FAQ
The questions licensed Maryland operators ask us most, answered without the disclaimers that make an answer useless.
Until federal rescheduling is fully effective and applied to your tax years, IRC 280E continues to govern deductibility. We maintain cost accounting that maximizes allowable cost of goods sold today while positioning your Maryland operation to benefit cleanly from the transition to Schedule III, including protective filing considerations.
Adult-use cannabis sales in Maryland carry a 9% sales and use tax remitted to the Comptroller of Maryland. Medical sales are treated differently, which means your point-of-sale must classify transactions correctly at the moment of sale. We reconcile that classification daily and accrue the liability so filings are a byproduct of the books.
The MCA expects inventory records that tie to your seed-to-sale system, documented cash-handling procedures, and an audit trail that survives inspection. Our Maryland MCA inventory tracking work reconciles physical counts, system records, and the general ledger on a consistent cycle.
Yes. We help applicant groups build financial projections, entity structures, and control narratives before licensure so the operating business does not have to be rebuilt after award.
We serve licensed operators statewide, with concentrated hubs in Baltimore, Rockville, Silver Spring, Annapolis, and Bethesda.
Regularly. Cleanup engagements start with a reconciliation of inventory and cash, followed by a restated trial balance and a corrected sales and use tax position where needed.
A cannabis CPA runs the accounting, tax, and internal control work a licensed operation needs: inventory costing under IRC 280E, seed-to-sale reconciliation, Maryland sales and use tax compliance, cash controls, the monthly close, and financial reporting that lenders, regulators, and investors accept. The differentiator is cost accounting depth, not tax preparation.
IRC Section 280E disallows ordinary business deductions for any business trafficking in a Schedule I or II substance. Cost of goods sold is not a deduction, so it survives. That makes how you capture and allocate production cost the single largest driver of your effective tax rate — and the reason cannabis tax planning is really cost accounting.
Adult-use retail sales carry a 9% Maryland sales and use tax remitted to the Comptroller of Maryland, with medical sales treated differently. Federal taxable income is computed under 280E, and standard Maryland income, employment, and property taxes apply as they would to any licensed business.
METRC is the seed-to-sale tracking system that records the existence and movement of regulated inventory — plants, packages, transfers, waste, and retail sales. It is the regulator's record of units; your general ledger is the record of dollars. Reconciling the two on a regular cycle is core cannabis accounting work.
Inventory is where compliance, tax, and profitability intersect. Batch-level costing supports your 280E position, accurate quantities support your MCA reporting, and correct valuation is what makes gross margin reporting meaningful. When inventory is wrong, every downstream number is wrong with it.
Balance sheet, income statement, and cash flow, plus gross margin by product category, an inventory roll-forward with turnover and shrink, budget-to-actual variance with written commentary, and an updated thirteen-week cash forecast. Six to eight measures reviewed consistently beat a fifty-page package nobody reads.
Cash and point-of-sale daily, inventory quantities against seed-to-sale weekly, and bank accounts, inventory value, and the general ledger monthly as part of a scheduled close. Long reconciliation gaps make variances unexplainable, which is when they become findings.
Yes, when it is configured for the industry: class or location tracking, a chart of accounts that separates production from selling activity, and an inventory subledger that reconciles to the regulatory system. What fails is using point-of-sale summaries as a substitute for a general ledger.
Point-of-sale transaction detail, seed-to-sale exports and manifests, physical count sheets and adjustment approvals, payroll and time allocation records, vendor invoices, bank and cash logs, and filed returns with workpapers. A seven-year retention standard is prudent, and longer where a tax position stays open.
An examiner typically tests your cost of goods sold allocation, samples inventory and cash transactions, and traces reported figures back to source documents. Positions rarely fail on theory; they fail when the substantiation was built after the fact. If your allocation memo, time studies, and reconciliations were prepared contemporaneously, an examination is a document production exercise rather than a negotiation.
Every engagement starts with a working conversation about your license type, your systems, and where your reporting currently breaks down.