Cannabis, CBD & Hemp

Key Takeaways

• GAAP compliant cannabis accounting with full absorption costing, per plant or per strain inventory, and perpetual systems tied to seed to sale for precise COGS and audit defense.
• 280E planning using lawful COGS under IRC 471 and clean documentation, plus entity design and arm’s length transfer pricing to reduce taxable income where 280E still applies.
• A disciplined month end playbook, WIP rollforwards, yield variance analysis, finished goods valuation, intercompany eliminations, and a permanent audit trail.
• A connected stack that links METRC, POS, labs, payroll, and the GL, with receipt capture to prove every unit and every dollar.
• CFO level support for cash flow, controls, and profitability, so you stay compliant, protect margins, and fund growth with confidence.

Who This Page Helps

• Operators, controllers, and CFOs who want audit ready books across cultivation, processing, distribution, labs, and retail.
• CPA firms and EAs that need cannabis specific white label delivery with SOC 2 guardrails and IRS aligned documentation.
• Founders who want to trim tax drag where the rules allow, stabilize cash, and prepare for lenders or investors.

A Straight Update On 280E And 2025

Federal rescheduling remains in process as of October 8, 2025. DOJ proposed moving marijuana to Schedule III in May 2024, which started formal rulemaking. The IRS has reminded businesses that until a final rule is published and effective, marijuana is treated as Schedule I and Section 280E still applies. Keep documenting COGS under IRC 471 and plan for multiple scenarios. 

What You Will See On This Page

• Clear definitions first, then steps you can use this month.
• Field tested commentary, including the first items examiners ask for.
• Tools, templates, and control habits that fit a roughly 180 day grow cycle.
• 2025 fresh compliance notes, including New York’s METRC milestones and Form 8300 e file rules, with citations.

POV And Promise

I will speak to you directly. Where useful, I will share what I have seen work in grows, labs, and retail rooms. The goal is simple, help you run clean books, reduce risk, and keep more cash while passing audits with less stress.

Cannabis, CBD, and Hemp Accounting Services

You run a regulated operation. Your books should be built for scrutiny. We design GAAP inventory, cost accounting, tax ready documentation, and a month end system that stands up to state inspectors, IRS agents, lenders, and investors.

Core Services

• Full absorption costing under GAAP aligned with IRC 471 concepts.
• Per strain and per plant costing, perpetual inventory, and WIP rollforwards.
• Audit ready workpapers, PBC binders, and a repeatable month end close.
• 280E tax support, chart of accounts with 280E tags, and documentation examiners can re perform.
• Seed to sale, POS, labs, payroll, and GL integration, plus controls that actually hold up.

CTA: Want a quick assessment of your chart, cost pools, and close? Request a working session and we will map seed to sale IDs to your GL and outline a month end you can run next month.

Experienced Cannabis Accounting, Built For Scrutiny

If you have been through a state inspection or investor diligence, you know the first request list is not glamorous. It asks for inventory by lot, test results, tie outs to sales, cost build ups, and proof that WIP and finished goods match both seed to sale and the GL. We design your accounting so you can answer those requests in minutes, not days.

What This Looks Like In Practice

• Inventory that reflects a 4 to 6 month cycle, with strain or plant costing that accumulates cost as a crop matures.
• WIP rollforwards that show beginning WIP, costs added, yields, shrink, and ending WIP, tied to actual movements.
• Finished goods valuation that matches what you sold, with clear methods for conversion, trim, by products, and packaging.
• A permanent audit trail, time stamped support for each journal, and a month end binder your team can assemble without heroics.

You do not get boilerplate. You get a close calendar, a checklist your team follows, and workpapers that make sense to a grower and an auditor.

E E A T, The Useful Version

• Experience, teams who have built and reviewed COGS files across hundreds of operators.
• Expertise, GAAP inventory and IRC 471 methods that examiners recognize.
• Authoritativeness, seed to sale IDs flow into the GL so quantities, costs, and sales reconcile in one shot.
• Trust, SOC 2 certified processes, segregation of duties, and role based access that reduce error and fraud.

Auditors trust what they can re perform. If they can trace a unit from tag to sale with one set of IDs, you are already halfway home.

The 2025 Reality Check You Need

• DOJ’s rescheduling proposal kicked off in May 2024 and moved into comments and hearings. Timelines stretched into 2025. Operate as if 280E still applies and model both outcomes so you can pivot when rules finalize. 
• In New York, the Office of Cannabis Management targets a late December 2025 METRC go live. All businesses are expected to be credentialed with inventory in METRC by December 17, 2025. Map this into your close and training plans now.
• Illinois executed a new statewide contract with METRC in February 2025. Expect onboarding, training, tag ordering, and data migration. Budget calendar time for this so inventory and cost tags reconcile smoothly. 

