Running a cannabis business comes with unique challenges, particularly when it comes to bookkeeping and accounting. With tight regulatory requirements, high compliance standards, and the need for accurate tracking of cash flow, taxes, and inventory, you need specialized software to stay on top of things. Over the years, the cannabis industry has seen a rise in bookkeeping software tailored to its needs, offering integrations for inventory management, tax tracking, and compliance reporting.
Here’s a detailed breakdown of the best bookkeeping software for cannabis businesses, designed to help you stay compliant and streamline your financial management.
Top 5 Bookkeeping Software for Cannabis Businesses
| Software | Best For | Key Features | Pricing |
|---|---|---|---|
| FreshBooks | Best for invoicing & ease of use | Custom invoicing, expense tracking, time tracking, mobile-friendly | Starts at $17/month |
| QuickBooks Online | Best all-rounder for cannabis businesses | Payroll, inventory management, integration with seed-to-sale software | Starts at $30/month |
| Xero | Best for scalability & compliance | Cloud-based, inventory tracking, tax compliance, multi-currency | Starts at $13/month |
| MJ Freeway | Best for seed-to-sale tracking | Specialized for cannabis businesses, compliance reporting, POS integration | Contact for pricing |
| Wave | Best free option | Free invoicing, expense tracking, receipt scanning, and payments | Free |
FreshBooks: Best for Invoicing and Ease of Use
FreshBooks is a solid choice for cannabis businesses that prioritize invoicing, expense tracking, and client payments. Its user-friendly interface makes it easy to manage financials without needing a steep learning curve. While it doesn’t offer industry-specific features like seed-to-sale tracking, it’s an excellent option for smaller dispensaries, consulting businesses, or cannabis entrepreneurs needing streamlined bookkeeping.
- Why It’s a Top Pick: FreshBooks offers one of the most intuitive platforms for invoicing and expense management. For cannabis businesses that need to send custom invoices to customers or vendors (especially those offering ancillary services or consulting), FreshBooks provides a quick and easy way to do so. Plus, it’s cloud-based, so you can manage your finances on the go.
- Custom Invoices: FreshBooks allows you to create branded, professional invoices, which can be customized for your cannabis business. You can track when clients have viewed and paid the invoice, helping with cash flow management.
- Expense Tracking: Track operating expenses like cannabis supplies, security, and licensing fees. FreshBooks integrates with your bank account to automatically import and categorize expenses.
- Tax & Compliance: While it’s not specifically tailored for cannabis compliance, FreshBooks offers basic tax tracking and reporting, which can help you stay on top of tax obligations like 280E reporting (though you’ll need additional software or a tax expert for cannabis-specific tax issues).
- Pricing: Starts at $17/month for the Lite plan, with invoicing, expense tracking, and customizable reports. Higher-tier plans add features like project management and advanced reporting.
QuickBooks Online: Best All-Rounder for Cannabis Businesses
QuickBooks Online is one of the most widely used accounting platforms and works exceptionally well for cannabis businesses due to its integration with seed-to-sale platforms and robust accounting features. QuickBooks helps manage inventory, payroll, and complex tax reporting, making it a reliable option for cannabis dispensaries, growers, and manufacturers.
- Why It Works for Cannabis: QuickBooks is versatile enough to handle the accounting challenges of cannabis businesses. It supports integrations with cannabis industry software like MJ Freeway and BioTrackTHC (seed-to-sale tracking systems), allowing you to pull in inventory, sales, and compliance data automatically.
- Inventory Management: QuickBooks Online offers robust inventory tracking, which is essential for cannabis businesses that need to monitor products across the supply chain. It allows you to track product levels, sales, and reorders in real-time.
- Payroll & Employee Management: For cannabis businesses with employees, QuickBooks offers integrated payroll features, making it easy to manage wages, benefits, and tax compliance.
- Tax Compliance: QuickBooks Online helps you stay on top of tax compliance, particularly with 280E tax code complexities. While it doesn’t automatically handle cannabis-specific tax rules, it offers advanced tax reporting and integration with tax professionals for cannabis-specific guidance.
- Pricing: Starts at $30/month for the Simple Start plan, with features like invoicing, payroll, and expense tracking. Higher plans offer multi-user access, inventory management, and advanced reporting.
Xero: Best for Scalability and Compliance
Xero is a cloud-based accounting platform ideal for cannabis businesses that are scaling or expanding into multiple locations. Xero excels in handling multi-currency transactions, inventory management, and advanced compliance reporting, making it a strong choice for cannabis manufacturers, distributors, and retailers.
- Why It’s Great for Cannabis: Xero offers flexibility and scalability, making it perfect for growing cannabis businesses. Its ability to integrate with third-party cannabis software ensures you can keep track of seed-to-sale data, while its real-time reporting helps you stay compliant with state and federal laws.
