Michigan Cannabis CPA & Accounting Services

Cannabis accounting is a system, not a set of disconnected tasks. Sales generate cash and card activity, that activity has to reach the bank, purchasing and production feed inventory, inventory releases cost into cost of goods sold, payroll adds labor cost that may belong in production or in operating expense, and all of it lands in the general ledger before a close can produce meaningful financial statements.

Most licensed operators need accounting designed around the systems they actually run — point of sale, purchasing, production tracking, payroll, and banking — rather than a generic small-business chart of accounts adapted after the fact. When the chart of accounts does not reflect how product moves and where cost is incurred, cost of goods sold becomes an estimate and gross margin stops being usable for management.

• Chart of accounts structured around departments, locations, and cost pools
• Recurring transaction coding tied to source documents
• Bank reconciliation and independent cash reconciliation
• Inventory records that carry value, not just quantity
• Cost of goods sold supported by a documented costing methodology
• Payroll coded so production labor can be identified
• Balance-sheet account reconciliation as part of every close
• Financial statements, tax workpapers, and management reporting from one ledger

For a deeper technical treatment of these mechanics, see the Michigan Cannabis Accounting Guide. This page is the commercial overview; the guide is the reference.

A cannabis CPA is an accounting professional who maintains and reviews the financial records of a licensed cannabis business and translates those records into tax filings and management information. In practice, the role connects bookkeeping, inventory accounting, cost of goods sold, tax preparation and planning, financial reporting, payroll accounting, reconciliation, cash-flow planning, forecasting, management reporting, and multi-location consolidation.

The exact engagement depends on the operator. Some businesses need full recurring accounting; others have an internal bookkeeper and need review, inventory costing, close support, and tax. Not every client receives every service, and scope is agreed in writing before work begins.

Cannabis bookkeeping is the recurring work of recording, classifying, and reconciling every financial transaction so that a reliable set of financial statements can be produced on a schedule. It covers transaction coding, chart of accounts maintenance, bank reconciliation, cash reconciliation, accounts payable, payroll entries, inventory entries, and balance-sheet reconciliation.

The reconciliation step is what separates bookkeeping that supports decisions from data entry. Point-of-sale sales, expected cash, actual counted cash, deposits, and the general ledger should form a chain that can be traced in either direction. Where the chain breaks, the difference is investigated and documented rather than plugged.

Full scope, deliverables, and cadence are on the cannabis bookkeeping service page, and the cannabis bookkeeping guide walks through the underlying method in more detail.

Dispensary accounting is retail accounting with heavy cash handling and inventory discipline layered on top. Two chains have to hold together every month: the money chain and the product chain.

• Daily point-of-sale reconciliation to expected and counted cash
• Deposit tracking from register close through bank clearing
• Purchasing records tied to received inventory and vendor invoices
• Inventory valuation supporting cost of goods sold by category
• Gross margin reporting by product category and by location
• Discount, comp, and shrink treatment applied consistently
• Retail payroll coding by shift, role, and store
• Month-end close producing statements management can act on

See the dispensary accounting service page for engagement detail, and the dispensary accounting guide for the longer technical walkthrough.

Three different things are commonly called "inventory," and confusing them is one of the most frequent sources of unreliable cannabis financials. Physical inventory is what is on the shelf. Operational or seed-to-sale inventory is what the tracking system says exists. Accounting inventory is the financial value carried on the balance sheet. Quantity is not the same thing as value, and the three answer different questions.

That cost flow is a conceptual model of how value moves, not a universal tax formula. What actually makes it dependable is consistency: costs classified the same way at entry each period, allocation drivers documented, counts performed on a schedule, and variances explained. Reliable inventory is what supports cost of goods sold, gross margin, the balance sheet, tax workpapers, and management reporting at once.

Seed-to-sale reconciliation compares operational tracking records against the financial records and explains the differences. Operational tracking exists to record product identity and movement; accounting exists to record financial value and obligation. They are built for different purposes and will rarely agree line for line without work.

• Timing differences between recorded movement and posted entries
• Mapping differences between product catalogs and GL accounts
• Quantity differences between tracked, counted, and booked units
• Adjustments recorded without supporting documentation
• Inventory variances by location, category, or production stage
• Accounting differences arising from costing method or cutoff

The deliverable is a documented bridge, not a forced match. Engagement detail is on the seed-to-sale reconciliation service page, with background in the seed-to-sale guide. We are an independent accounting firm and are not affiliated with, certified by, or endorsed by Metrc or any other software provider.

Where Section 280E applies, the deductibility of ordinary operating expenses is restricted, which shifts the burden onto inventory costing and the documentation behind cost of goods sold. The practical response is structural: a chart of accounts that separates cost pools at entry, a written costing methodology applied the same way each month, and workpapers that trace reported figures back to source records.