Cash And Form 8300

If you receive more than $10,000 in cash in a single or related set of transactions, file Form 8300 within 15 days. Beginning January 1, 2024, if you file at least ten information returns, you must e file Form 8300. Build this into weekly routines and month end, and keep confirmations and customer statements for five years.

Why Firms Choose Accountably

• White label delivery purpose built for CPA firms and EAs, you keep the client, we provide trained offshore teams that follow IRS, GAAP, and SOC 2 processes.
• Month end systems that pass re performance, not just narrative tests.
• Practical cannabis specific templates, WIP rollforwards, strain costing, 280E tagging, and PBC binders that speed exams and diligence.

CTA: Ask for a sample month end checklist, WIP rollforward, and strain costing workpaper. See if it fits your workflow.

Tax Planning And The 280E Challenge

State licenses and clean local compliance do not change federal tax rules. Under Section 280E, deductions and credits are disallowed for businesses that traffic in Schedule I or II controlled substances. Until a final rescheduling rule is published and effective, that remains the position. You can, however, reduce gross receipts by properly calculated COGS, which is why documentation matters so much. (irs.gov)

What You Can Do Now

• Capture production costs that lawfully flow into COGS under IRC 471 concepts, direct labor, indirect labor tied to production, inputs, utilities, facility overhead attributable to production areas, and packaging.
• Keep disallowed SG and A out of COGS, and tag 280E expenses in your chart so tax prep is faster and cleaner.
• Maintain workpapers examiners can re perform, labor by task and phase, per strain yields, WIP rollforwards, and finished goods reconciliations.
• Close the month the same way every month, lock source data, archive support, and maintain a permanent audit trail.

The more detailed your COGS story, the less painful your exam. The less detailed your COGS story, the more it costs to defend.

Scenario Planning For Rescheduling

• If marijuana moves to Schedule III, Section 280E would not apply because the statute targets Schedules I and II. Model cash and pricing impacts so you can react on day one. (reuters.com)
• Until a final rule is effective, stay the course on 280E compliance. The IRS has warned against filing amended returns for refunds before a final rule is published. (irs.gov)

Documentation, The Non Negotiables

• Time by task and phase for cultivation and processing, captured in payroll and shared to costing.
• Bills of materials and standard yields, updated with actuals by strain and form factor.
• WIP rollforwards that show percent complete, transfers, shrink, and finished goods conversion.
• Intercompany agreements and transfer pricing support where you use multi entity designs.

What, How, Wow, A Quick Map

• What, GAAP consistent full absorption costing and documented 471 methods.
• How, cost pools, WIP rollforwards, inventory reconciliations, and a disciplined close.
• Wow, fine grained strain or plant costing and a data room that lets examiners re perform your numbers in minutes, not days.

Service Highlights For CPA Firms And EAs

• White label cannabis accounting with role based controls and SOC 2 certified processes.
• Dedicated teams for reconciliations, rollforwards, seed to sale tie outs, and audit ready PBC packages.
• Tax ready documentation that follows IRS language and examiner expectations.

CTA: Ready to scale cannabis clients without stretching your seniors? Start a short pilot and keep ownership of the client relationship.

Inventory, Cost Accounting, And GAAP Compliance

Your tax strategy only stands if inventory accounting is solid. Full absorption costing under GAAP, aligned with 471 concepts, is how you lawfully maximize COGS and defend it. In plain terms, put costs where work happens, then prove it with records.

Build Cost Pools That Reflect Reality

• Direct labor, cultivation, trim, processing, packaging.
• Indirect labor, supervisors, QA, sanitation, maintenance tied to production.
• Inputs, nutrients, media, CO₂, water, packaging, and labels.
• Utilities, electric and HVAC with a reasonable, documented allocation method.
• Facilities and security, rent, insurance, cameras, access control, production square footage based allocations.
• Overhead, repairs and maintenance attributable to production areas.

Example Cost Pool Map You Can Defend

Keep a perpetual inventory, update WIP as work happens, and use rollforwards anyone on your team can explain. If seed to sale shows different quantities than your GL, fix the process, not just the number.

A clean rollforward is a mirror. If it looks messy, the process behind it is messy too.

Per Strain And Per Plant Costing

• Track percent complete across the 180 day grow, then capitalize costs until harvest or conversion.
• Reconcile lab results and POS to finished goods valuation so COGS follows what you actually sold.
• Document trim, by products, waste, and conversions with the same discipline you use for prime flower.

Why This Protects Your Margin

• Pricing confidence, because you know true unit costs.
• Faster audits, because you can re perform your own numbers.
• Less tax drag where 280E applies, because you lawfully capture production costs in inventory.
• Better investor conversations, because your gross margin is not a guess.

