5 Inventory Quick Tips for Cannabis Dispensaries

June 17, 2021


Running a cannabis dispensary comes with all of the challenges associated with running any business. On top of those, you also have to make sure that you are compliant with all relevant laws and regulations.

To make inventory management easier for your cannabis dispensary, incorporate these tips.


Before we get into our quick tips for your dispensary’s inventory, make sure you understand why managing your inventory is so important.

The biggest reason to manage your inventory is to maximize your profits. You want to have a clear idea of what items are in stock at all times. This lets you know when you need to order more of a popular item. It also lets you know when you shouldn’t order more of an item because it isn’t selling very well. Staying on top of your inventory can also help you decide when to put a product on sale, such as if it is getting older and not selling well.

On top of that, managing your inventory properly makes it much easier to remain compliant with cannabis regulations and show that you are compliant.


Because cannabis is perishable, you should always follow the inventory practice of first in, first out.

This is the simplest way to ensure that your products are always fresh. That ability to maximize freshness delivers several important benefits.


To start, your clients will be happy with the quality of your products. If you were to accidentally sell aging cannabis, you would likely have customer complaints. Those complaints could potentially hurt your business. They would also cost you money, as you may have to accept returns and refund customers’ money.


There would also be potential legal consequences if you sold cannabis that is too old. As with any other perishable item, a company that sells cannabis that has gone bad could be potentially liable if someone gets sick from it.


There is also the fact that when you follow the first-in, first-out principle, you will reduce the waste that your company produces. After all, if a flower gets stuck in the back of a storage area for months, you will have to throw it out or risk unhappy customers and potential lawsuits.

Reducing waste is crucial for maximizing your profits, as every bit of product that you cannot sell costs you money. On top of that, disposing of products as a cannabis dispensary can be a lot more challenging than a grocery store just tossing out expired produce. Because of the legal restrictions around cannabis, you have to follow certain procedures, including completing a large amount of documentation.


In order to successfully follow the first-in, first-out strategy, you will need to keep your inventory well organized. Otherwise, your team will not know where to find the oldest products.

When it comes to organization, start by ensuring you store each type of product in its ideal environment. For example, you may want to keep concentrates in a refrigerator and flowers in airtight containers in a humidity-controlled space.

Overall, you want to come up with an organization system that works for your dispensary and is easy to understand. Most dispensaries will benefit from having SKU numbers on products. You can try color-coding products, for example. Or you can organize products based on the farm or manufacturer you get them from. There are limitless possibilities, so you can look at your inventory and decide what works best for your needs.


No matter the type of business you run, you want to regularly audit your inventory. This is particularly important in the cannabis industry, due both to regulations and the fact that cannabis is perishable.

Auditing is the main factor that helps you decide what to order and what items to create promotions for.


Ideally, you would have a dedicated employee who audits the inventory and does so daily. However, this is not always practical. A more realistic approach is to have a rotating audit schedule for your inventory. Have the designated employee(s) audit one category of your products every day. This “cycle counting” will divide your inventory into more manageable chunks.

At a minimum, try to ensure that every single section of your inventory is audited at least once a week.


Just telling someone to audit the inventory is not enough. You need to have a process in place for doing so. This is crucial, as it ensures that your reports are accurate and consistent. Most importantly, it also ensures that every single audit includes all of the information you need to track to be compliant.

On top of that, having a clearly outlined audit process makes it easier to train additional people in the process in the future. You should also take advantage of software to help streamline the audit process.


While internal audits are important, you also want to occasionally supplement them with external ones. This simply means hiring a third party to conduct the audit. Doing this prevents the risk of your internal auditor fudging numbers. It also reduces the risk of errors, as any will be spotted.


One of the most important tasks related to inventory management is ordering new products when your supplies get low. For the best results, you want to plan your orders as far ahead as you possibly can.


There are plenty of things that could potentially affect your plans for ordering if you don’t plan ahead. In cannabis, changes to regulations on products or processes are a real concern. You may also have to deal with regular business fluctuations, such as changes to which products are popular based on seasonality or sales.

Planning ahead also helps ensure that your dispensary will have enough cash flow to purchase the inventory you need when you need it. You can allocate a portion of your budget to it ahead of time.

