Posted by David Thikoll on

Five things you need to know before you buy.

Cannabis Accounting SoftwareWhen we speak to cannabis/marijuana growers, processors and distributors, we’re usually talking to young companies. And there is a tendency for many of these young businesses to think small when it comes to cannabis accounting software. Rather than selecting a true cannabis ERP solution, many cannabis companies do what many other small businesses do, they purchase an entry-level accounting package thinking that it can handle the tasks at hand.

What these business owners and managers are finding, though, is that thinking small isn’t the best approach, and can result in production bottlenecks, inefficiencies, costing and pricing errors, and half-baked profitability. We’ve found that most cannabis businesses will benefit from the implementation of a true cannabis ERP solution. So, just what is (and what isn’t) a cannabis accounting software solution?

1. Seed to Sale Software is not ERP

No doubt you’re familiar with the term seed-to-sale software. While some include a few inventory management features, these are primarily compliance solutions, not ERP solutions. They lack the targeted feature set and functionality of a real ERP application, and are years behind most ERP solutions in their development and technologies.

2. QuickBooks is not ERP

We’re not being critical of QuickBooks to say this, but it is not ERP. QuickBooks is an easy-to-use, quick to deploy accounting package that is designed for small, straightforward businesses. While you may be small (for now), your cannabis business is not straightforward. Inventory management, cost accounting, business insights and data integrity are a few areas where QuickBooks falls short as cannabis accounting software for growing businesses.

3. Inventory add-ons do not an ERP make

There are add-on products (like Fishbowl) available for use with QuickBooks that extend the inventory functionality of QuickBooks. This usually ends up as a short-term fix for the problem, as the add-ons have their own significant limitations, and don’t come close to approaching the robust inventory management and cost accounting functionality of ERP. Short term fixes are often wasteful investments, consuming time and resources better spent on a viable, long-term solution framework (i.e., platform).

4. ERP is ERP

ERP software offers robust, scalable and comprehensive functionality designed to manage virtually all aspects of your cannabis business, from financials to supply chain management, distribution, service and compliance. ERP solutions like Microsoft Dynamics NAV and Intacct are optimized for cultivation, processing and distribution operations like yours, and support detailed cost accounting functionality to ensure you know precisely what your items’ costs and profitability are. ERP will grow and scale with you as your operation grows. ERP solutions keep a secure and complete audit trail necessary for any business, but are critical in an industry with compliance and tax regulations like yours. Marijuana compliance is a challenge for single-state operators and even trickier for multi-state cannabis businesses. The whole industry needs to proactively manage the impact of IRS section 280E. ERP solutions are designed to provide auditable tracking and deliver deep business insights through various reporting, dashboards and analysis tools. Access to detailed insights about the health and happenings of your operations allows you to make rapid, fact-based decisions, keeping you nimble and responsive.

5. Think Higher

As your marijuana business researches its first – or next – business management software solution, we encourage you to think higher. You don’t have time for short-term fixes and partial solutions that smoke your resources and your capital. Patching together a system using entry-level applications may get you started, but it won’t provide you with a solid foundation to grow your business. Cannabis accounting software that provides an ERP solution is that foundation. Investing in ERP sooner rather than later ensures you’re ready for the challenges and the opportunities of today and of tomorrow.