Perfecting what you do and how you do it is the key to business survival today. This is especially crucial in an industry hinged upon rapid changes, stigma, and legal restrictions. Today the cannabis manufacturing market is worth a massive $16.63 billion as demand for the cannabis plant and its products continue to rise.
The only thing keeping pace with the ongoing demand are the continuous updates to cannabis cultivation guidelines and regulations, intensifying the need for accounting and compliance among cannabis manufacturers.
Here are 6 cannabis accounting and compliance tips for manufacturers.
Keeping documents like your operating agreement, employer identification number, and articles of incorporation are common state and federal practices for businesses. But the cannabis industry is stricter with rules and regulations.
Appropriate documentation, in this case, your financial information and licensing documents, is critical for a cannabis manufacturer tracking initial raw materials to the final manufactured product.
For instance, the federal and state laws are very specific about the safety and health requirements of manufacturing and distributing cannabis in the event of a recall. If an issue were to arise concerning the safety of your products, proper documentation of your manufacturing process helps you track the products back to their raw material stage. This makes it easier to identify the source of the problem and rectify any quality issues that deem your product unfit for consumption.
It helps to have an accountant that is well versed in the cannabis industry to help you manage your manufacturing financial records. The right cannabis manufacturing ERP will collect data, keep it safe, and update your records automatically. An excellent system will also help you stay on top of your tax code, track your employee timesheet and responsibilities, and identify those within the tax-deductible bracket.
Read more: What cannabis accountants need to know about 471
An accountant that is familiar with the cannabis industry will understand the complexities of the cannabis system that your software solution overlooks. Additionally, an accountant can self-audit your cannabis manufacturing business, identify areas that need improvement, and provide suggestions on improving and preparing your business for compliance.
Different states have different cannabis laws, focusing on different areas of the cannabis industry. For example, California requires every cannabis business employer to have a documented Injury and Illness Prevention Program (IIPP) that identifies and rectifies safety hazards. This regulation has not been established by Occupational Safety and Health Administration (OSHA).
Knowing the cannabis laws in your state is just as important as knowing the cannabis rules and regulations provided by the federal government. State regulations are especially big on the packaging and labeling of your cannabis products, a law that is likely different in every state.
Be sure to check out the cannabis laws in your state.
One advantage of this digital era is that information is readily available. Remain compliant with your state and federal laws by maintaining a relationship with local cannabis regulators. They will help you understand any changes or current regulatory requirements and provide you with guidelines on how to stay compliant. News sources in the cannabis industry, like the NCIA Industry Reports, also identify compliance guidelines to adopt.
Further reading: Making cannabis manufacturing compliance a top priority
A cannabis manufacturing ERP tracks your cannabis processes and workflows while ensuring production consistency for high-quality products.
Creating and training employees about your SOPs standardizes your processes and workflow, transparency and accountability, and product and brand message. All these ensure you remain compliant even amidst changing regulations.
Learn how to choose the right cannabis manufacturing software
To be compliant, your entire manufacturing plant must follow a set of practices. These are called the Standard Operation Procedures (SOPs). One significant benefit of implementing SOPs is that they help identify compliance risks and help fix areas of concern.
Cannabis manufacturers know their success or failure depends on maintaining strict adherence to the law and maintaining an excellent relationship with the local government and consumers while understanding changes in the cannabis industry are numerous and unending.
Real cannabis manufacturing best practices are achieved through continuous improvement that embraces technology. With a cannabis ERP solution, you have the tools they need to ensure the process of accounting and compliance standardization is streamlined and effective.
Cannabis manufacturers must always be willing to adapt to state and federal governments continue to enact measures to protect consumers and businesses in the cannabis industry and be ready to remain compliant by manufacturing safe cannabis products for consumption.
Usually, the cannabis industry is infused with many State and Federal compliance requirements based on specific rules and regulations. The rules and regulations that govern the financial and accounting, including taxation, processes of cannabis businesses are referred to as cannabis accounting and compliance.
It allows manufacturers to progress in the cannabis industry. It also protects the cannabis manufacturers from legal issues considered misconduct under the cannabis rules and regulatory mandates. Compliance also makes it easier to attract investors to your business.
The manufacturer should consider waste management, the handling and storage of hazardous materials, the quality of air and environment, and employee safety. It is also important to look at the alert systems in the manufacturing plant to ensure problems do not go unnoticed.