• Bookkeeping structure that segregates cost pools from the start
• Inventory records with documented capitalization policy
• Cost of goods sold supported by allocation drivers, not year-end estimates
• Contemporaneous documentation retained with the ledger
• Tax workpapers reconciling the return to a closed trial balance
• Tax planning revisited as authority and business facts change
• Cash planning that anticipates the resulting tax position

Federal treatment of cannabis businesses can change, and positions should be reviewed against current authority rather than assumed from prior years. Detailed treatment lives on the 280E tax compliance service page and in 280E explained.

Tax preparation is the last step in a chain, not a standalone project. A return prepared from unreconciled books inherits every unresolved difference in them.

Engagements cover federal return preparation, coordination with Michigan filing obligations, entity-level reporting for the structure actually in place, estimated-tax planning where appropriate, and supporting schedules that tie each material line back to the ledger. Rates, thresholds, and due dates change, so filings are prepared against current published requirements rather than assumptions carried forward.

See cannabis tax preparation and tax planning for scope and approach.

From an accounting standpoint, transaction taxes follow a predictable path: sales activity drives a tax calculation, the calculated amount becomes a liability in the general ledger, payment clears that liability, and the remaining balance is reconciled to filed returns each period.

The accounting question is whether the liability account ties to what was collected and what was filed. Where it does not, the difference usually traces to point-of-sale configuration, exemption handling, or timing between accrual and payment. Current Michigan rates, filing mechanics, and municipal considerations are covered in the Michigan Cannabis Tax Guide, which is the reference for that material; compliance work is described on the sales and excise tax compliance page. Authoritative rates and forms are published by the State of Michigan.

A fractional CFO engagement adds forward-looking financial management to an existing accounting function. Reliable forecasting begins with reliable historical accounting: a forecast built on books that do not reconcile simply projects the error forward.

• Thirteen-week cash forecasting with weekly rollforward
• Annual budgeting and rolling reforecasts
• KPI reporting tailored to license type and business model
• Gross margin analysis by category, product, and location
• Inventory and working capital analysis
• Location profitability and contribution reporting
• Capital planning and financing scenario analysis
• Board, lender, and investor reporting where applicable

Cadence and deliverables are on the fractional CFO advisory page, with the underlying framework in the cannabis CFO guide.

Payroll is usually the second-largest cost in a cannabis operation and one of the most commonly miscoded. Our role is payroll accounting and reconciliation coordinated with your payroll provider — we work from the payroll register rather than acting as the processing agent.

• Gross wages coded by department and location
• Employee withholding recorded to the correct liability accounts
• Employer payroll costs separated from employee withholding
• Payroll clearing accounts cleared each period, not carried
• Production labor identified where costing requires it
• Payroll-to-general-ledger reconciliation performed every close

Scope is described on the cannabis payroll services page and in the payroll guide.

A monthly close is not complete merely because an income statement was generated. Material balance-sheet accounts should also be reconciled, or the statement is an assertion rather than a report.

• Income statement with prior-period and budget comparison
• Reconciled balance sheet with supported account detail
• Cash-flow reporting tied to bank activity
• Gross margin by category, product line, and location
• Inventory balances and turns
• Labor cost as a percentage of revenue by department
• Budget versus actual with variance commentary
• Location-level reporting before consolidation

See financial reporting for the reporting package and delivery schedule.

Cash planning is distinct from forecasting profit. An operation can post a positive margin and still run short because inventory purchases, payroll cycles, tax reserves, and debt service do not align with collection timing.

• Operating cash requirements by week
• Inventory and purchasing commitments
• Payroll cycles and employer cost timing
• Tax reserves set aside as liabilities accrue
• Debt service where applicable
• Capital expenditures and buildout timing
• Growth and expansion funding requirements

Detail is on the cash flow planning page.

The accounting framework is consistent, but where the difficulty sits changes with the business model.

Service detail is available for dispensary accounting, cultivation accounting, and manufacturing accounting, with industry pages for dispensaries, cultivators, and manufacturers.

Multi-location operators need location-level reporting before consolidated totals become useful for management. A consolidated statement can look healthy while one store carries the group.

• Uniform location and department coding across every site
• Separate cash accountability by location
• Inventory tracked and valued per location
• Payroll allocated to the site where labor was performed
• Shared and corporate costs allocated on a documented basis
• Inter-location transfers recorded on both sides
• Location profitability reviewed alongside consolidated results

Groups that operate through more than one legal entity need separate ledgers per entity, a documented method for shared expenses, and intercompany transactions recorded on both sides so balances eliminate cleanly in consolidated reporting. Entities that are informally treated as one checkbook become very difficult to untangle later.

• One complete general ledger per legal entity
• Shared expenses allocated by a written, repeatable method
• Intercompany receivables and payables recorded symmetrically
• Management reporting by entity and by operating group
• Consolidated reporting with eliminations where appropriate

We provide accounting and reporting support; legal structuring decisions belong with counsel. Where an accounting perspective is useful during those discussions, see entity structuring.

