11 Cannabis Accounting Experts Share Industry Software Tips

Cannabis accounting software is hard to come by, and options that do exist are abysmal at best. Most vendors won’t come near the federally illegal industry. Also, the software that is available tends to be buggy and won’t typically integrate well with your clients’ existing accounting software. 

Without efficient “out-of-the-box” software solutions in place, you’d have to resort to pen and paper and archaic spreadsheets. Not only is that method time-consuming, but it’s also incredibly error-prone and inconvenient. You need smooth, systematic, and repeatable software solutions and workarounds to streamline accurate Cannabis accounting, which will keep keep your clients profitable and compliant.  

We questioned more than 800 accounting professionals that are currently in the DOPE CFO program and are successfully helping clients. To help you navigate the frustrations of the lack of Cannabis software solutions, we’ve featured tips, hacks, and workarounds from select DOPE CFO VIP Black Badge holders** (as well as input from Dope CFO founder Andrew Hunzicker, CPA) in this article to help make your life easier.

Essential Tools and Software for Day-to-Day Cannabis Operations

From daily reports and reconciling transactions to daily cash flow statements, you need reliable tools and software in place to manage your Cannabis clients’ daily needs.

Actionable Data Tools

Polling our elite members of our DOPE CFO VIP Community, Dropbox and Excel were old standbys favored for their convenience and versatility. Dropbox is an exceptional centralized location you can use to share your perpetual data room easily with your clients.  Excel may be basic, but its time-tested reliability and versatility make it ideal for consolidating data,  creating balance sheets, month-end reports, and Chart of Accounts (COAs). Excel is also the program of choice for cost accounting, reconciliations, consolidations, and much more.

Cannabis Friendly Bookkeeping and Accounting Software

Xero and AccountingSuite are also top choices for streamlining bookkeeping and accounting processes. AccountingSuite includes inventory tracking and has easy-to-set-up templates for clients to use. For specific bookkeeping tasks, many accounting professionals prefer QuickBooks Desktop (QBDT).

As we’ve mentioned in our prior blog posts, Cannabis accounting software is hard to come by or is relatively new. Keep in mind that because Cannabis is technically federally illegal, companies like Quickbooks can shut down your client’s account without warning if you use their systems. AccountingSuite has come out in full support of Cannabis companies. As of today, Xero has not fully confirmed whether or not they will support the use of their platform for Cannabis businesses; however, we have not heard of any instances where anyone’s account has been shut down, so proceed with caution.

Regarding Xero and other preferred tools, David Lewis, CPA, a managing member of Olympus CPA in Salt Lake City, states, “Our firm primarily uses Xero for bookkeeping and accounting purposes. It is a straightforward software system with excellent management reporting tools. We use DropBox as a document repository because it is simple to keep organized and share with our clients.”

Project Management and Communication

Other project management and team communication tools that are popular with members of the DOPE CFO VIP Community are Slack and Zoho Projects. Slack is a messaging app that connects all people and teams within a business so they can easily communicate via “channels” that keep projects moving forward smoothly. Zoho Projects is a cloud-based project management tool that can unite teams easily while working on and organizing projects to ensure that everyone’s work and progress are visible, keeping all team members on task.

Payroll Software

As an accounting professional, you’re often called upon to help your client’s team be paid on time and that benefits packages are properly handled, along with processing payroll taxes. You might also keep track of payroll reports, expense reimbursements, and profit-sharing disbursements. 

The top choices among DOPE CFO VIP Community members were Gusto, AccountingSuite, and Sage 50 cloud. Ideal payroll software should be easy to set up, allow you to manage all your clients on one platform, and enable easy access for all of your clients’ employees. 

Once again, all payroll companies are not created equal when it comes to Cannabis. Also, given Cannabis companies’ challenges in terms of banking and other things, utilizing a Cannabis-friendly service provider that you can trust is incredibly important.

Bruce Andersen, CPA, MBA, and founder of Cannabis CPA Tax, says of Gusto, “Gusto {is] simple to use, set up, and manage, {and} has scheduling link to Intuit. Wurk can handle a bigger range and can do work for companies with no bank.”

Payroll is rolled into the convenient AccountingSuite platform and Sage 50cloud is a simple, cloud-based program that also assists with tax filing, accounting integration, and HR data management.

Easiest Tool for Building Perpetual Data Rooms 

One of the biggest value-add services you can offer a new client during cleanup (or any client at any stage) is building them a perpetual data room. A perpetual data room (PDR) is like cleaning out your client’s closet; you initially organize all permanent documents and files in the client’s cloud system so that all investors, owners, board members, or auditors can instantly access them without a snag. Ideally, you’d want to continue to organize and add all documents so that all privy parties could extract any information they need without asking you first.

The resounding number one choice for perpetual data rooms among DOPE CFO VIP Community members was Dropbox. Straightforward and easy to use on any device, this cloud storage solution is secure, offers large storage capacity, and does not require remote access. 

Lynn Niznik of Niznik’s Bookkeeping, LLC. is a big fan of Dropbox. She says, “DropBox is my selection for managing perpetual data rooms. Easy [to] use and decent cost as your volume of data increases.”

