Navigating Cannabis Accounting Challenges: The Strategic Advantages of Outsourcing in 2024

By: Jake Carruth, Associate

As the cannabis industry continues to expand so do the complexities of managing its financial operations. From constantly changing tax regulations to meticulous record-keeping requirements, cannabis businesses face a unique set of challenges to ensure they are compliant and their books are up to date. For many in the industry, outsourcing cannabis accounting functions can be a strategic decision that offers significant advantages.

Why Should Cannabis Companies Outsource Their Accounting with Maner Costerisan?

We Know the Ins and Outs of How to Stay Compliant in the Cannabis Industry.

Compliance in cannabis industry accounting is crucial due to the sector’s complex and highly regulated nature. Adhering to strict legal requirements helps prevent legal issues, fines, and operational disruptions. Our team can help you stay on top of cannabis tax compliance, including CRA regulations. By outsourcing these functions, you can ensure that all financial operations adhere to the strict legal requirements, minimizing the risk of penalties and enhancing operational efficiency.

We Have a Deep Understanding of Section 280E & Sales & Excise Taxes.

Section 280E prohibits cannabis businesses from deducting ordinary business expenses on their federal tax returns. This results in significantly increased tax liabilities, as many deductions that other businesses can take are disallowed for those in the cannabis sector. Through years of experience, Maner has developed strategies to minimize the impact of Section 280E on cannabis businesses. By leveraging our expertise, you can navigate these complex regulations and aim to reduce your overall tax burden.

In addition to 280E, cannabis businesses are also subject to state sales and excise taxes. Ensuring timely and accurate filings is crucial but can be challenging with imprecise records. Proper management of these taxes is essential to maintain compliance and avoid penalties. Outsourcing to a knowledgeable accounting team, like the experts at Maner Costerisan, can help ensure accurate record-keeping and filing, simplifying the process and allowing you to focus on running your business.

We’re Experienced in Navigating AFS Audits for Cannabis Companies.

Annual Financial Statement (AFS) audits are mandatory in states like Michigan every three years for cannabis businesses. Without proper support and documentation, this process can be daunting. Our professionals assist with documentation requirements and provide guidance to make the AFS audit a less stressful process for you and your team. We can help you properly prepare for these audits to ensure your business remains compliant, maintains its operational integrity, and keeps moving toward its goals.

We Can Help You Shift Your Focus to What Matters Most – Running Your Cannabis Business.

By outsourcing cannabis accounting, businesses can free up internal resources, allowing their team to concentrate on core activities and strategic growth rather than getting bogged down with financial management. Outsourcing ensures that your financial operations are handled by experts who are up-to-date with the latest regulations and best practices, providing you with peace of mind and allowing you to focus on growing your business.

Services Offered by Maner Costerisan

Maner Costerisan offers a comprehensive suite of cannabis accounting services designed to help you navigate the complexities of the industry:

• Sales/Excise Tax Filings: Ensuring accurate and timely filings to comply with state tax regulations.
• Reviewed Financial Statements: Providing a detailed review of your financial statements to ensure accuracy and compliance.
• Section 280E Guidance: Offering strategies to minimize the impact of Section 280E on your business.
• Cash Flow Projections: Helping you plan and manage your cash flow effectively to support business growth.
• Inventory Costing: Assisting with accurate inventory costing to ensure proper valuation and compliance.
• Bookkeeping: Managing day-to-day bookkeeping to keep your financial records accurate and up-to-date.
• AFS Audit Guidance: Providing support and documentation to help you navigate AFS audits with confidence.
• Financial Reporting: Delivering detailed financial reports to support decision-making and strategic planning.
• And Much More!

Maner Costerisan is committed to helping cannabis businesses overcome the inherent challenges of the industry. We understand the complexities and have a dependable, detail-oriented team that can support your business today. Contact our Cannabis experts today at maner@manercpa.com or 517-323-7500.