Glossary
COGS (cost of goods sold)
The cost of inventory sold in a period. For cannabis it is the one deduction 280E allows on adult-use activity, so package-level landed cost matters: invoice cost at accepted quantity, freight, and Michigan's wholesale tax booked into inventory cost.
Why it matters for reconciliation: the cost figure is only as accurate as the cost behind it. Package-level landed cost, using accepted quantity, freight and any wholesale tax booked into cost, is what turns a sale into a defensible cost figure.
Example: a store sells a package that was received at 28 accepted units with a Michigan wholesale tax of 24%. The cost of goods sold for each sale uses the landed cost including that tax, so the margin reflects what was actually paid.
Where this comes up on budally.com
- Supply chain & purchasing
- Compliance invoicing & accounting
- Ten weeks after the NMS2S cutover: the year-end inventory audit every New Mexico retailer should run
- Michigan's 24% wholesale marijuana tax: book it in cost, never on the receipt
- The dispensary month-end close: a checklist that reconciles to Metrc before anything posts
- What the April 2026 Schedule III order changes for dual-license books.
Related terms
- 280E
Internal Revenue Code §280E disallows ordinary business deductions for businesses trafficking in Schedule I or II controlled substances. Since the April 2026 order, state-licensed medical cannabis is Schedule III and out of 280E; adult-use cannabis remains Schedule I and under it. Cost of goods sold (§471) remains deductible either way.
- Landed cost
The full cost of a package into inventory: invoice unit cost at accepted quantity, freight, and any wholesale tax booked into cost (Michigan 24%). The floor for any price proposal.