Inventory Management Made Easy – The Role of Software in Cannabis Dispensaries

Managing inventory can be complicated for any business. Knowing when to restock or produce, how much to purchase, and where to sell requires accurate tracking.

Cannabis dispensary software enables companies to track inventory between production, storage, and sales. It also gathers metrics that help a cannabis company realize sales trends and create the best marketing strategy.

Optimal Inventory Hierarchy

Regardless of industry, inventory management involves the tracking and monitoring of merchandise or products to earn a profit from their sale. Cannabis dispensaries have a unique challenge in this area due to strict compliance and security concerns.

Accurate inventory reports are crucial to meeting customers’ needs and complying with state cannabis regulations. This requires a thorough and accurate system for logging incoming inventory, sales, and other information. Choosing software designed specifically for cannabis operations will contribute to more efficient and reliable processes.

A POS that integrates with online menus, METRC, and other state seed-to-sale tracking systems will reduce the need for manual data entry into these programs. Having a POS that can push sales reports to these systems daily or weekly is also advantageous.

Another important inventory metric for cannabis retailers is stock turn, or how often a dispensary sells through its entire inventory in a year. This is calculated by subtracting the cost of goods sold from total sales revenue.

Many businesses use a first-in, first-out (FIFO) inventory management method to minimize waste. This strategy is especially useful for avoiding product spoilage and promoting optimal shelf life. However, this requires careful demand forecasting and strong supplier relationships. Using the FIFO method also ensures that you always have enough stock on hand to meet customer demand, which can reduce backorders and other unprofitable situations.

Raw Materials

A dispensary must maintain proper inventory practices to avoid being caught with out-of-stock products. This means keeping a close eye on raw materials like flowers, extracts, edibles, and more to know when to order new stock or reduce inventory. Cannabis inventory management software is a useful tool for dispensaries to use in these efforts, as it helps them track product availability and sales trends for data-driven decision-making.

Back-of-house (BOH) is the area in a dispensary that is not visible to customers and is primarily where inventory managers operate. In addition to a storeroom for processing products and preparing them for sale, BOH often includes:

  • A room for auditing inventory.
  • A secure cash storage room.
  • Offices.
  • Other areas used solely by employees.

BOH inventory is typically tracked with a barcode system to keep accurate records of what has been sold and when. This information is used to prepare and verify taxes, create receipts for customer purchases, and ensure compliance with state regulations. 

Dedicated dispensary management software provides many key features to help a business run efficiently and comply with governing laws. These include reporting and analytics feature that delivers a comprehensive overview of business performance so owners can make smart decisions based on hard facts about profit margins, customer preferences, sales trends, and more. The software also automates record-keeping tasks to keep companies on track with compliance requirements for the types of products they sell, how they are sold, age verification, and transaction timeframes.

Finished Goods

A dispensary can use its point-of-sale system to track the stock levels of finished products like edibles, pre-rolls, and vape pens. It can also check on the levels of its raw materials with state-mandated compliance systems. These solutions are often integrated with the point-of-sale system for ease of use and streamlined tracking.

In addition to a comprehensive inventory management feature, the right software for a cannabis business should offer robust analytics that allows for quick views of key metrics and data analysis across all departments. 

Finally, a good cannabis software solution will help a business establish a best-practice approach for handling its in-store inventory. For example, many cannabis retailers employ a first-in, first-out (FIFO) fulfillment strategy to ensure that high-priority items get sold before their expiration date, helping protect against losses from spoilage.

Additionally, digital displays can help a cannabis store showcase current inventory or build brand awareness. They may feature product recommendations or a self-service platform for customers to build their carts and place orders.

Work in Progress

A dispensary may also offer pre-rolls, which are marijuana joints that have been prepared for consumption by the budtender. These can save the consumer time, effort, and money that they would otherwise spend grinding their own weed into a joint for consumption.

A tracking system, or traceability system, is used in states with legal cannabis markets to record and track inventory from cultivation to sale at a dispensary. Compliance with this type of tracking is required in most legal cannabis markets and helps to prevent product diversion and other violations.

Dispensary employees may be granted specific permissions in the software that controls all aspects of a dispensary’s operations, including sales, reporting, and inventory management. This can include access to inventory, cash drawers, and more. Having standard permissions helps to ensure that only the most qualified employees can access sensitive data.

POS is the point of sale or checkout process in a dispensary that allows customers to pay for products using various payment methods, such as cash, ACH, cryptocurrency, or debit cards like Visa and Mastercard. In addition, some dispensaries offer a new form of payments called point of banking which functions similar to an ATM transaction and looks and feels more familiar for the customer.


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