In today’s cannabis world, there are monthly, quarterly, and yearly reporting requirements at the State and Federal level which include required bank reporting, and investor & lender reporting. This reporting is complex and requires specific software tailored to the industry, which means general business solutions will not work. Popular accounting systems like Quickbooks and Xero don’t have cannabis industry chart of accounts or integrate with other cannabis software. To make it even more complex, most states have separate “Seed to Sale” tracking software that is required, is often difficult to use, and doesn’t interact well with cannabis or accounting software.
There are some operational packages (mostly for Point of Sale, “POS”) available, but most (including popular ones like Greenbits, MJ Freeway, Biotrack) have only been around a few years, are filled with bugs, have had significant downtime, and have many features that simply don’t work. I’ve worked with 10-15 different popular systems and have yet to find one that is reliable, effective, or efficient.
Unfortunately, a reliable Cannabis ERP does not exist in 2018. Cannabis is a complex world and mistakes can be costly. For instance, it involves several sub industries (farming, chemical manufacturing, food production and retail) often in a single company. On top of that you are faced with a plethora of other issues such as multi-entity structures, consolidated accounting, cannabis and non-cannabis divisions, and complex customer resource management just to name a few.
Currently, the only two ERPs, I know of, that are being implemented are Viridian Sciences (SAP based) and D365 Cannabis (based on Microsoft Dynamics). Having read numerous reviews I would not recommend the current version of Viridian, and based on personal and client experience I would not recommend D365 either. They are still very new, have implementation issues, customer support is poor, and they are very expensive. At some point, these, or others, will hopefully overcome their issues and provide an “all-in-one” solution. But for now, cannabis companies are forced to piecemeal together several systems.
Each state has required “seed to sale” tracking software of which Metrc seems to be the most common. Metrc primarily tracks quantities and must be updated daily by cannabis companies. This software has many problems, and seems to not even be able to track simple quantities moving from one location to another (not to mention cost/retail pricing). For example, Farm “A” can sell/deliver a pound of weed to Dispensary “B” and then Dispensary “B” can mistakenly only receive only a gram, instead of a pound. Currently, Metrc doesn’t have controls to prevent this and at end of month when reports are run, often quantities shipped don’t match quantities received. That said, CEOs have no choice, so they have to make do with this system.
Due to these issues, many cannabis accounting specialists (including myself) are cobbling together a patchwork system of software until better solutions are available, which is more likely once cannabis is federally legalized.
We all must make do with the State mandated software Metrc, which we usually rely upon for quantities, and ensure they match to physical inventory counts each month. For accounting, most use Quickbooks (we have created for our students our own chart of accounts for cultivation, extract, edibles, and retail) or Xero. Retail operations use one of the cannabis POS systems, but most have many issues, so you have to carefully reconcile quantities and pricing between Metrc, QB, and POS each month. Finally, we rely heavily on Excel for cost accounting templates we’ve created, month-end reconciliations and tie-out work-papers, combined and consolidated financials, rolling cash forecasts, and 280e/471 tax work.
Layered over this are other apps, storage, & productivity software such as bill.com, trello, Slack, Google Drive, Dropbox, Zoom, and CRMs such as Hubspot.
As you can see, Cannabis is a complex industry, and its riddled with issues: banking, cash, accounting, software, merchant service, compliance/legal issues, and insurance just to name a few. However,even with all those problems comes great opportunity for those with the fortitude, knowledge, ability to problem solve, and desire to be part of a major new industry.
If you would like learn how you can become a financial professional in the cannabis industry visit dopecfo.com today.