithms will simplify tax calculations in a second. They’ll also ensure compliance with specific tax requirements for marijuana businesses, e.g., a law as complex as 471 C; 471 C can make tax calculations even more complex since it leads to a business owners tax liabilities being underreported.
Does Financial Analyses Quite Well
Doing quick and accurate financial analyses may not seem that daunting a task if you have experienced versatile accountants at hand. Many cannabis businesses rely on amateur bookkeepers who require the utilization of cannabis accounting automation solutions. These solutions will help them:
- Analyze financial data
- Generate comprehensive reports
- Gain insights into financial performance
That’s how you can make informed decisions and find out how to improve cannabis production.
Works Well With Other Business Software
It’s a no-brainer that cannabis bookkeeping software isn’t the only one you’ll be using. A typical firm will make use of different software packages, such as:
- Payroll software
- Point-of-sales systems
- Seed-to-sale tracking systems
What’s amazing about marijuana bookkeeping solutions is that they integrate seamlessly with many of these software programs. You can easily transfer data back and forth without performance lags. So, this aspect of cannabis software eliminates the need for manual data entry or incorrect data presence.
7 Features of Marijuana Accounting Software
Surely, you’ll now be interested in learning about marijuana accounting software solutions’ key features and aspects! Different accounting solutions designed for the marijuana industry offer distinct features; it is important to go through the list of features and find the ones that coincide with your business needs. For instance, some software solutions are made for larger companies, while others are designed for the needs of small businesses. So, you should check out the key features of your chosen business package to determine if it’s what your company needs. Here are some features generally found in weed accounting software:
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Regulatory Compliance
Let’s start with the most common feature, i.e., regulatory compliance. A cannabis accounting solution is packed with features like built-in compliance checks, automated reporting for regulatory agencies (such as Metrc), product tracking/tracking abilities, etc.
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Inventory Management
As explained before, cannabis businesses deal in different marijuana-extracted products, such as:
- Edibles
- Flowers
- Gummies
- Skin patches
- Concentrates
That’s why business owners need features like effective inventory management in an accounting tool to maintain foolproof records of the stuff stored inside their warehouses. Cannabis accounting software – the one you’ll choose after careful consideration – will help you with the following:
- Tracking product quantities
- Monitoring product expiry dates
- Managing batch numbers efficiently
- Generating detailed inventory-level reports
Tax Reporting
There’s no need to emphasize the importance of tax reporting again. You already know how tax laws can be complex in the marijuana business. Dealing with 280E regulations can drain all your energy. That’s why it is vital to go with a software package that offers amazing tax calculation features. You’ll search for great features like automated tax calculations, tax software integration, Form 8300 generation, etc.
Business Software Integration
Does your favorite cannabis bookkeeping software work well with other software solutions? Integrating this software with other applications already in use in your marijuana company is important. Seamless & error-free integration will ensure smooth data flow. That’s how you’ll reduce manual data entry and end up lowering the risk of errors.
Data Security and Privacy
The cannabis industry deals with sensitive information that must be kept confidential in case the rivals get their hands on it. That’s why privacy is a priority when a marijuana business is looking for a bookkeeping solution. The ideal software must have data encryption and multi-factor authentication features. It must also back up your data regularly. Moreover, you should invest in a marijuana accounting solution that follows industry best practices and gets regular software updates.
Scalability and Customization
As your business grows, your accounting software must keep up with your expansive needs. Look for the perfect accounting solution that can:
- Handle increased transaction volumes
- Accommodate different locations/subsidiaries
- Provide customized features as per your business needs
User-Friendly Interface
Don’t neglect this one; it’s probably one of the most important features cannabis accounting tools offer to small businesses. You mustn’t invest in a marijuana accounting app that’s difficult to understand, as if it were a mountain for your resident bookkeepers to climb! It should offer a user-friendly interface that is intuitive and requires minimal training. It must have a clean, clutter-free layout as well. Finally, choose a software solution that is easy to navigate and makes essential features effortlessly accessible.
How to Choose the Right Cannabis Accounting Software for Your Business? A 6-Step Journey
Finally, we have reached the penultimate stage of our journey. How do you choose the right cannabis & marijuana accounting tool for your business? Don’t worry; we have created a 6-step guide to explain this matter to you. You have to follow these steps when selecting the perfect software for your business:
Step 1: Assess Business Needs
What are your current and future accounting needs? You should factor in the size of your business when choosing the ideal cannabis accounting automation software. Also, take into account factors like:
- The complexity of your operations
- Numbers of users using the software
- Specific regulatory compliance requirements
Your job is to identify the right features and functionalities essential for your cannabis business.
Step 2: Assess Software Choices
You will find different software options designed for the marijuana market available online. You have to go through these options to choose the perfect one based on factors like software reputation, the expertise of the software provider, the number of years this software has been in the market, customer reviews, pros & cons, etc. In the end, you’ll choose a software solution with positive feedback from users and a golden track record of serving cannabis businesses in the US effectively.
Step 3: Consider the Cost and ROI
How much will this cannabis accounting software cost? You should evaluate the return on investment or ROI of choosing this particular software as well. For instance, these factors will help you decide which of the numerous options available online is the best:
- Upfront cost
- Ongoing licensing fees
- Ongoing subscription fees
- Cost of implementing software
- Additional training-associated costs
The core idea is to compare the features offered by different cannabis accounting solutions with their costs to find the one best suited to your unique marijuana market needs.
Step 4: Implement the Software
How do you implement this software in your organization? What kind of support would you need in this regard? If your company doesn’t have experienced bookkeepers or accountants, then you should search for software solutions that come with easy setup/installation. Also, many cannabis accounting programs offer training resources and technical support to buyers. These resources include:
- User manuals
- Video tutorials
- Customer support channels
- Phone, email, and/or live support
Step 5: Look for Integration Capabilities
Please don’t forget about the cannabis accounting software’s ability to integrate with other systems and businesses. For instance, if you plan to use another software to manage the payroll, the accounting tool you’ve chosen today must work well with that potential software as well.
Step 6: Run a Trial First
Don’t forget to take advantage of trial runs or free demos software providers usually provide. It’s a great way to experience the software firsthand and evaluate its user interface. It gives you the opportunity to test its compatibility with your specific business needs and determine if it meets your expectations.
Final Remarks
A very recent survey shows that over 7,000 medical marijuana dispensaries were operating in the US as of last year. It’s an impressive 14.6% increase from 2022! As Malta, Brazil, South Africa, and many other nations continue to legalize weed, the need for cannabis accounting solutions will remain constant. You can’t have a cannabis business without robust accounting software when the world is decriminalizing it.
Most companies are popping up little by little that deal in cannabis production – in the US and Canada alike – and you need to keep up with them. So, take the time to evaluate your needs and then compare different marijuana accounting automation software solutions. You’ll have to factor in stuff like the cost of acquiring and implementing this software. That’s how you’ll end up choosing a cannabis accounting & financial solution that aligns with your business objectives to streamline your accounting procedures.
Don’t wait to catch up – it’s time to step up and take charge. Become a leader in this fast-paced niche. The ever-evolving industry of cannabis production harkens to you! You may now schedule a free discovery call with the top experts at Alchemy 365 and find out how we can be your trusted ERP partner on this ride.
It’s your chance to find a top-notch cannabis ERP solution for your business needs.