Field Notes From Month End

• Lock exports from seed to sale, POS, labs, and payroll, then archive to your data room.
• Reconcile physical counts to books by strain and lot, record reasons for any adjustments.
• Update WIP rollforwards, beginning WIP plus costs added minus yields and transfers equals ending WIP.
• Allocate utilities, security, and facility costs to production using consistent, documented methods.
• Reprice finished goods with updated cost pools, reconcile to period sales.
• Run intercompany settlements and eliminations with agreements attached.

CTA: Want our month end checklist and WIP model? Ask for the template and we will share a copy you can run next month.

Multi State Structure And Regulatory Strategy

Every state writes its own playbook. Your entity map should minimize 280E leakage where it applies, comply with licensing limits, and withstand audit. Separate plant touching activities from non plant touching services when appropriate. Use written intercompany agreements, market rate fees, and clear scopes. Keep minutes, approvals, schedules, and eliminations in a live data room.

Steps That Prevent Surprises

• Pick entity types with pass through rules, residency, and state ownership caps in mind.
• Centralize shared services, payroll, admin, and IP in a service company with documented rates.
• Model excise, sales, and income tax by state, and watch nexus thresholds for distribution.
• Reconcile intercompany monthly, then eliminate properly at consolidation.

CFO Advisory, Cash Flow, And Profitability

Under 280E pressure, a strong CFO function watches every basis point. Focus on GAAP compliant COGS, allocations that belong in inventory, and a forecast that fits a roughly 180 day cash cycle. That is how you reduce tax drag where the rules allow, plan purchases, and say yes to growth with confidence.

Weekly Focus That Works

• Daily liquidity view that the whole team can see.
• Cash routines for retail, daily deposits, dual approvals, armored transport where needed.
• Short cycle working capital models to handle long grow cycles.
• SKU level margin by strain and form factor, with actions attached to low performers.
• Intercompany settlements, so eliminations do not pile up.

Results you feel, keep more cash with clean COGS and better pricing, reduce tax drag where legally possible, fund growth because your cash plan is real, and impress lenders and investors with fast, consistent reporting.

Where Accountably Fits, Briefly

If you are a CPA firm, EA, or boutique practice, you can scale cannabis work without stretching your seniors. Accountably provides trained offshore teams and white label delivery that follow IRS rules, GAAP, cash basis where appropriate, and SOC 2 certified processes. You keep the client relationship and strategy. We handle reconciliations, rollforwards, cost accounting, and PBC packages with role based controls.

CTA: Start with a 30 day pilot. We plug into your systems, stand up the month end routine, then step back so your team owns the rhythm.

Technology, Controls, And A Month End System That Holds Up

Think of your stack as one system. Seed to sale feeds the GL, the GL feeds costing, and the month end playbook stitches it all together.

Cannabis Tech Stack, Tied To The GL

• Seed to sale, METRC continues expanding. New York targets a late December 2025 go live, with all businesses required to be credentialed with inventory in METRC by December 17, 2025. Illinois executed a new METRC contract in February 2025 and began transition roadshows in April. Plan training, tag ordering, and data migration into your calendar. (cannabis.ny.gov)
• Accounting, QuickBooks Online or an ERP like D365 with a cannabis chart and dimensions for strain, lot, or site.
• POS and labs, connect COAs so quantities and potency test results reconcile to inventory and COGS.
• Payroll, capture time by task and phase, then post to cost pools automatically.
• Receipt capture, attach support to each cost with time stamps.
• Cash controls, daily deposits, dual approvals, and Form 8300 monitoring. If you file at least 10 information returns, you must e file Form 8300 and file within 15 days after receiving more than $10,000 in cash in single or related transactions. Keep records five years. (irs.gov)

Push clean, coded data into the GL and your close gets easier. Push mysteries and the close gets longer.

Month End Control System

• Integrate seed to sale with your GL so lot and strain IDs feed WIP and COGS without manual re keying.
• Run a perpetual inventory with full absorption costing that aligns with GAAP and your cost pools.
• Use a checklist, physical to book reconciliations by strain and lot, WIP rollforwards with percent complete and expected yields, intercompany eliminations, and 280E tags.
• Enforce segregation of duties, approvals for journals, and time stamped support. Package a month end binder in a secure data room.

METRC Details Worth Noting

• New York OCM published the implementation timeline. Credentialing opens the week of October 31, 2025 for labs and November 7, 2025 for other license types. The target date is December 17, 2025 for all businesses to be credentialed with inventory in METRC. 
• Illinois’ transition includes training and tag ordering guidance from METRC. Add those steps to your plan so inventory and cost tags reconcile smoothly. (metrc.com)

Item Level Transparency

METRC Retail ID QR codes are rolling out across many markets. Consumers and inspectors can scan to see origin, test results, and COAs. If you map those IDs into your GL, reconciliations get faster and audit defense gets easier.

