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Proper inventory management is a crucial part of cannabis retail. As a cannabis dispensary owner, you cannot afford to be overstocked, understocked, or over assorted. This can lead to issues of poor cash flow, disappointed customers, slower sales, and huge monetary losses. 

Cannabis inventory control measures are not just necessary for the profitability of your business. They are also stipulated by cannabis industry regulations. The intention is to deter product diversion to off-book sales and accessibility to underage persons. An inventory compliance violation may result in hefty fines or even license suspension, among other penalties. 

To cushion your canna-business from possible unwanted issues, you need to embrace a smart inventory management system. This not only assures you that you have enough stock at any given time. It also ensures that your capital isn’t tied to excess inventory that is not selling fast.

Read on to learn more about a smart inventory management system, how it works, and how it can benefit your cannabis retail business. 

What Is Inventory? 

An inventory consists of the products or materials managed by a business with the intention of selling them for profit. It may be raw materials that you buy and transform into something completely new. It could also be a bulk product that you break down into small parts and sell individually. 

In a retail cannabis dispensary, inventory comprises:

  • Cannabis products: These include flower strains, vape carts, tinctures, gummies, pre-rolls, and topicals.
  • Cannabis accessories: They include rolling papers, grinders, lighters, ashtray, bongs, and pipes.
  • Cannabis branded merchandise: Hoodies, t-shirts, and caps are typical examples.

What Is Smart Inventory Management System? 

A smart inventory management system is a web-based application that tracks various functions of your cannabis inventory. These include how much stock you have, customer orders, sale numbers, and deliveries. 

The system uses data and automation to help cannabis retail stores meet increasing customer demand with a lean inventory.


Some dispensaries rely on instinct and luck to determine how much inventory to stock on their shelves. As soon as errors like missing products and overstocks crop up, they realise that tossing a coin and hoping for the best outcome is not a reliable strategy. 

Balancing dispensary inventory levels against projected customer demand has always been challenging. But smart inventory management systems make demand forecasting much easier. The software uses historical data to predict future demand trends, thus giving you visibility of your dispensary inventory.



Cannabis retail stores that use manual inventory control and tracking methods grapple with human error issues. For example, hand-counting the number of cannabis products sold daily is not only time-consuming but also costly, especially if employees do it outside of business hours.

Smart inventory systems use RFID or barcode scanning technology. These technologies speed up stock-taking, receipts, and fulfilment of customer orders. You also eliminate manual and labour-intensive tasks such as counting the number of cannabis products you’ve sold. 

Automated scanning ultimately helps your employees increase the number of product scans they perform daily without human error. As you automate more tasks and free up resources, your employees can focus on other important tasks. Automated technology also helps sync your dispensary inventory across several sales platforms, allowing you to maximize sales.

How Does Smart Inventory Management Work? 

Products in a cannabis retail store usually have UPC barcodes or RFID tags. These are used to identify individual products that have been sold. The dispensary staff scans the UPC barcode or RFID tag on a given cannabis product at the point of sale. The smart inventory management system receives the information from the scanners. It then decodes the numbers scanned on the bar code and matches them to the kind of product they represent—for example, delta-8 gummies. 

Advanced software maintains a log of inventory going out of the dispensary through purchases. It also records the number of cannabis products that remain on dispensary shelves and in the storage facility. This gives you greater visibility into your inventory.

The system also evaluates the inventory data and makes suggestions for reordering plans. It prompts you when it is the right time to order and how much stock to order from the suppliers. The system can be programmed to place orders automatically if inventory levels reach a certain point. A smart system is flexible and allows you to make the final decision on order placement.

The smart inventory management system is prepped for integration with other systems. For example, it can be integrated with your cannabis POS system, warehouse system, or third-party ERP systems. It can also be integrated with other external systems for accounting, planning, and data analytics. 

Important Features of a Smart Inventory Management System 

Inventory Tracking 

The system tracks inventory and notifies you when it plunges below or surpasses certain limits. For example, you may be running low or overstocking delta-8 gummies. The smart inventory management system lets you know whether or not you should stock more delta-8 gummies. 

Advanced Reporting 

The system generates advanced reports on everything related to cannabis inventory. This may include cannabis product purchases, sales, suppliers, payments, and customers. Reports of inventory totals, order details, transactions, and so forth ensure efficient workflows and boost effectiveness. Generated reports also enable you to check the progress of cannabis product sales and identify the items with high or low demand. 

Forecasting Demand 

Forecasting Demand 

The inventory management system uses historical data to predict demand in the future. You can then use the data to make insightful decisions on whether to stock up on certain products. For example, the system may recommend you stock more on delta-8 gummies, given the high customer demand for delta-8 edibles. With such valuable insights, your dispensary can stay ahead of the curve. It can prevent you from being caught unawares of surges in demand for delta-8 gummies or any other product.

Tracking Transaction History 

This feature allows tracking and storing of all inventory-related information. These include the number of items in stock, receipt dates, expiry dates, shipping dates, and so on. Such data should be accessible in the system’s memory bank when needed.

