With the unprecedented expansion of cannabis in the U.S. creating a number of challenges for new operators in the industry, old-school accounting programs made for bootstrapped startups are no longer suitable for today’s cannabis manufacturer.
Regulatory bodies that govern cannabis production and sales are regularly on the lookout for noncompliance while manufacturers and vendors continually adjust to lightning-fast legislation changes which affect the livelihood of their business. There is simply no way to manually keep up with every new restriction and grow a business.
In an industry proven to be a constant state of evolution, cannabis manufacturers have grown increasingly aware of the need for robust software solutions like enterprise resource planning (ERP) software, not just for compliance, but to stay relevant.
Here are some of the primary concerns cannabis manufacturers face and how cloud-based ERP can help overcome them for growth:
Data Collection and Analytics
ERP is, at its core, all about data integration, analytics, and accessibility. Pulling data from every facet of a cannabusiness to be made available from a single location for authorized users is the foundation for growth. Users can compile and cross-reference data to use in order to derive insights into the overall health of the organization and its business practices.
A cloud-based ERP system gathers information on customers, product interactions, supplies and restocking data, accounting information, and much more and grants ready-access to authorized users through an online dashboard. Because of how quickly the cannabis industry changes, growing cannabis manufacturers need all the information they can garner to make the best business decisions possible.
Cannabis operators must fully grasp the specific federal and state cannabis accounting guidelines as well as manage all the operational complexities created as a result. They’ll need to master cost, accruals, and absorption accounting as well as 471 and 280E tax rules.
States and the IRS don’t make it easy considering GAAP/accrual accounting is required for absorption/cost accounting to comply with 280e/471. Tax section 280E, for example, is the federal statute thatwhich prevents a cannabusiness from taking tax deductions or credits because cannabis is a Schedule I controlled substance. This means cannabis operators pay taxes on all of their revenue without being able to use business expenses as tax deductions.
Cannabis accounting is extremely complex. A cannabis accounting solution needs to be flexible enough to meet changing business needs. The right ERP solution for cannabis manufacturers will offer accounting features that are already integrated with state and federal laws regarding the growth and sale of cannabis products.
The ideal ERP solution for cannabis manufacturers will help them handle the complex changes and decisions that arise from growing in the industry. The cannabis industry features many unique input material requirements, inventory items, and compliance issues that change based upon their volume of business.
Plus, the wisdom of automation speaks for itself. It’s fast, it saves money, and it zeroes-in on efficiency. With a customized ERP system in place, anyone in the industry—growers, manufacturers, distributors, and more—can implement AI, machine learning and more to help a cannabis manufacturer to grow.
ERP systems are designed specifically to scale to any level of business or enterprise and will provide the flexibility to cannabis manufacturers needed to scale their operations.
Cannabis entrepreneurs understand that success or failure depends on maintaining strict adherence to the law, even in an ever-changing environment. When noncompliance results in hefty fines or worse, seed-to-sale ERP addresses the extensive regulations which govern cannabis cultivation, processing, and distribution.
Mandating everything from manufacturing and growing processes, to packaging requirements, and banking restrictions, compliance is nothing to gamble with. Cannabis ERP helps cannabis manufacturers track and keep up with all regulatory guidelines for their industry.
Cannabis is one of the biggest growth industries in the country at the moment, but with the nearly limitless potential for business growth in this new industry also comes new challenges. Luckily, the challenges unique to cannabis manufacturers lend themselves to ERP solutions like Sage Intacct. ERP platforms are known for the integration and streamlining of various manufacturing processes and workflow systems under a single umbrella.
Sage Intacct lets cannabis manufacturers make better decisions regarding their production to make real-time improvements often before they’re needed. In an industry experiencing this level of growth and limitless potential, Sage Intacct is crucial to provide improvements for a cannabusiness to help solve problems and stay one step ahead. Contact us to learn more about how a cloud-based accounting solution can improve your cannabusiness.