Tracking work in process by stage
Cost accumulates through propagation, vegetative growth, flowering, harvest, drying, curing and packaging. Each stage should absorb the labor and overhead consumed there, so value builds progressively rather than appearing all at once at harvest.
Choosing an overhead absorption driver
Square footage, plant count, direct labor hours and cycle days are all defensible drivers in different circumstances. What matters is selecting one that reflects how cost is actually consumed, documenting the choice, and applying it consistently across periods.
Calculating cost per pound
Divide total capitalizable production cost for a harvest by saleable output, then split the result into materials, labor and overhead so the drivers of change are visible.
- Report cost per pound by room, strain and harvest
- Track the trend, not just the current cycle
- Compare against realized wholesale pricing in the Missouri market
- Flag rooms where overhead per pound is drifting upward
Yield variance and shrink
Variance between the standard model and actual output comes from moisture loss, trim ratios, failed testing and destruction events. Each is recorded in Metrc, so each should be reconciled and explained in the same period it occurs.
Capitalization and the federal position
Producer status allows a substantially wider set of costs into inventory than a retailer can claim. Cultivation payroll, nutrients, media, grow-room utilities, environmental controls, equipment depreciation and compliance testing are typically inventoriable; wholesale selling and general administration are not.
Frequently asked questions
Should cultivation use standard or actual costing?
Standard costing with periodic true-up is usually more useful, since it produces timely unit costs during long cycles while still landing on actual cost at period end.
How is destroyed product handled?
As a documented write-down tied to the Metrc destruction event, with quantity, reason and approval recorded.
