What makes cannabis accounting different from traditional accounting?
Section 280E of the Internal Revenue Code is the reason. Where it applies, a cannabis business cannot deduct ordinary expenses like rent, payroll and marketing, so Cost of Goods Sold becomes the main way to reduce federal taxable income. Accounting Buds builds your chart of accounts, inventory method and monthly close around that rule so your books support your tax return and stand up to review.
Section 280E disallows deductions for businesses trafficking in Schedule I or Schedule II controlled substances. That changes how every expense in a cannabis business has to be recorded, because only costs properly included in inventory under Section 471 reduce federal taxable income.
Where 280E applies has changed in 2026. State-licensed medical cannabis moved to Schedule III on April 28, 2026 (the order is being challenged in court). The DEA has so far registered only medical-only dispensaries, and the IRS hasn’t said whether 280E relief depends on that registration, so medical-only operators are in the clearest position, while relief for operators with both medical and adult-use licenses is unresolved. Adult-use cannabis remains Schedule I while the DEA administrative law judge’s recommendation is pending, so 280E still applies to it. Operators with both kinds of activity now need books that separate them. Our rescheduling tracker has the detail.
Our accounting work covers the full range of cannabis financial management, from day-to-day bookkeeping to CFO-level planning for multi-state growth. We tie your books to your seed-to-sale system, manage multi-entity structures, and prepare financials that regulators, lenders and investors can rely on.
Accounting services
- Bookkeeping & AccountingMonthly bookkeeping, reconciliations and financial statements built around 280E and your inventory method.Learn more
- Invoicing & Bill PayInvoice recording, approval routing, weekly payables review and ACH preparation, with your signers releasing every payment.Learn more
- Financial AnalysisCannabis KPIs, margin analysis, cash flow forecasting and budgets that reflect your real after-tax position.Learn more
- Fractional CFOSenior financial leadership for capital raises, expansion, board reporting and major decisions, without a full-time hire.Learn more
How we approach cannabis accounting
- A cannabis-specific chart of accounts that separates inventoriable costs from costs 280E disallows.
- Cost allocation under IRC 471, with the documentation to support it under examination.
- Books reconciled to seed-to-sale data from systems such as METRC and BioTrack.
- Separate tracking for medical and adult-use activity where your licenses require it.
- Multi-state reporting that handles each state’s excise, sales and license-related obligations.
- Financial statements prepared for the IRS, state regulators, lenders and investors.
Who it’s for
Licensed cultivators, processors, dispensaries, vertically integrated operators and multi-state operators across the country. We work with single-location businesses and with operators running several entities across several states.