Why a Generalist CPA Usually Falls Short
A capable general-practice CPA can still get a cannabis engagement badly wrong, not from lack of skill but from lack of exposure to the specific rules at play. 280E cost segregation, METRC reconciliation, and Colorado's dual license structure under the Retail and Medical Marijuana Codes are not covered in standard CPA continuing education, and a firm's first cannabis client should not be the one learning on your dime.
Questions to Ask Before Engaging a Cannabis CPA
A short conversation should reveal whether a firm has real cannabis depth or is describing the industry in the abstract.
- How many active Colorado MED-licensed clients does the firm currently serve, across which license types?
- Can they describe their standard approach to 471/263A cost accounting for cannabis inventory, specifically?
- Do they reconcile METRC to the general ledger as a standing monthly procedure, or only at year-end?
- Have they represented a cannabis client through an IRS 280E examination or a MED compliance review?
- Do they know how to compute and support the Colorado state 280E subtraction, not just the federal add-back?
What a Real Cannabis CPA Engagement Includes
Beyond annual tax preparation, a cannabis-focused engagement should include monthly bookkeeping and reconciliation, a documented 280E cost accounting methodology reviewed at least annually, sales and excise tax filing support across every jurisdiction the business operates in, and proactive communication about regulatory changes — a Department of Revenue AMR update or a MED rule change — that could affect the numbers.
Red Flags in a Cannabis CPA Relationship
Warning signs include vague answers about COGS methodology, no mention of METRC when discussing inventory, reluctance to put a cost accounting policy in writing, and pricing that seems too low for the actual complexity of the work — cannabis accounting done properly takes meaningfully more time than a comparable non-cannabis retail or manufacturing client.