- Inventory & Cost of Goods Sold (COGS): Xero’s inventory management tools let you track cannabis products from raw materials to finished goods, ensuring accurate COGS calculations for compliance reporting.
- Tax & 280E Compliance: Xero doesn’t automatically handle cannabis-specific tax issues like 280E compliance but offers robust reporting tools that allow you to generate custom reports. These reports can help simplify tax filing when working with a cannabis tax professional.
- Multi-Currency & Multi-Location: For cannabis businesses with multiple locations or international transactions, Xero’s multi-currency support makes it easy to track financials across different markets.
- Pricing: Starts at $13/month for the Starter plan. Higher-tier plans offer more features like bulk transaction reconciliation, multi-currency support, and payroll.
MJ Freeway: Best for Seed-to-Sale Tracking
MJ Freeway is a cannabis-specific platform that goes beyond bookkeeping by offering seed-to-sale tracking, compliance management, and integrated POS (point of sale) systems. For cannabis businesses that need specialized tracking across the entire supply chain—whether it’s growing, manufacturing, or selling—MJ Freeway ensures compliance with local and state regulations while managing your financials.
- Why It’s Ideal for Cannabis Businesses: MJ Freeway is designed specifically for cannabis, offering features that help you track plants, products, sales, and inventory from seed to sale. This is essential for staying compliant with cannabis laws and regulations.
- Compliance Reporting: MJ Freeway automatically generates compliance reports to ensure you meet all legal requirements. It integrates with state reporting systems, making sure you’re always on top of regulatory obligations.
- POS & Inventory Management: The platform includes POS and inventory management, allowing you to track product levels, manage sales, and automate reorders. Whether you’re a dispensary or a grower, MJ Freeway makes inventory tracking easy.
- Integration with Accounting Software: MJ Freeway integrates with QuickBooks Online and Xero, allowing you to sync your cannabis sales, inventory, and compliance data with your bookkeeping software.
- Pricing: Pricing is based on the size and needs of your cannabis business. Contact MJ Freeway for custom pricing.
Wave: Best Free Option for Small Cannabis Businesses
Wave is a completely free bookkeeping solution that offers essential features like invoicing, expense tracking, and receipt management. While it doesn’t cater specifically to cannabis businesses, it’s a great option for smaller cannabis entrepreneurs or startups looking for basic bookkeeping without upfront costs.
- Why It’s a Good Fit for Small Cannabis Businesses: For smaller cannabis businesses that need simple bookkeeping without the expense of monthly subscriptions, Wave offers all the basics for free. While it lacks industry-specific features, you can still track expenses, send invoices, and manage payments easily.
- Invoicing & Payments: Wave allows you to send professional invoices and accept online payments, helping you get paid faster. This is especially useful for cannabis consultants or small retail shops that need to manage client billing.
- Expense Tracking & Receipt Scanning: Wave integrates with your bank accounts and automatically imports transactions, allowing you to track business expenses effortlessly. You can also scan receipts and upload them directly into the system for easy record-keeping.
- Free Payment Processing: Wave’s invoicing and expense tracking are free, but it charges standard fees for credit card payment processing if you need to accept card payments.
- Pricing: Free for invoicing, expense tracking, and receipt scanning. Wave charges fees for payment processing and payroll if needed.
Key Considerations When Choosing Bookkeeping Software for Cannabis Businesses
1. Compliance
- Cannabis businesses operate under strict regulatory frameworks, so it’s critical to have software that integrates with compliance tools. MJ Freeway and QuickBooks Online (with seed-to-sale integration) are great for managing compliance.
2. Inventory Management
- Cannabis businesses need to track products from seed to sale, especially in states with tight regulations. Xero and QuickBooks Online offer robust inventory management tools, while MJ Freeway provides the most cannabis-specific inventory tracking.
3. Tax Compliance (280E)
- Cannabis businesses face challenges with IRS Code 280E, which restricts the types of expenses that can be deducted. Using software like QuickBooks or Xero with the right tax integrations can help manage these complexities.
4. Scalability
- If you expect your cannabis business to grow, choose software that can scale with you. Xero and QuickBooks Online are cloud-based solutions that are great for multi-location businesses or those expanding into new markets.
5. Cost
- For smaller businesses or startups, Wave is a great free option. For businesses looking for cannabis-specific features, MJ Freeway may be worth the higher cost.
Final Thoughts
For most cannabis businesses, QuickBooks Online offers the best balance of features, including payroll, inventory tracking, and compliance reporting through integrations with seed-to-sale software. If you’re looking for a cannabis-specific solution, MJ Freeway provides comprehensive seed-to-sale tracking and compliance tools. Xero is ideal for businesses expecting growth, while FreshBooks and Wave are great for smaller operations or businesses focused on ease of use and invoicing.
Choosing the right bookkeeping software will help you stay compliant, organized, and efficient, so you can focus on growing your cannabis business!