How Adeptus Can Support Your Cannabis Business

As more and more states legalize medical and recreational cannabis, limitations and confusing tax laws continue to disrupt the emerging field. As a result, Cannabis Operators need to consider state and federal regulations and complex tax obligations, including the 280E adjustment. 

While cannabis is becoming legalized by state, it’s still federally illegal, leading to a host of barriers in sustaining a Cannabis Practice. Cannabis is considered a Schedule 1 Drug or a controlled substance. Under the Tax Code, 280E, businesses that engage in the sale of a controlled substance cannot deduct typical expenses like wages and salaries. 

Working with an experienced accountant can help Cannabis Operators with tax planning and compliance.  This is critical for avoiding penalties and maximizing the business’s financial health. 

Here are some ways Adeptus can support Cannabis Operators to help minimize risk and maximize profits:

Keeping Up To Date On Regulatory Compliance

The cannabis industry operates within a complex web of regulations, which vary from country to country, state to state, and even within individual municipalities. Our accountants have a thorough understanding of these regulations to ensure compliance. This includes tracking and reporting financial data accurately, adhering to tax obligations, and complying with specific cannabis industry regulations, such as seed-to-sale tracking requirements or limits on the amount of cannabis that can be held in inventory.  Accurately valuing this inventory, including plants that are still growing, requires the specialized knowledge that only a qualified professional can provide.

Tracking Cost Accounting and Inventory Management:

Cannabis businesses require robust cost accounting and inventory management systems due to the nature of their products. We closely track and allocate costs related to cultivation, processing, manufacturing, packaging, and distribution. This includes determining the cost of goods sold (COGS) and calculating production costs per unit. Additionally, we offer consulting on inventory management that is necessary to comply with regulatory requirements and prevent losses due to spoilage or theft.  This helps ensure our clients are able to set up the right prices to protect their margins.

We Prepare Financial Reporting and Auditing:

We prepare financial statements in accordance with generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS). This includes generating income statements, balance sheets, cash flow statements, and notes to the financial statements. As the cannabis industry continues to evolve, our auditors play a vital role in ensuring the accuracy and transparency of financial reporting, especially for publicly traded cannabis companies.

Financial Analysis and Decision-Making: 

We provide valuable financial analysis and insights to help cannabis businesses make informed decisions. They analyze financial data, key performance indicators (KPIs), and industry benchmarks to assess the company’s financial health, identify areas for improvement, and support strategic planning.  We are able to summarize these crucial metrics on customized dashboards that enable our clients to keep a close eye on every financial aspect of their businesses.

Adeptus Resources

Learn about our Strategic Partnership with Sands Lane, led by Evan Eneman, Adeptus partner and CEO and Founder of Sands Lane, who has spent over 20 years working with leading brands in traditional markets and the last decade in cannabis, psychedelics, and other emerging markets.  

Our team of outstanding finance and accounting professionals have deep cannabis experience and familiarity with the unique record keeping required by this industry.  Contact us today for a complimentary consultation.