Why dispensary books break under normal small-retail methods
A Retail Marijuana Store or Medical Marijuana Center license runs a cash-intensive, high-transaction-volume retail operation with a federal tax return that only allows a deduction for the cost of the product sold. Bookkeeping built on a generic retail template — expense everything, reconcile at month end — leaves a dispensary overstating deductions the IRS will disallow and understating the cost pool 280E actually permits.
The fix starts with a chart of accounts and cost-pool structure designed around IRC 471 and 280E from day one, not retrofitted after the first extended tax return. Every dollar of rent, labor, and overhead needs a documented reason for landing in cost of goods sold or in a nondeductible operating expense bucket, because an examiner will ask for that reason directly.
METRC reconciliation as a daily discipline, not a monthly cleanup
The Marijuana Enforcement Division requires every package received, transferred, and sold to be logged in METRC in near-real time. Point-of-sale systems push sales data into METRC automatically in most configurations, but manual adjustments, returns, waste, and multi-location transfers are exactly where counts drift.
We reconcile METRC package and sales exports against the general ledger and the POS system on a recurring cadence — ideally weekly, at minimum monthly — so a unit variance gets caught and explained while the paperwork is still fresh, not eighteen months later when a MED compliance officer or a lender's due diligence team asks about it.
- Weekly METRC-to-POS-to-ledger three-way reconciliation
- Documented variance investigation and write-off procedure for shrink and waste
- Package-level audit trail supporting every sale, transfer, and destruction event
Layering excise, sales, and local marijuana tax correctly
Retail marijuana carries a 15% state excise tax on the first transfer from cultivation and a 15% state retail marijuana sales tax at the register, while medical marijuana carries the 2.9% general state sales tax instead. Municipalities including Denver layer their own local marijuana tax on top, each with its own return, remittance schedule, and occasional rate change.
Getting the base right for each tax — excise applies upstream at transfer, sales tax applies to the retail transaction, and local rates vary by jurisdiction — prevents both underpayment penalties and the far more common problem of a dispensary quietly overpaying because a bookkeeper applied the wrong rate to the wrong line item.
Daily cash reconciliation across every register
Even with improved banking access, most Colorado dispensaries still run meaningfully in cash. Multiple registers, cash pickups, till counts, and change-fund float all have to tie out every single day, because a shrinkage pattern that goes unnoticed for a month is far harder to trace back to a specific shift, register, or employee.
We set up a daily close checklist — till count, deposit reconciliation, POS Z-report tie-out — that a store manager can run in minutes, with monthly rollups that flag any register or shift trending outside normal variance.