How Does a Smart Inventory Management Systems Improve Your Cannabis Retail Business?

Better Operational Efficiency

A smart inventory management system leverages data to solve dispensary operational inefficiencies in the following ways: 

Avoid Stock Outs

When a product like edibles is out of stock, there’s a higher likelihood that your customers will shop for it from another retailer. That translates to missed sales and a probability of losing future customers.

The first step is to work out your lead times. Lead times refer to the number of days it takes for your cannabis products to go from the supplier to your shelves. The smart inventory management system will take into account your lead times coupled with available sales data to work out your safety stock. It then advises you on reorder points for each cannabis product in your dispensary. Reorder points will determine when to restock your inventory levels so that you can meet customer demand. 

Avoid Overselling

Some dispensaries fail to synchronize their stock levels across different selling platforms. Consequently, they end up selling products that aren’t available.

The smart inventory management software acts as a central repository for your inventory. This limits the possibility of overselling by showing available inventory levels in real-time. Based on your inventory count data, you can decide on the number of available products on each of your sales platforms.

Fulfil Customer Orders Fast

Smart inventory management systems support automated delivery guidelines. For instance, after receiving a customer order, the software can automatically assign it to the storehouse nearest its destination. This helps speed up delivery and reduces shipping expenses.

Improve Your Bottom Line

Improve Your Bottom Line

Barcode and RFID scanning allows for effortless data transfers. When such scanning technology combines with a central data warehouse, they form powerful data assets. You can tap into these data assets to closely examine what’s happening inside your cannabis dispensary. A smart inventory management system allows you to draw insights from your dispensary data for more insightful decision-making.

These insights may include:

  • Customer buying trends
  • Best and poor performing sales platforms
  • Best and poor performing cannabis products

When you analyse the data reports of individual product performance, you’ll be able to make more informed inventory decisions. For instance, is the full-spectrum oil tincture selling poorly because it isn’t being marketed enough or is it due to the lack of demand? Stocking products that don’t sell fast may increase your stock carrying costs and dent your profit margins. 

Data insights generated by the smart inventory management system can also facilitate successful sales across several channels. The reality is that product demand varies across different platforms. With greater visibility into your dispensary stock and platform performance, you can determine the marketing and pricing strategies depending on demand, ultimately maximizing your dispensary sales.

Achieving Customer Satisfaction

Customer satisfaction translates to more sales and excellent reviews for your cannabis retail business. You can build a solid reputation in the cannabis marketplace based on your ability to complete customers’ orders. Cannabis consumers who are particular about their desired flower strain or flavoured gummies, for example, won’t think twice about replacing your brand with one that fulfils their product needs. In order to prevent this, you need to keep them satisfied with your products.

A smart inventory management system can help you understand the primary reasons fuelling product returns. As such, you can adopt corrective business decisions to facilitate a better buying experience. 

Here are examples of corrective decisions to boost customer satisfaction:

Switching to a Reliable Shipping Service

How your shipping service performs will reflect on your cannabis retail business positively or negatively. That’s why you must pay attention to the reasons your customers return certain products. 

The smart inventory management system can capture return reasons for each product from your dispensary. The information will help you understand if your shipping service provider is to blame for some of the product returns. The data can also show which items are more prone to damage. This enables you to decide and act accordingly to prevent customers from continually getting dissatisfied. 

Better Product Descriptions

One of the main reasons that customers return products they purchase is poor, inaccurate, or misleading product descriptions. The smart inventory system will contain all the vital information on the exact cannabis product in question. With this system, you can evaluate if your product descriptions or images correctly describe each cannabis product. 

Better Product Descriptions

Accurate Product Shipping

Another source of customer dissatisfaction is when they receive the wrong product. Smart inventory systems eradicate these kinds of errors through RFID or barcode scanning. If the budtender were to pick the wrong flower strain, for example, the barcode or RFID scanner would automatically notify them. This enables them to rectify the mistake before shipping to the customer

Reducing Operational Expenses

Every cannabis dispensary incurs the cost of carrying inventory. These expenses include:

  • Capital costs for buying inventory
  • Taxes
  • Insurance premiums for the inventory
  • Storage costs
  • Labour costs
  • Risk-holding expenses like shrinkage, stock depreciation, and obsolete inventory
  • Utility costs

These expenses highlight the essence of carrying as little stock as possible. Smart inventory management gives you real-time visibility of your inventory levels. This helps you stock up enough inventory to fulfil customer demand. It also helps you project your next reorder points. 

The Bottom Line 

Inventory is the lifeblood of your cannabis retail business. Sticking to the traditional ways of managing your business is a recipe for failure. Not only will you get data that is inaccurate and prone to human error, but you can also suffer from inventory shortages or overstocked shelves. 

A smart inventory management system with the right integrations and reporting features will streamline inventory control in your dispensary. This will translate to less capital tied up in inventory and an overall increase in sales. In addition to that, because each business has unique needs, you can choose a custom-made system that’s right for you.