By Heather Ritchie, Staff Writer for Cannabis Packaging and News
In the states where adult use and medical cannabis are legal, record keeping is one of the most significant hurdles to pass. Unfortunately, it’s one of the most important aspects to keep up with in this fledgling, highly-regulated industry.
Over the past two decades, cannabis businesses operated without a paper trail. They knew that the less records they had, the less likely the DEA would find them. Then when cannabi was legalized, compliance and regulations created a tsunami over the whole industry, causing chaos, panic, and even casualties early in the game.
Efficient record keeping may be all that stands between your business’s success or failure. It’s also imperative to understand that attaining state permits is not the end. Keeping in compliance is a part of retaining your license.
Audits by state authorities also make it necessary to keep your paperwork in order. Since this industry is even more regulated than others, audits can be particularly tricky. There are several things that you can do to keep your business compliant and make the audit process easier on yourself and the authorities conducting them.
Store and organize all cash transactions. This is key because cash is the primary form of payment. Cannabis-related businesses aren’t allowed to take credits and deductions for sales that they make of products made from cannabis. They can however, deduct some costs for goods sold as they relate to other legal parts of their business.
Constantly having all records showing your compliance is vital to not get caught unprepared by auditors. This includes vendor payments, sales, and even employee salaries. In addition, the IRS requires that payments over $10,000 are reported.
At this stage in the game, ignorance isn’t an excuse. The six-month grace in California is now 0ver, and companies must be fully transitioned to be compliant. These regulations require hard work, however, if you want to run a successful business, you must know every in and out of the rules.