Despite being more than 10 years old, the legal cannabis industry is still in its infancy. Only a handful of tools and technologies have been specifically developed for the unique complexities of the industry. In some cases, other traditional software solutions have been retrofitted to fill the needs of the more sophisticated operators. Robust accounting and reporting functionality has been one of the most under-served components of cannabis technology. Chief Financial Officers (CFOs) and their accounting teams rely on rudimentary spreadsheets to do their own manual analysis.
As more states adopt cannabis regulation, accounting solutions that are the gold standard for other industries are becoming more willing to integrate and work within the cannabis market, opening up new solutions that fit the needs of enterprise-level operators and their accounting staff. The combination of sophisticated accounting integrations and in-depth data insights are key for the success of any cannabis finance team.
To answer the question, “What tools do cannabis CFOs need to be successful,” we must first understand what is important to cannabis CFOs:
What should you be trying to achieve as a cannabis CFO?
We will cover these in more detail throughout this article, but the main focus of any cannabis CFO should be:
- Clear financial visibility and reliability in your operation’s data realized through an end-to-end seed-to-sale solution
- The ability to sustainably scale your business
- Packaging your company to be attractive to investors
Clear financial visibility and reliability in data
After more than a decade of growth and increasing legitimacy, the cannabis industry is still in the early stages of maturation. As a result, many cannabis companies currently operate with out-of-the-box accounting solutions not specifically customized for the cannabis industry. However, leading businesses who want to scale their operations are starting to utilize world-class accounting solutions integrated with their cannabis seed-to-sale systems to gain the insights needed to make impactful decisions. If you are looking to compete with the multi-state operators (MSOs) of today and scale your company, investing in advanced software solutions is integral to that growth.
So, how do you know if your accounting program is holding back your cannabis business?
If you are unable to rely on real-time operations performance data to make key business decisions, then you are not maximizing the ROI of your existing technology investments. Truly successful businesses need full visibility and insights into how every arm of their operations are functioning to uncover problems and resolve those issues quickly. After all, we can’t fix what we don’t know.
Here are some indications that it might be time to invest in more robust accounting software solutions:
- Manually importing data – Manual processes such as data entry are standard for small businesses, but as a business grows, these processes eat up time—and time is money. Upgrading to an integrated system reduces manual entry, so reports are accurate from more current data.
- Audit controls and compliance – Many small accounting packages are limited in helping business owners adhere to industry best practices, and often fall short of ensuring business financial compliance reporting. Upgrading to a more robust system that has audit controls built-in will help a business owner sleep better at night.
- Consolidated financial reports – If a business operates across multiple locations and warehouses, a business owner needs to track each entity separately, but also roll up all the reporting into one overall financial statement. Many businesses may export each entity into Excel and conduct their analysis in a spreadsheet. This method creates a larger margin for error and can throw a business out of compliance. Upgrading to a program that can handle consolidated reporting from multiple entities reduces error and manual calculations.
- User and storage limitations – As businesses hire, they need to provide different levels of access to their accounting programs (timesheets, inventory entry, customers). Oftentimes, smaller packages can accommodate more users, but their operating performance and file storage size may diminish or require a larger investment to cover the seats and storage space. Upgrading to a program that can accommodate more users, more data, a larger file size, and one that can provide more analytics across all departments is ultimately the right next step.
- Reliance on outside financial help – Smaller packages often provide small businesses with the option of giving access to their financial software to their CPAs. A big indicator that an accounting package can’t keep up is when the business owner relies on reporting from his/her CPA to give them a picture of their business. Upgrading to an accounting program that can provide the instant reporting that the business requires will save the business owner from investing in the daily services of an expensive CPA.
If you resonate with any of the upgrade indicators, it’s time to explore accounting software options that integrate with leading seed-to-sale systems, like MJ Platform.
We all understand why leading accounting software is crucial to your enterprise-level cannabis business, but why is the integration with a seed-to-sale system so important?
Vertically integrated companies often rely upon multiple systems to conduct operations from cultivation to manufacturing to wholesale distribution to retail. The benefit of having a single system that can handle each of these operations lies in the streamlining of important key performance indicators (KPIs). Let’s discuss how this happens in seed-to-sale software, like MJ Platform.
In addition to its business intelligence engine, MJ Analytics, MJ Platform seed-to-sale solution has certified integrations with industry-leading accounting providers, such as SAP, Sage Intacct, Netsuite (in Canada), and Quickbooks. MJ Platform are be able to review financial data points, such as cost of goods sold, across multiple facilities in multiple states and generate reports at an organizational level. These integrations allow you to pull the information you are already collecting through your compliance software into your accounting workflows for seamless reporting and analysis. The combination of data collection, insight analysis, and robust accounting tools supply CFOs with end-to-end financial visibility.
The ability to scale sustainably
Despite more states legalizing cannabis, it remains illegal at the federal level, adding complexity to how businesses are able to operate. Staying compliant with your state regulations is crucial, so ideally, your seed-to-sale software should integrate with state track-and-trace systems. If your seed-to-sale program is unable to consistently keep up with these regulatory integrations and the constantly changing requirements of the state, you are going to run into issues scaling.
RELATED: What is Track-and-Trace vs. Seed-to-Sale? Watch this short webinar!
In order to streamline your business, you will also need a system that can standardize workflows across your facilities. Using disparate seed-to-sale software across verticals prevents access to normalized data for key financial reporting and insights. Finding a seed-to-sale vendor with experience across all cannabis verticals is so important because it gives you enterprise-level solutions for your entire supply chain.
Your seed-to-sale software allows you visibility into every aspect of your business, providing you with the insights you need to build processes and drive efficiency. When paired with a robust accounting solution, your seed-to-sale vendor becomes a true partner for your business, and as with every collaboration, if you don’t share an understanding of your company’s vision and long-term strategy, that disconnect could cost your business significant revenue.
MJ Freeway was founded on the groundbreaking idea of creating a transparent supply chain model for dispensaries so they could track cannabis products back to their origin. That initial development project grew into the compliance standard for the industry and the backbone of seed-to-sale tracking technology. Transparency and compliance have been the cornerstone of our seed-to-sale technology innovations. The team behind MJ Freeway’s software has over 150+ years of combined cannabis industry experience and we’ve been in the trenches with our clients to get through their most critical business issues.
The ability to attract investors
Now that you understand how accounting software integrates with seed-to-sale solutions and how this integration can impact your ability to streamline and scale your business, how do you turn this information into an attractive opportunity for investors?
The cannabis industry’s investment growth is unprecedented. If you are unable to generate beneficial financing for your company during this infancy period the industry is currently in, odds are you’re missing out on the most important opportunity in cannabis finance.
Thankfully for MJ Platform users, the MJ Analytics reporting engine brings sophisticated analysis to reliable data. The ability to present a holistic overview of your operations to potential investors enables cannabis CFOs to superpower their benefit statements with true proof points related to growth and sustainability.
Want to see what reports are most beneficial for CFOs in MJ Analytics? Click here to watch this short video on the top MJ Analytics reports for cannabis CFOs.
With all the auxiliary integrations that supplement the core seed-to-sale functionality, MJ Platform is the best enterprise-level software option for growing cannabis companies and the accounting team that supports them. MJ Platform handles the complexities of today’s MSOs unlike any other software. With expertise across the fully legal market, we are here to help support your business now and into the future. Tools that support your success is vital in any industry, but when those tools are backed by expertise and people, their true ROI is invaluable.
Ready to explore the benefits of MJ Platform and its integrated accounting software solutions for your business? Click here to schedule a demo >>
