Cannabis Business Cashflow Management

While recreational marijuana is legal in several states, the federal government’s classification of cannabis as a Schedule I drug makes cashflow management difficult. Even though the government benefits from the profits via tax revenues from sales, federally backed banks do not allow businesses to deposit cash from cannabis sales.

Because cannabis businesses cannot make sales via federal bank-backed debit or credit cards, they are generally cash businesses. This is inefficient at best and dangerous at worst — cash attracts bad actors. In addition to risks from outsiders, internal theft is also a problem; certainly, some employees are tempted by all that untraceable cash.

How do cannabis businesses safely store and transport cash payments? States have established one or more secure locations to which retail operations can bring their cash, but some of these may be hours away from the store. Businesses that can’t afford to hire armored cars must transport cash in personal vehicles, often at great risk to the driver and passenger(s).

Are there effective cannabis cashflow management options? Cannabis CPA helps our clients:

• Create an environment that has strict procedures for cash handling and employee monitoring
• Make employees feel valued and rewarded monetarily to discourage theft
• Control entrances and exits, hire experienced security guards and install an effective surveillance system
• Develop automated systems and procedures for tracking cash and designating only a few employees to handle money
• Implement a blind reconciliation system in which employees know how much money is in the cash drawer but not how much should be there
• Install a time-triggered safe for storing a single day’s worth of cash on-site
• Find a secure local storage facility for long-term storage and transport cash via armored vehicles, if possible
• Research local banks and credit unions that may be willing to work with legal cannabis businesses
• Set up the new point-of-banking payment processing system to offer a non-cash option

To be blunt, cannabis business cashflow management is unlike that in any other industry. You are forced to operate without access to business bank accounts, credit cards or loans. Tracking, reporting and protecting large volumes of cash assets are extremely challenging. You need the assistance of a good financial consultant, but not just any consultant will do. Cannabis CPA offers the services of professional financial consultants who are experienced in working with businesses like yours. Cannabis consulting is not just something we do; it’s ALL we do!