Resource
Cannabis Startup Financial Guide
The financial decisions made before opening are difficult and expensive to reverse afterward. This guide covers what a new operator should have in place from day one.
Before Opening
Choose the entity structure with tax and legal input, open the accounting system with a cannabis-appropriate chart of accounts, and track pre-opening costs by category from the first expenditure.
- Entity and ownership structure documented
- Chart of accounts established before the first transaction
- Startup and organizational costs tracked separately
Capital Planning
Model build-out cost, licensing and application expense, initial inventory, and operating runway through ramp. Understating runway is the most frequent startup modeling error.
Licensing and Municipal Considerations
Michigan licensure is administered by the Cannabis Regulatory Agency, and local governments decide whether to allow and how to permit cannabis establishments. Municipal requirements, fees, and timelines vary and should be confirmed locally with counsel.
First Ninety Days of Operation
Establish the daily close, reconcile the monitoring system, and produce a first monthly statement package on schedule. Habits set in the first quarter tend to persist.
Frequently Asked Questions
- How much runway should a new operator plan for?
- Enough to cover build-out, licensing, initial inventory, and operating costs through a realistic ramp, with contingency. The specific amount depends on license type and market.
- When should accounting be set up?
- Before the first transaction. Retrofitting a chart of accounts after months of activity is avoidable rework.
- Are pre-opening costs deductible?
- Startup and organizational cost treatment follows specific tax rules and interacts with the federal limits applicable to licensed operators. Review the treatment with your tax advisor.
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Read moreDiscuss Your Operation With a Cannabis Accounting Specialist
Call to talk through your license types, current records, and reporting needs, or schedule a consultation at a time that works for your team.