The heart of any successful retail operation is a solid inventory management system. But when your business involves sales of a highly valuable and perishable product like cannabis, proper inventory management becomes even more crucial — not to mention that it’s also a legal requirement in our industry.Of course, the first step toward a winning inventory strategy is utilizing the right inventory management technology. With so much at stake over even a single compliance infraction — namely, your license to operate — avoiding an investment in an automated inventory system can end up being a very costly mistake.
A reliable software solution does much more than just keep you compliant, though. With the right dispensary technology in place, you’ll also enhance customer experience by ensuring online menus are always accurate and up to date. This means that customers can be confident that the product they see online is, in fact, in stock and will be there when they arrive at your store. There’s nothing worse than spending time researching and selecting a cannabis solution online and showing up to the retailer to find that it’s actually unavailable.
Of course, once you’ve selected the right POS and inventory software for your cannabis retail store, you’ll need to get your products set up in the system and make sure you have the right personnel and procedures in place to maintain inventory accuracy. And that’s exactly what we’re discussing today.
How to Set Up and Maintain a Compliant Cannabis Retail Inventory System
Before actually entering your product info into your inventory system, you’ll want to adequately organize the data. Although it will take some time and effort, it will be well worth it to ensure your inventory management system is neat and squared away from the start.
Key details you’ll want to compile for each product include:
- Product name
- Product description
- Product image
- SKU (stock keeping unit: the product’s unique identifier)
- Retail price
- Supplier info
Remember — the more detailed info you have on each product, the easier it will be to track and monitor your inventory. It’s also important to be consistent with data formatting; for instance, if you use the format “Product type + Brand + Grams” for one product, then you’ll want to make sure all other products follow the same pattern.
Once you’ve gathered and organized all your product data, it’s time to upload them into your system. The specific process will vary depending on the program your software uses, but generally speaking, it’s simply a matter of importing data directly from a CSV file or manually entering the info.
With your inventory management software all set up and ready to go, you’re halfway there. Now it’s time to look at the people and procedures that will help you maintain an organized and compliant inventory system.
Inventory Personnel and Procedures
While it’s highly recommended to have a dedicated inventory manager overseeing your store’s merchandise, proper inventory management involves more than just one person. At the top of the chain, the company’s compliance officer should be developing, maintaining, and revising your organization’s policies and procedures to help prevent product diversion and improper internal conduct.
Of course, the inventory manager is responsible for developing and implementing the inventory control procedures and best practices, along with ensuring that inventory audits and reconciliations are conducted routinely. Store managers and budtenders also play a major role in inventory upkeep, as they must implement the procedures and are often the ones actually performing counts and audits. When it comes down to it, budtenders are your first line of defense in making sure all transactions and movements of product are accurately recorded.
As far as procedures and processes, you’ll want to start by creating a flowchart that maps out each step of the inventory process — from receiving, to auditing, to monitoring stock levels and reordering, every element should be documented and clearly defined. Additionally, automating key procedures like compliance reporting will not only save you time and money, but will help ensure you stay current on reports and help you avoid a compliance infraction. A quality cannabis POS and inventory system will be able to integrate directly with Metrc or the traceability system used in your state for easy, automated reporting.
NOTE: In Canada, there is no centralized cannabis traceability system. Every licensed retailer is responsible for generating provincial compliance reports and submitting them to the government — which means if you’re using a generic POS (i.e., one that is not specifically designed for cannabis retail), it will not auto-populate these reports in the right format, and you’ll have to create them by hand.
Finally, you’ll want to monitor key performance indicators (KPIs) and inventory metrics to optimize your operation. Some of these include:
- Inventory turnover
- Days of supply
- Product performance
- Lost sales
- Gross margin
Having a deep understanding of how product moves through your store — and what items are collecting dust on the shelf — will help you maximize profit and decrease loss due to expiration and damages.
Want to Learn More? Grab a Free Copy of Our Newest Guide
If you’re ready to take your dispensary’s inventory management to the next level, then download a free copy of our latest resource: The Ultimate Guide to Cannabis Retail Inventory Management. In it, you’ll find everything you need to know to optimize your inventory, including a step-by-step template for inventory auditing and reconciliation.
Grab your free copy today!