Preferred ERP Software

Enterprise resource planning (ERP) integrates primary business processes used to help companies collect, store, manage, and interpret data from across the entire organization. Usually cloud-based, an ERP system is usually in the form of a suite of integrated applications.

When we asked our DOPE program members, we received a surprising yet expected answer: hardly anyone is using an ERP at this point, unless they’re dealing with a large manufacturer or operator with a need to track and visualize supply chain data.

Regarding ERP software, Dope CFO founder Andrew Hunzicker, CPA says, “In my experience, the ERP systems in the space are still relatively new (meaning lots of “bugs”), are very expensive, and take months to implement. Training and support are also very weak. Because of these factors, most “mom and pop” Cannabis companies will not use these systems.”

While there certainly is not an ERP software solution out there to rule them all, good old Excel and a specially trained accounting team that can get all of your data organized in a useable way may not be a bad option… for now.

Workarounds to Cope with Cannabis-Specific Software Challenges

Cannabis accountants face software issues most accounting professionals don’t even consider. Because of the vendor issues and integration complications we discussed earlier, many Cannabis accountants employ software hacks to get by and make things work. It may not be a perfect solution, but it’s a workaround that can get the job done and offer your clients world-class service.

Hacks and tips our polled Community Members suggested include:

“Determine your own stack of tools and stick closely to them. It can get very challenging if your clients have many different systems such as Dropbox vs. Google Drive vs. OneDrive, etc. It will save you a lot of headaches by being fairly rigid in what you offer clients.” - Mark Waller, CPA of Morem and Waller CPAs

“We have had good success with QB (QuickBooks) Enterprise using two tools. One is custom fields which then can be programmed into forms, reports, and lists, such as customers and vendors. Next, we have programming resources that allow us to make "sidecars" that can populate data outside of QuickBooks and then bring it into the database.” - Bruce Andersen, CPA, MBA

“It’s not really a hack per se, but since QBO (QuickBooks Online) isn't canna-friendly, using QBDT (QuickBooks Desktop) is a better solution because you purchase the software once and they can't really kick you out like they could with a subscription-based plan.” - Lisa Brubaker, MBA, Esq. of Moksha Financial Management

Other tips suggested were using spreadsheets for everything, from calculations to inventory tracking to ERPs. Zapier can also assist with workflow automations, such as the creation of invoices if you use accounting software like Xero or AccountingSuite.

Seed-to-Sale Tracking Systems

Perhaps one of the biggest banes of Cannabis accountants’ careers is tackling seed-to-sale tracking. Seed-to-sale is state-mandated and varies based on local legislation, rules, and regulations. Whether you serve clients from within your own state or work with clients across state borders (or both), it’s useful to familiarize yourself with the specific seed-to-sale software required by the state in which you’re prospecting before you attempt to integrate it with your preferred accounting software.

At this point, the three seed-to-sale systems required by states are Biotrack, MJ Freeway, and METRC, which are used to help states enforce traceability, from monitoring plant inventory in real-time to reconciling with Point of Sale using an API. All three of these systems can be difficult to use and tend to have unreliable reporting.  (Also note, the client doesn’t choose a seed-to-sale tracking system; the state mandates what your client will use.)

Bruce Andersen, CPA, MBA states his favorite is METRC: “What I can say is the METRC has become a mainstay for many multi-license holders. We link METRC to the accounting package and cut out the canna layer many times for everything but retail.”

NOTE: The opinion of DOPE CFO’s founder is that METRC still has many issues (for example, a farm might report sales of two pounds to a dispensary and the same dispensary reports the purchase as two grams). Just be careful and do not connect it to other systems if possible.

Manufacturing Inventory Solutions

Inventory traceability and allocating inventory costs to Cost of Goods Sold is a required staple in Cannabis, but this is especially important in the manufacturing vertical. With all the “steps” and inventory categories required to bring a product from seed to flower to finished product, you need a reliable software solution to help you properly maximize your client’s tax benefit.

Our panel of polled accountants weighed in and determined their choices were Leaflogix and Backbone.

Leaflogix and Backbone are specifically designed to serve Cannabis companies. Leaflogix is known for its built-in compliance tools and time-saving automated reporting. Backbone integrates seamlessly with QuickBooks and provides live COGS updates to keep your clients audit-ready. Other systems from the non-Cannabis world, such as Fishbowl, can also be used to manage manufacturing inventory.

The jury is honestly still out on many of these software programs and what works best for Cannabis accountants. Really, there is no software ERP or accounting system that is the standard for this industry, or that even offers a perfect solution, which means Cannabis companies must have an accounting professional in place who knows workarounds and the nitty-gritty of Cannabis-related software issues to guide them to sustainable growth.

What software do you use to run your Cannabis business or service your clients? Leave a comment below and let us know. If software and systems are your biggest headache, join the ranks of our DOPE accounting professionals and become the expert that Cannabis companies are looking for as legalization escalates across the country. Apply to our program today.

**DOPE CFO Black Badge Holders are VIP members who are either founding community members or have been a part of our VIP Community program for over a year. For more information on the DOPE CFO Cannabis Accounting 4.0 program and VIP membership, CLICK HERE!