Running a cannabis dispensary is more than stocking flower, managing budtenders, or keeping customers happy; it’s a financial tightrope walk in one of the most regulated industries in the country.

If your books aren’t clean, your COGS aren’t properly allocated, or your compliance records don’t match your transactions, you’re not just risking a fine, you’re risking your license, profits, and future.

This is your crash course in Dispensary Accounting 101, a must-read for any retail cannabis operator who wants to run a tight ship and stay in business.

Why Dispensary Accounting Is Different

Cannabis accounting isn’t like other retail businesses. Why? One word: 280E.
Because cannabis is still federally illegal, IRS tax code 280E disallows dispensaries from deducting most standard business expenses.

You can’t write off:

• Rent
• Marketing
• Administrative salaries
• Software subscriptions
• Utilities

Instead, you’re taxed on gross profit, not net income, unless you know how to work COGS to your advantage.

What You Can Deduct as a Dispensary

The only expenses you can deduct under 280E are those that fall under Cost of Goods Sold (COGS), the direct costs of purchasing and preparing cannabis products for sale.

COGS in a dispensary may include:

• Wholesale cannabis inventory
• Inventory transportation costs
• Labor tied to inventory (receiving, stocking)
• Packaging
• Storage-related rent (only if isolated)

To legally maximize deductions, you need to categorize these expenses accurately and consistently. That starts with a dispensary-specific Chart of Accounts.

The Importance of a Cannabis-Specific Chart of Accounts

If you’re using a generic accounting software template or QuickBooks setup, you’re already falling behind.

Dispensary operators need a custom Chart of Accounts built around:

• 280E compliance
• COGS optimization
• Sales tax and excise tracking
• State reporting requirements (like METRC, BioTrack, etc.)
• Inventory reconciliation

Here, at Mindtrix Accounting, we build these from scratch based on your license type and operations, so your books are audit-proof and tax-efficient.

5 Common Dispensary Accounting Mistakes to Avoid

1. Mixing inventory and non-inventory costs
   – Always separate COGS from non-deductible expenses.
2. No POS-to-books integration
   – Your point-of-sale system must match your accounting system, or you risk compliance issues.
3. Improper sales tax reporting
   – Excise and sales taxes must be recorded separately from revenue or you’re overstating income.
4. Not tracking cash properly
   – Many dispensaries are still cash-heavy. Without clear SOPs, theft, loss, or misreporting is inevitable.
5. DIY bookkeeping
   – Cannabis accounting is not the place to learn on the fly. Mistakes are costly and could get your license revoked.

Monthly Dispensary Accounting Checklist

• Reconcile POS with accounting software
• Record all COGS-related purchases separately
• Review payroll for compliance and role categorization
• Ensure sales and excise taxes are remitted and recorded
• Maintain proper documentation for all transactions
• Prepare monthly financial statements (P&L, balance sheet, cash flow)
• Update inventory and COGS reconciliations

Why Work With a Cannabis Accountant?

Dispensary owners have a lot on their plate staffing, compliance, inventory, branding. Don’t make accounting your headache too.

At Mindtrix Accounting, we work with retail operators to:

• Reduce tax liability (legally)
• Maintain clean, compliant books
• Track real-time profitability
• Prepare for state and federal audits
• Help you understand your numbers not just file them

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💬 Final Thought

Dispensary success starts with good product and great service but it stays successful with smart accounting.

Whether you’re opening your first location or scaling to multiple licenses, your financial foundation needs to be bulletproof. And that’s where we come in.

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