Books fall behind for ordinary reasons — staff turnover, rapid growth, a system migration, or a busy operator wearing too many roles. The common symptoms are recognizable: bank accounts not reconciled, cash that does not tie, inventory that does not agree with operational records, stale payroll liabilities, unexplained balance-sheet accounts, months of unposted activity, locations mixed together, accumulated adjusting entries, and cost of goods sold that swings without explanation.

Work begins with a diagnostic rather than immediate data entry, because the first question is what can actually be supported. A defensible opening position is established, then periods are brought current in sequence and a recurring close is put in place so the same gap does not reopen. Not every historical record can be fully reconstructed; where source documentation no longer exists, the limitation and the method used are documented.

Cash-intensive operations with inventory-driven cost of goods sold benefit from controls that are written down and actually performed. Controls reduce the likelihood and duration of undetected errors; no control environment eliminates risk or guarantees that misconduct cannot occur.

• Cash counting, custody, and deposit procedures with dual verification where practical
• Inventory adjustment authorization and review thresholds
• Purchase authorization limits and vendor approval
• Vendor master file changes reviewed independently
• Payroll change review separate from payroll processing
• Journal entry review above defined thresholds
• System access rights reviewed when roles change
• Reconciliations reviewed by someone other than the preparer
• Segregation of duties applied where headcount allows

Readiness is a documentation discipline rather than a control discipline. The goal is that a request for support becomes a retrieval exercise instead of a reconstruction project. No firm can guarantee the outcome of an examination.

• Completed reconciliations retained with the period they support
• Inventory counts, valuations, and costing memoranda
• Tax workpapers tying the return to the trial balance
• General ledger detail retained in exportable form
• Payroll registers and filings by period
• Fixed asset schedules and depreciation support where applicable
• Vendor invoices and purchase documentation
• Adjusting entry documentation with preparer and reviewer

See audit representation and the audit preparation guide.

POS sales do not tie to bank deposits.

Review register close procedures, payment type mapping, deposit timing, and whether discounts, refunds, and comps are recorded in the ledger the same way the POS treats them.

Cash does not reconcile.

Rebuild the expected-versus-counted chain by shift and drawer, then test custody handoffs and deposit preparation before concluding the difference is a posting error.

Inventory does not match operational records.

Isolate timing, unit-of-measure mapping, and adjustments made in one system without a corresponding entry in the other.

Accounting inventory does not agree with the balance sheet.

Confirm that the subledger and the general ledger control account are reconciled monthly and that costing entries post to the same accounts each period.

COGS swings dramatically month to month.

Look for inconsistent cost classification, missing accruals, physical count adjustments dropped into a single month, or period costs being capitalized irregularly.

Payroll liabilities remain stale.

Clear payroll clearing accounts every period and reconcile withholding and employer cost liabilities to filings.

Tax liabilities do not reconcile.

Compare accrued tax by period to amounts filed and paid, then test POS tax configuration and exemption handling.

The close takes too long.

Sequence the close with a written checklist and cutoff dates; most slow closes come from reconciliations started after the period rather than maintained during it.

Management does not know location profitability.

Introduce location coding and a documented shared-cost allocation before attempting site-level comparisons.

The balance sheet is ignored.

Schedule every material balance-sheet account and require support before the period is considered closed.

Multiple entities are mixed together.

Separate the ledgers, identify what was paid by whom, and record intercompany positions on both sides going forward.

Reports arrive too late to be useful.

Set a committed close date and deliver a consistent reporting package on that date rather than waiting for perfection.

1. 01Understand the business, license types, and entity structure.
2. 02Review the accounting and operational systems in use.
3. 03Review and, where needed, restructure the chart of accounts.
4. 04Review bank accounts and cash handling procedures.
5. 05Review point-of-sale and revenue recording.
6. 06Review inventory records, counts, and costing method.
7. 07Review payroll setup, coding, and liabilities.
8. 08Review every material balance-sheet account.
9. 09Review tax and accounting reporting requirements.
10. 10Identify cleanup work and scope it explicitly.
11. 11Establish recurring reconciliation procedures.
12. 12Establish a monthly close with a committed date.
13. 13Produce financial statements and management reporting.
14. 14Add tax, CFO, or advisory support where appropriate.

Not every engagement follows the same scope or sequence. The steps above describe the full review; what a given operator needs is agreed in writing after the initial consultation.

We work with licensed cannabis businesses throughout Michigan, from single-store retailers to cultivators, processors, and multi-location groups. Clients operate in Detroit, Grand Rapids, Ann Arbor, Lansing, Flint, Kalamazoo, Warren, Sterling Heights, Troy, and Dearborn, along with smaller municipalities that have opted into licensing.

Engagements are conducted remotely with scheduled working sessions, secure document exchange, and on-site visits arranged when a specific engagement — an inventory observation, for example — calls for one. We do not maintain branch offices in each city; the practice serves Michigan operators statewide from one team.