POS, METRC and General Ledger Reconciliation
Retail cannabis generates three parallel records of the same transaction: the point-of-sale system, the state track-and-trace system, and the accounting ledger. They disagree constantly — discounts, voids, employee sales, samples, waste, and manual METRC adjustments all create drift.
We build a standing three-way reconciliation. Gross receipts per POS tie to deposits and to revenue in the ledger. Units sold per POS tie to METRC package depletion. Variances are investigated at the SKU level and either explained or corrected before the period closes, because an unexplained inventory variance is both a compliance exposure and a tax exposure.
- Daily sales journal from POS to ledger with discount and refund detail
- Unit-level reconciliation of POS depletion to METRC package activity
- Deposit-to-sales cash tie-out with over/short tracking by shift
- Documented investigation of variances above a defined threshold
Cash Handling and Internal Controls
Limited banking access means most California retailers still handle significant currency. Cash creates two distinct risks: loss from internal theft, and the appearance of unreported income during an examination. Controls address both.
We design segregation of duties across the till, the vault and the deposit; require dual counts with signatures; reconcile drawer counts to POS shift reports; and maintain a vault log that can be tied to the ledger on any given day. If a business banks with a cannabis-compliant institution, we prepare the reporting packages those institutions require to maintain the relationship.
- Dual-control counts and signed count sheets at every custody transfer
- Shift-level over/short analysis with trend reporting by employee
- Vault log reconciled to ledger cash daily
- Deposit documentation packages for cannabis banking programs
Excise Tax, Sales Tax and Retailer Obligations
California retailers are responsible for collecting cannabis excise tax from purchasers and remitting it to CDTFA, alongside state and district sales and use tax and any local cannabis business tax. Rates and local add-ons vary by jurisdiction, and the tax base is not the same for each.
We configure the POS tax setup, verify the calculation against a sample of transactions, and prepare the filings on a fixed calendar so that returns and payments are never funded out of surprise. Local business tax filings — often gross-receipts based and city specific — are tracked in the same compliance calendar.
Inventory Valuation and Retail COGS
As a reseller, a dispensary has a narrow COGS profile under 280E: the invoice cost of product plus the costs of acquiring it. Getting that right requires accurate landed cost per unit, disciplined receiving, and a physical inventory process that actually agrees to the system.
We standardize receiving so that each purchase order ties to an invoice, a METRC transfer manifest, and an inventory receipt at a specific unit cost. Cycle counts run on a rotating schedule, with full counts at period end. Shrink is quantified, categorized and reported rather than absorbed silently into margin.
Management Reporting That Drives Retail Decisions
Compliance reporting tells you what happened. Management reporting tells you what to do. We report gross margin by category and by brand, basket size and transaction count by daypart, discount leakage, labor as a percentage of gross profit, and inventory turns by SKU class.
Those metrics answer the questions retailers actually ask: which brands earn their shelf space, whether the delivery channel is contributing after driver labor, and how deep a promotion can go before it destroys gross profit that federal tax law will not let you recover.
- Gross margin by category, brand and SKU
- Discount and promotion leakage analysis
- Labor efficiency measured against gross profit, not revenue
- Inventory turns, days on hand and aged-stock exposure
The Daily Close in a California Retail Environment
Retail cannabis generates hundreds of transactions a day across cash, debit workarounds and increasingly ACH-based payment rails, in a store where the product is tracked by the state and the till is counted by hand. The close discipline that makes this work is daily, not monthly: shift-level cash counts under dual control, a signed over/short log, a deposit prepared and logged the same day, and a POS Z-report reconciled to both the deposit and the ledger.
A San Diego storefront running 400 tickets a day with an average basket of $62 moves roughly $9,000,000 of gross receipts a year through that process. A one percent unexplained variance is $90,000 — more than the cost of the controls that would have prevented it, and exactly the kind of pattern that turns a routine examination into a difficult one.
We implement the control set, then audit it monthly: variance trend by shift and by budtender, void and discount frequency by employee, and refunds against the exception policy. Controls that nobody reviews stop being controls.
- Dual-control counts at open, shift change and close
- Sequential deposit log tied to the armored carrier manifest
- Daily POS-to-ledger reconciliation with documented variance explanations
- Monthly exception review of voids, discounts and returns by employee
Landed Cost, Category Margin and Merchandising Decisions
Because a retailer's inventoriable cost is narrow, the accuracy of landed cost per unit at receiving determines the entire federal tax position. Invoice price, inbound freight where the retailer bears it, and permitted acquisition costs go into unit cost at the moment product is received and the METRC transfer is accepted — not estimated later from a vendor statement.
That same unit cost drives merchandising. Category margin reporting shows what flower, vape, edibles, pre-rolls and accessories each contribute after cost, and brand-level reporting shows which vendor relationships are actually profitable once discounting and slow-moving inventory are considered. In a market where price compression has been relentless, a Sacramento retailer that reallocated shelf space toward two high-turn categories improved blended margin by four points without raising a single price.
We also report days-on-hand by SKU. Cannabis inventory ages badly, and product written down or destroyed at the back of the store is margin that federal tax law will not give back.
