There aren’t too many businesses out there (at least legal ones) that deal almost exclusively in cash. Even lottery tickets, once strictly cash, can now be purchased in some states with debit or credit cards. And yet we in the cannabis business are forced to work in cash only because federal laws prevent credit card companies from servicing cannabis clients, regardless of legality in the operating state.
To add to the difficulty, especially in Oregon where recreational marijuana sales just became legal, most banks are refusing to accept canna customers because cannabis sales are still federally illegal, and/or because of the extensive regulatory compliance required of banks with large deposits of cash. Cash deposits add to the workload of banks in a number of ways, and while new customers are a priority for banks, canna customers may be perceived to be more trouble than they are worth.
Because of these two components, many of you may find yourselves with large amounts of cash to store and manage. You may also be forced to operate using actual cash to pay your bills and staff. From a marijuana accountant’s perspective, paying bills and staff in cash is never recommended because it doesn’t provide the trail (support) of the transaction that writing a check does. But again, you are stuck and given that you are stuck I recommend you do the following:
- Do not store cash with inventory
- Provide two safes to store cash, one for daily operating (like the tills at your budtenders stations) and one for cash reserves that you will use to pay bills and payroll
- Always have two people present when cash safes are opened and keep them locked when access is not immediately required
- Set up a good system for tracking expenses that are paid in cash. You still need an invoice for every transaction because that invoice serves as proof of a legitimate expense. You also need proof from your vendor that an invoice was paid.
- Use a payroll system or outside payroll service to track your payroll, determine the proper amount of taxes to be paid and complete the required federal, state and local tax filings.
The details of managing an all cash business are too voluminous for this venue. Just know that cannabis cash management requires particular scrutiny to numerous details to keep it safe and compliant. Spend the time and resources to do it right. No shortcuts here guys and gals.