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So, you’re thinking of opening a marijuana dispensary? If so, prepare to deal with inventory management challenges in the industry. Effective inventory management is a top priority for cannabis dispensaries. 

Knowing the condition of your inventory, the amount you have at hand, and when you need to restock products is crucial. It paves the way for increased profitability. It’s also a great way of ensuring that your cannabis dispensary adheres to regulatory compliance every step of the way. 

For cannabis dispensaries, inventory management comes with its fair share of obstacles. Let’s look at some of these real-world dispensary inventory management challenges and the best strategies to counteract them. 

Importance of Cannabis Inventory Management

Dispensary inventory management is part of your larger supply chain. It involves the following actions:

  • Controlling and supervising purchases both from customers and vendors
  • Safe storage of cannabis products
  • Organizing the products on the dispensary shelves
  • Controlling the volume of products available for sale in your store
  • Fulfilling customer orders

Inventory management in cannabis dispensaries is quite different from that of other retail businesses. Strict compliance regulations govern how dispensaries can purchase and store their inventories. Many legal cannabis states stipulate that your stock is synced with the state’s traceability system. In short, there’s no circumventing proper inventory management.

Challenges of Dispensary Inventory Management

Dispensary owners face a myriad of pain points, including:


It’s time-consuming to manually enter data of incoming merchandise and enter the same data into regulators’ seed-to-sale tracking system. Chances are, you will be saddled with backlogs, causing inconsistencies with your inventory. Soon, regulators will notice the discrepancies and decide which fines to apply to your retail license. 

Dispensary owners should instead turn to appropriate tools and personnel to carry out inventory management tasks. To achieve this, you need to create relevant positions in your cannabis dispensary. For example, you might be operating in a state that requires compliance with seed-to-sale tracking. 

In this case, you will need the services of an inventory manager or compliance officer. Their role will be to supervise your inventory, both in your point-of-sale system and your seed-to-sale software. 

Data Security

Marijuana dispensaries are required to store customer data even after the product purchase is made. The duration to hold onto the customer sales data may vary from state to state. The data should be stored safely, away from potential breaches and theft. The standard applies to inventory data as well. Security tools like multi-factor and encryption can help dispensaries achieve data privacy.

Inventory Auditing and Compliance

Inventory Auditing and Compliance

Inventory auditing is the process of physically counting the stock in your dispensary. This is meant for correct reporting and compliance. The process lets you verify whether the physical stock on your floor corresponds with the sales data you’re sending to the regulators. This remains one of the major challenges that dispensary owners face.

For an efficient inventory auditing process, you need to adopt automated reporting and compliance tools. Failure to do this time-consuming task will turn into a difficult, stressful exercise. Automated auditing helps you detect discrepancies early, before the authorities do.

Inventory Management Strategies

First in, First Out (FIFO)

The FIFO inventory management principle is the best practice for marijuana dispensaries. This method completes customers’ orders using the products that have been on the shelves the longest. So, the remaining stock comprises your most recent purchases, which are still high in market value. 

As such, perishable products get sold long before their expiry date. This increases profitability and safeguards against stockouts. Most states insist on the need for marijuana products to undergo laboratory testing. The tested products are given a Certificate of Analysis, which expires after six months or so, depending on the state you are in. 

So, dispensary owners have to sell the merchandise before the lapse of six months. Otherwise, they are expected to destroy the unsold products after a certain period. Based on the FIFO principle, all tested cannabis products are usually sold before their Certificate of Analysis expiration date. 

FIFO also shields dispensary owners from inflation and price volatility. Your dispensary sells older, low-priced products first while retaining recent, higher value products on the shelf. In the end, you will report reduced costs of products sold and higher overall profitability. 

Integrative Cannabis POS System

You will need to bring software solutions onboard to track your cannabis inventory. A good example is a point-of-sale dispensary system. Make sure your dispensary POS system allows for integrations with other tools. Some of the crucial integrations you should consider include:

  • Real-time updates of inventory availability
  • Powering delivery services
  • Tracking customer loyalty programs
  • Generating detailed sales reports

Thanks to integrative dispensary POS software, you can be sure that your stock is kept up to date and compliant for the entire time. A vital integration for your marijuana POS system is the state’s tracking system that authorities use to check compliance. Through this integration, you can:

  • Validate package labels with pre-populated product details
  • Import new products from the state’s tracking system
  • Send daily or automatic sales reports to the state’s tracking system
  • Reconcile the physical and the issued inventory sales reports

Inventory Audit Approaches Inventory Audit Approaches

A typical marijuana dispensary should adopt two unique strategies for inventory auditing:

  • Unit-based audits, and
  • Weight-based audits

This differentiation will help your inventory auditing software reveal the exact value of each product category. The weight-based method is appropriate for dry cannabis buds that have to be weighed and captured into the system. It’s exhausting and time-consuming to manually conduct a weight-based audit. The dispensary POS system allows the audit manager to simply scan and input data into the system to confirm in-stock product volumes.

Likewise, automated marijuana dispensary POS software makes unit-based inspections easy to conduct. The audit officer only needs to scan every product. Then the software confirms any disparities between the scanned total and the reported amount.

The Bottom Line

Running a successful cannabis dispensary involves a lot more than just buying and selling weed. Dispensary owners need to adopt robust systems that incorporate inventory, point-of-sale, and regulatory compliance in an integrated system. Doing so will lead to long-term profitability in the cannabis market.