Security, Roles, And SOC 2 Habits

• Role based access in your accounting, POS, labs, and seed to sale systems.
• Maker checker for journals and inventory adjustments.
• Centralized document control, time stamped receipts and approvals.
• Quarterly access reviews and annual control testing.

CTA: Want our sample month end binder index and control checklist? We will send a copy you can adapt in one hour.

Hemp, CBD, And The 2018 Farm Bill Context In 2025

The 2018 Farm Bill defines hemp as cannabis with no more than 0.3 percent delta 9 THC by dry weight. USDA’s domestic hemp production program remains in effect. Your costing, labeling, and controls should reflect both federal and state differences today, and you should watch ongoing federal efforts that may change the definition or restrict intoxicating hemp derivatives. (congress.gov)

Recent reporting shows expanded federal and state moves to restrict intoxicating hemp products, with states taking different policy paths. Expect a patchwork. Build compliance into your SKU strategy and keep a living matrix of state rules for your product set. (reuters.com)

Practical Playbooks You Can Use Now

• Lock exports from POS, labs, and seed to sale, then archive to your data room.
• Reconcile physical counts to books by strain and lot, and record reasons for adjustments.
• Update WIP rollforwards, beginning WIP plus costs added minus yields and transfers equals ending WIP.
• Allocate utilities, security, and facility costs to production using consistent, documented methods.
• Reprice finished goods with updated cost pools and reconcile to period sales.
• Run intercompany settlements and eliminations with agreements attached.
• Tag nondeductible 280E expenses where applicable so tax prep is straightforward.
• Package a month end binder, financials, tie outs, inventories, workpapers, and approvals.

COGS Do And Do Not

• Do, capture time by task and phase and keep the reports.
• Do, maintain BOMs and standard yields, then true up with actuals.
• Do, attach invoices and receipts to the specific workpaper they support.
• Do not, post manual inventory entries without a matching movement in seed to sale.
• Do not, bury SG and A in COGS. If it is truly production, document why.

FAQs

How much do cannabis accountants earn?

Ranges shift by market and responsibility. As a general guide, bookkeepers often earn $40,000 to $65,000, staff $60,000 to $90,000, seniors $90,000 to $130,000, and controllers or CFOs $120,000 to $250,000+. Advisory work for complex tax, inventory, and audit support often runs $200 to $500 per hour, with retainers moving totals higher.

What do cannabis accountants actually do?

You design and run the financial system that regulators and investors will test. That includes seed to sale integrations, GAAP cost models, documented COGS, permanent audit trails, consolidations, cash controls, forecasting, and state specific compliance, all tied to a repeatable month end close.

What is cost accounting for cannabis?

It is the process of capturing production costs from seed to sale, capitalizing into WIP and finished goods, and maintaining audit ready valuation consistent with GAAP and IRC 471 concepts. Accurate labor capture, overhead allocation, and strain level yields are the core.

Is there a difference between hemp CBD and cannabis CBD?

Yes. Hemp is federally defined at 0.3 percent delta 9 THC or less, while cannabis remains governed by state rules and tighter tracking. Pricing, testing, and labeling differ by state. Monitor proposed federal changes and keep your SOPs current.

Partnerships, Tools, And Community

Strong operations keep one eye on rules and one eye on controls. Use trusted policy sources for timely updates, insurance partners who understand crop and product risk, and accounting tools that keep your audit trail intact. Fold policy changes into SOPs within days, not months.

A Simple First Month With Us

• Week 1, we review your chart, cost pools, and inventory methods, then map seed to sale IDs to the GL.
• Week 2, we set up the month end checklist, WIP rollforwards, and 280E tags, plus a secure data room.
• Week 3, we run a test close on last month and document gaps.
• Week 4, we run the live close, publish a binder, and set weekly cash views.

Mentions of Accountably are light by design. If you need trained offshore teams, white label support for your firm, or hands on help with 471 style COGS, we can plug into your systems with SOC 2 certified processes and role based controls, then step back so your team owns the cadence.

What Changes If Rescheduling Finalizes

If marijuana moves to Schedule III and the rule becomes effective, Section 280E would no longer apply because the statute targets Schedules I and II. Expect transition questions about method changes, timing, and state conformity. Plan two paths now, one assuming 280E continues and one with ordinary and necessary deductions allowed, then switch when a final rule is effective. Until then, treat 280E as active. 

Next Steps And A Friendly Nudge

• Request a working session to review your chart, cost pools, and month end playbook.
• Ask for sample WIP rollforwards, strain costing workpapers, and a cannabis month end checklist.
• Get a tech map that connects METRC, POS, labs, payroll, and the GL, plus a Form 8300 workflow you can run next week. 

Today’s clean close is tomorrow’s easier raise and next year’s calmer audit.

CTA: Book a working session. We will map your IDs to the GL, stand up the month end, and send your first audit ready binder in four weeks.