accounting

Many cannabis business owners draw a salary from the profit of their cannabis venture. Unless you are running a nonprofit, certain business entities allow you to take a reasonable salary from your cannabis operation. You may be required to earn directly from your cannabis interest. 

In every industry, bad debts can happen for a variety of reasons: fraud, bankruptcy, and other financial problems make some debts uncollectible. The COVID-19 pandemic and ensuing economic chaos have increased the likelihood that cannabis entrepreneurs will have to deal with bad debt. 

The nature of cultivation businesses is that they are loaded with upfront costs with no return on that investment until much later when compared to dispensaries or cannabis manufacturing businesses.

All cannabis businesses should have a financial forecast.

There are many attention-grabbing news headlines and industry people that like to talk about cannabis dispensaries making $3 million – and even $8 million – each year. While those figures sound impressive, don’t be fooled. That million-dollar number comes from top line, or gross revenue

This post is part 2 in a series about economic receivership. Catch up on the first part, “Receivership for Cannabis Businesses” for more information.