What Seed-to-Sale Tracking Actually Records
Arizona's ADHS inventory requirements obligate licensed operators to maintain complete, auditable seed-to-sale controls, and most operators satisfy that obligation using METRC, the platform adopted as the industry standard by many Arizona and multi-state operators. It assigns unique identifiers to plants and packages and logs every movement, transformation, transfer, sale and disposal.
For an accountant, that is an unusual gift: an independent quantity record sitting alongside the financial ledger that can be tested against it every single period.
The Package Lifecycle
Packages get created, split, combined, adjusted, transferred under manifest, sold at retail and finished when depleted. Each of those events should have a matching financial entry — a receipt at cost, a cost transfer between package identifiers, a write-off, or a charge to cost of goods sold.
Any event with no financial counterpart creates a variance that grows silently until someone reconciles it.
- Package creation and cost assignment at receiving or harvest
- Splits and combinations that move cost between identifiers
- Adjustments requiring a documented reason and a financial effect
- Manifest transfers matched to invoices and physical receipts
Manifests and Inter-Licensee Transfers
Every inter-licensee movement travels on a manifest listing packages, quantities and the receiving establishment. Receiving should always be a three-way match — manifest, invoice and physical count — with discrepancies resolved before acceptance.
Accepting a manifest that does not match physical product creates a compliance record that contradicts your own inventory, which is the worst possible position going into any examination.
Waste, Samples and Manual Adjustments
Waste, destruction, quality-control samples and employee product all remove inventory physically. Each removal needs a matching financial entry with a documented reason.
Manual adjustments deserve the most scrutiny. An adjustment made purely to clear a compliance discrepancy, with no corresponding journal entry, is the single most common source of reconciliation drift we see in Arizona operators.
Building a Real Monthly Reconciliation
The reconciliation compares opening inventory, receipts, production, sales, waste and adjustments from seed-to-sale records against the general ledger inventory rollforward and the physical count.
Classify differences as timing, documentation, costing, physical loss or system error, assign an owner and a resolution date to each, and retain signed workpapers with the tax file.