Of course, planning ahead also helps reduce the risk of running out of stock if there is a delay of some sort. This could be from weather conditions, transportation issues, or anything else.


While planning your orders ahead of time reduces the risk of potential problems, it doesn’t completely eliminate them. Many of those potential problems are out of your control.

Instead of preventing them, you can create a plan to minimize them. You will likely want backup plans for various situations.

For example, you can have backup vendors that you can get products from. Or maybe you can talk to another local dispensary and create a partnership where you help each other out if you experience shortages.


If you aren’t taking advantage of the data that your inventory offers, then you are missing out on business insights and opportunities. Ideally, you want to track KPIs (key performance indicators) using your inventory. By paying attention to the KPIs, you can boost profitability, make informed decisions as to which products to buy and stock, and streamline cash flow.

The following are some of the most important inventory KPIs that you should be monitoring.


This figure tracks how many days you typically have a product between ordering and selling it.

You can use this KPI to look for potential issues. If the figure is too low, then maybe you need to order more of the relevant item so you don’t run out of stock. If the figure is too high, then look for ways to reduce inefficiencies.


This figure tells you the amount of profit you keep for every product that you sell.

By tracking this figure, you can better determine which products make your dispensary the most money. You can then use that knowledge to focus on those products and boost your profitability.


Shrinkage refers to the amount of your inventory that you can’t account for. It includes items you recorded incorrectly, those you lose, and those that are stolen.

Tracking this figure helps you establish a baseline. If you notice your shrinkage increasing, then you may need to confirm that you haven’t lost items to theft.


This refers to how quickly you sell and replace various products.

Tracking this KPI lets you figure out which products are in the highest demand. You can then use that knowledge to order more if necessary. Or use that knowledge when it comes time to expand your offerings by focusing on adding products similar to those in demand.


This refers to the total amount of stock you have. You should ideally take this figure a step further and think of it as a way to offer an overview of your inventory. For example, you could compare inventory levels for different types of products to see which ones you need to order more of.


On top of all of the other tips for your dispensary inventory, you should be aware of the most common obstacles that you will face. This awareness will help you avoid obstacles and come up with a plan to overcome them if they do occur.


One of the biggest challenges when it comes to managing your inventory is time. There likely isn’t enough time in the day to thoroughly check your inventory every single day. It can be even more time consuming if you use an inventory system with manual data entry.

There are several ways to overcome this, starting with strong planning and organization. Keeping your inventory organized will allow you to audit items and perform other tasks more efficiently.

In terms of planning, schedule a set time for your inventory employee to take care of their planned audit. If they also work with customers, make sure that you have at least one other employee on hand during that inventory time. This way, your inventory employee can focus solely on the inventory while the other attends to customers in the store. That should dramatically reduce the risk of errors and will help ensure the auditing gets completed.


Another major obstacle for your dispensary will likely be compliance. The specific regulations you need to follow vary based on your location, but you will typically have to keep strict records. It can be time-consuming to stay on top of the requirements and more time-consuming to complete them.

To overcome this obstacle, make it a point to stay on top of any changes to regulations. Create a checklist of everything you need to do to remain compliant and ensure your team knows to stick to it.


Part of being compliant with regulations is keeping customer data up to seven years after a purchase. This poses a challenge, as you need to ensure that the data is secure at all times.

You can typically overcome this obstacle with basic cybersecurity measures. At the very least, make sure to use encryption and strong passwords. Ideally, you will use multi-factor authentication.


One often overlooked challenge with inventory management is figuring out how to glean insights from the data you get. There is a wealth of data to be found within your inventory management system. You could potentially use it to make purchasing decisions, sale decisions, and more.

Overcoming this obstacle starts with our earlier advice to track KPIs for your inventory. Consider using reporting software that will analyze those KPIs and help you find meaningful insights.


Not only do dispensaries need to keep track of their inventory to know what products to order, but managing their inventory is also essential to remaining compliant with regulations. To keep your inventory well organized and compliant, follow the first-in, first-out method and conduct regular audits. On top of that, measure KPIs to get insights, plan your orders ahead of time, and know how to avoid and overcome inventory obstacles, and your inventory should run smoothly.