Top 5 Financial Mistakes NY Dispensaries Make (and How to Fix Them)

Key Points

• NY cannabis dispensaries commonly lose profits and invite audits due to poor financial planning and 280E missteps.

• Most financial mistakes stem from inadequate recordkeeping, cash controls, or waiting too long to seek expert help.

• With a proactive CPA partner, dispensaries can clean up operations, boost margins, and scale with confidence.

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New York’s legal cannabis scene is buzzing, but the green rush isn’t all smooth rolling. Between tight regulations, evolving tax codes, and heavy startup costs, even the most passionate dispensary owners can find themselves buried in financial stress.

At Growise CPAs, we’re working with cannabis entrepreneurs across the state, and we’ve seen a pattern: the same five money mistakes showing up again and again. The good news? They’re fixable. Let’s break them down.

1. Local NYC Tax Complexity

The Issue:
Dispensaries in NYC must navigate not just New York State tax requirements, but also local taxes like the Metropolitan Commuter Transportation Mobility Tax (MCTMT)—which applies to employers (including dispensaries) operating in the five boroughs and paying over a certain payroll threshold.

Operators often overlook this tax entirely, miscalculate it, or file late—triggering penalties and increasing their audit risk. NYC businesses are also subject to local unincorporated business taxes (UBT) or corporate franchise taxes, depending on entity type, adding another layer of complexity.

The Fix:
Payroll setup, entity structuring, and quarterly tax forecasting are mission-critical. Without proper planning, dispensaries risk being blindsided by unexpected tax bills and noncompliance fines.

🔍 Our Outsourced CFO service helps clients proactively calculate MCTMT thresholds and filing, align entity structure to minimize UBT or maximize franchise tax credits, forecast quarterly liabilities, including NYS + NYC overlays.

2. Ignoring 280E and Missing Deductions

The Issue:
Section 280E of the Internal Revenue Code prohibits cannabis businesses from deducting most operating expenses. That means rent, marketing, and payroll aren’t deductible—unless they're part of COGS (Cost of Goods Sold). Many dispensaries either don’t know this or misclassify expenses, leading to overpaid taxes or audit exposure.

The biggest issue (and opportunity) we see is related to inventory accounting. General accounts don’t recognize the impact the inventory accounting method can have and still rely on outdate guidance.

The Fix:
Utilize a progressive inventory accounting approach and save … a ton. With a cannabis-specific chart of accounts you can also track direct costs precisely and categorize expenses in a way that maximizes your allowable deductions. Monthly cost accounting—not just bookkeeping—is key.

💡 Need help? Growise CPAs’ tax planning services are designed to navigate 280E from day one.

3. Lax Inventory and Cash Controls

The Issue:
In NY, regulators expect airtight inventory tracking and cash management. A single mistake—like product shrinkage or misreported cash—can lead to major fines or even license suspension.

The Fix:
Implement documented SOPs for cash handling, daily inventory counts, and POS integration with your accounting system. Reconcile everything regularly, and embed receipts directly into your financial statements.

📦 A cannabis-industry focused CPA can help you build a bulletproof cannabis compliance system for inventory and cash.

4. Mixing Personal and Business Finances

The Issue:
We get it—funding is tight early on, and sometimes you just need to pay a bill fast. But paying business expenses from personal accounts (or vice versa) creates chaos at tax time and erodes audit readiness.

The Fix:
Separate everything. That means distinct bank accounts, clear ownership structures, and documented fund flows. Your CPA should help you map out how money moves across entities and create a defensible structure.

🏗️ Growise CPAs provides fund flow mapping and entity structuring built for cannabis complexity.

5. Real Estate Leasing Structures and 280E Exposure

The Issue:
Due to high property costs, many dispensaries enter leasehold improvement deals or profit-sharing arrangements with landlords. If these arrangements are poorly structured—especially if the landlord is part of the licensed entity—it can trigger IRS scrutiny under 280E or create “non-deductible” business expenses.

Operators may also capitalize improvement costs incorrectly, or fail to separate real property entities from retail operations, which can damage their tax position and audit readiness.

The Fix:
Proactively address issues with entity-level fund flow analysis, lease accounting under GAAP, and capital expenditure tax planning. This helps dispensaries like tours avoid misallocations and maintain clean, defensible books under audit.

📅 Book a free financial health assessment with our team to see where you stand today.

Final Thoughts: Build a Resilient, Audit-Ready Operation

There’s no shame in making a mistake—this industry is complex and constantly shifting. But with the right financial strategy, New York dispensaries can avoid costly errors, stay compliant, and build serious long-term value.

At Growise CPAs, we help operators grow smarter with personalized tax, accounting, and CFO solutions tailored to the cannabis space. You handle the plant—we’ll handle the numbers.

👉 Let’s fix the leaks and fuel your growth: GrowiseCPAs.com