4 Tips for Managing Cannabis Dispensary Inventory

Editor’s note: This post was originally published in October 2019 and updated to reflect current cannabis industry trends and expectations.

For cannabis dispensaries, effectively managing inventory is a top priority.

Knowing where your inventory is, how much you have on hand, and when you need to reorder products is essential for serving your customers and competing in an increasingly crowded industry.

For dispensaries, managing inventory can be difficult. Inventory makes up a significant portion of a business’s expenses and must be managed impeccably to remain profitable.

But in cannabis businesses, there’s also the concern about compliance.

Cannabis retail companies need the right tools and technology to simplify processes, eliminate manual work, and better organize inventory. This post lays the foundation of cannabis dispensary inventory management, including 4 tips to reduce complexity.

Why is cannabis inventory management important?

As a part of your larger supply chain, inventory management includes controlling and overseeing purchases (both from vendors and customers), securely storing and organizing your products, controlling the amount of product for sale on your floor, and fulfilling orders.

There are many nuances to cannabis inventory management when compared to traditional retailers. Strict regulations dictate the way dispensaries can buy, store, sell, and display cannabis products. And most legal cannabis states require that your inventory is synced with a state traceability system, like Metrc.

To put it simply, you have to take inventory management seriously at your dispensary.

Let’s dive into some real-world tips to improve your dispensary inventory operations.

Tip #1: Standardize your inventory audit process

Auditing inventory, or the process of physically counting all inventory in the store, is critical for accurate reporting and compliance.

Inventory audit best practices:

• Define your store's audit processes and roles/responsibilities of staff
• Create an SOP and require staff use it
• Train several employees on the process
• Audit every product at least once a week

Without factual inventory information, your business may lose sales, make poor ordering decisions, or be slow to catch internal theft and fraud. Incorrect inventory counts also take you out of compliance and risk investigation by state regulators.

To avoid fines, we recommend establishing a standard operating procedure (SOP) for inventory audits, ideally conducting a full audit of your entire inventory at least once a week.

To consistently audit your entire inventory over 30 days without having to count all your inventory at once, try cycle counting. Cycle counting is defined as counting only a portion of your inventory at a scheduled time every month, until all inventory has been “cycled through” and counted.

You can divide and count designated product categories on the same day each week to break up the work, for example:

• Monday = edibles
• Tuesday = flower
• Wednesday = concentrates
• Thursday = topicals & tinctures

Repeat this cycle every week.

Tip #2: Integrate your dispensary software

When searching for software solutions to help manage your inventory, make sure your cannabis POS system integrates with other tools, like updating inventory availability in real-time with Leafly, powering delivery services through Dutchie, and tracking customer loyalty programs with springbig.

An integrative system with an open API allows you to choose the best tools for your unique dispensary. With integrations, you can trust that your inventory is kept current and compliant throughout all your tools and processes.

Note: This may not be an option with seed-to-sale software, so make sure you do your research. The goal is to be more efficient in order to create more time to help customers.

The most important integration for cannabis dispensary inventory management software is Metrc, an inventory tracking system that state regulators use to monitor activity and compliance. This allows you to:

• Import new packages and inventory from Metrc

• Verify package tags with pre-populated inventory information

• Push sales reports to Metrc daily or automatically after each sale

• Reconcile physical and reported inventory with in-app Metrc Discrepancy Management

Our Metrc Discrepancy Report helps you analyze inconsistencies between your Flowhub and Metrc inventories by providing an itemized spreadsheet of errors so you can easily track down and fix mistakes.

Tip #3: Plan ahead for product orders

Even companies that put great effort into inventory planning will run into situations that throw their best-laid plans out of alignment:

• External factors may cause specific products to sell more quickly or slowly than expected.

• Spikes in sales based on seasonality, discounts, and regulatory changes can cause product shortages.

• A new product may not connect with customers and your stock sits on your shelf taking up space that should be delegated to better-selling products.

• New regulations change products or processes dramatically.

• Cash flow issues hinder your ability to purchase needed products, both new and existing.

• Vendor or transportation delays due to staffing, weather, etc.

These situations may be predictable or may catch you by surprise.

Regardless of whether these issues arise internally or externally, it’s critical that all retail cannabis companies have contingency plans in place.

Have a plan for reacting to product shortages, slow sales, or ordering issues. If a vendor had issues in the past, have backup vendors with fast shipping options on file to call. You can also explore partnerships with other stores and vendors that may allow you to offload underperforming products.

With plans in place, you can deal with any issues that arise. And build internal processes, like our par level report, to better track products to know when to order more.

Tip #4: Go mobile with the Stash app

Trying to keep track of and manage your inventory by hand will not only make you prone to human error, but will also waste your time. Because managing inventory is time-consuming, it’s important to streamline processes for your team and avoid mistakes.

The right technology will save your team hours every day on auditing and managing inventory. Our Stash® app on the mobile Nug makes it easy to conduct regular inventory audits simply by scanning package tags or SKU’s and confirming amounts rather than counting by hand.

You can also set up discrepancy approval workflows so that a manager can double-check work and investigate any errors before reporting to Metrc.

The Flowhub cannabis retail platform, including Stash, provides full inventory reporting, giving you ongoing insights into all activities related to the movement of inventory, par levels and low stock items, purchase history, as well as best selling products and the busiest times of day.

Inventory management facilitates growth

Inventory control is the machine that drives growth and stability in retail cannabis dispensaries. Your ability to effectively store, track, and analyze your stock allows your business to be more effective, agile, and responsive to customer demands.

The right inventory management solution with the right integrations, tools, and reporting features is the key to streamlining the process at your dispensary. This will also put your company in a position to capitalize on opportunities and grow steadily

Want to see how Flowhub facilitates inventory management and helps ensure compliance? Watch a demo!