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The best tips for managing dispensary inventory

published on March 28, 2021
by James Hammer

Having excellent inventory management is vital for any cannabis dispensary. State regulations are highly strict, and hundreds if not thousands of marijuana products need to be sold by a sizable amount. Most marijuana retailers tend to stock thousands of cannabis products in their storefront, and keeping track of everything can become challenging. Using advanced technology is necessary when managing cannabis dispensary inventory. A terrible dispensary inventory management strategy can cause severe financial issues. If dispensary owners do not handle their inventory appropriately, these growing issues will go unnoticed until regulators audit the store license. If you managed to end up in that position, you could experience license revocation and potentially criminal procedure. Dispensaries are something that every business owner needs to take into serious consideration. Fortunately, there are ways to implement efficient inventory management solutions that can improve your profits and streamline daily operations. Doing so will ensure your growth is at an all-time high while also keeping the dispensary completely compliant at every step of the way. The unique ecosystem of the cannabis industry makes inventory management a critical issue for anyone running a cannabis dispensary. For this article, we will go over some of the best tips for managing a dispensary inventory.

First In, First Out (FIFO)

The First in, First Out (FIFO) inventory management system is the industry standard for food production safely. Although this method will also ensure you sell cannabis products in the order you have received them. Cannabis products need to be sold long before they reach the expiration date. Keeping expired cannabis products stocked on the shelves will compromise the safety of your products. That could result in dissatisfied customers and compliance infractions. By implementing this method, cannabis business owners can avoid stocking or selling stale and expired products. Here are the steps you need to take for FIFO:

  • Search through your products and locate the ones that have the earliest use by, expiration date, or best before date.
  • Throw away any products that have been damaged or past the expiration dates.
  • Stock the oldest ( but still good) product at the front of your shelves.
  • Place the newest stock behind the older stock, with the most recent dates at the back of the shelves.
  • Make sure to sell the oldest items from the front of your shelves first.

Following these steps will ensure you manage to sell your products before they expire by prompting you to prioritize selling the products closest to expiring.

Use dispensary software

When you are looking for a software solution to assist with managing your inventory, make sure your cannabis Point of Sale (POS) system integrates with other software. They should be capable of doing several things such as updating inventory availability in realtime, powering delivery services, and tracking customer loyalty programs. Three POS systems that we integrate with here at Carrot are Flowhub, Leaflogix and BioTrack. Having an integrative system with open API offers you the opportunity to integrate the best tools suited to run your dispensary. With these integrations, you will confidently run your business knowing that your inventory is kept up-to-date and compliant throughout all your tools and processes. The most crucial integration for a cannabis dispensary inventory management solution is an inventory tracking system that state regulators use to monitor activity and compliance. With all of the projections, reconciliations, and daily inventory audits that the cannabis POS system facilities, having these solutions in place are crucial for every cannabis owner that handles inventory. By having an inventory management system in place, you will be able to reduce human error.

Measure and weigh each batch

It may seem simple, but accurate measurement of your cannabis product is one of the more crucial steps of inventory management. Each time you receive a new batch of products, weigh each batch to know how much of each strain or product is in your possession. At times, plenty of cannabis retailers find it useful to have a scale that integrates with their POS system. By auto filing the product weight, you can save up time on data entry and prevent potential inventory shrinkage or theft. Non-retailers should also prioritize taking inventory measurements through their business cycle. Cannabis products and extracts are people who are working with tons of very valuable raw material. Using measurements will allow you to lessen the chances to waste throughout your process. Implement a system of checks to make sure the ratio of the final product to raw material makes sense. Your investors will be asking you to demonstrate production controls, standardized measurement, and other inventory strategies. Furthermore, this helps you lower the chance of loss and maximize revenue.

Audit your stock frequently

Cannabis business owners need to do a complete audit of their inventory frequently, even if they are using an inventory management solution. For cannabis businesses, you should regularly conduct spot checks to get a sense of what products are being moved around frequently and which products are turning into dead stock. If possible, you should attempt to make an inventory report daily. While it may seem challenging to keep up with an inventory audit, especially when you are serving customers daily, doing this at least once a week should be enough. When conducting an inventory report, make sure the employee taking stock is not the same person who is in charge of your finances. That reduces the chances of fraud and theft. Duplicity is easy to pull off when a single person is handling the entire bookkeeping process and inventory management activity. Make sure to also separate things like processing customer payments, managing cash, keeping track of inventory, and paying invoices in several separate roles.

Prevent employee theft

While you need to show that your business is secure for you to remain compliant, it is also vital to consider how much product you are handling each month. It can be easy for products to go missing when there is plenty of temptation for dishonesty to occur. According to information provided by the Marijuana retail report, over 90% of losses reported by dispensaries are because of employee theft. That is why you need to incorporate strict rules to secure your inventory. Here are several options available for keeping your cannabis inventory secure:

  • Perform thorough background checks during the hiring process
  • Have limited access areas for inventory stock
  • Issue employee identification to get into and out of these limited access areas
  • Keep a record of every employee coming in and out of the inventory rooms to prevent fraud.
  • Install alarms, video surveillance, and lighting to prevent theft.
  • Hire security who keep a watch for any inconsistencies in employee and customer behavior.


Assign SKU number

Over the years, many states have chosen specific service providers for their track-and-trace reporting. Cannabis bought from the distributor will arrive with a unique barcode. For instance, In California Franwell’s Metric reporting software is the primary provider. That means that Metric barcodes will be attached to every batch of marijuana. Once your business has received a batch that is tagged with a barcode, you will want to assign your dispensary SKU number to the entire shipment. You can include the plant identification number in the product profile to remain aware of which SKU is assigned to which batch. By doing this, you will be able to make sales while keeping track of every gram sold in your dispensary.

Analyze customer data

Enhance your inventory management by taking the time to analyze the data your customers generate. As you manage your inventory and collect data, you can cause your business to become more effective and respond to your customer’s demands. With the appropriate data, you will understand what your customers want, how much you should order, and what margins will boost your business’s growth. By effectively utilizing that data to streamline your inventory management processes, you are positioning your business to make the most of any opportunity you manage to discover during your operations. Overstocking cannabis products can become a huge issue. Although you also need to store enough inventory to provide your customers with their preferred products, regardless of whether you are experiencing a peak in sales. The software you use should be capable of generating inventory and sales reports to ensure you are aware of how much product you should have on-hand at any given time. This should result in your business running as smoothly as possible.

Storing your cannabis

To successfully manage your cannabis inventory, you are going to need some organization. That is why some cannabis business owners hire an inventory manager who is in charge of inventory maintenance. The place you store your inventory should not be a complete mess. Instead, it should be well-organized and ready to pass an inspection at any moment. Store away your products carefully to ensure they last. That means you should use air-tight containers for extract and flowers, refrigeration for perishable items, and temperature-controlled climate to keep every product as fresh as possible. Store your products appropriately to ensure they last. That can mean air-tight containers for extracts and flowers, refrigeration for perishable edibles, and temperature-controlled climates to keep all products as fresh as possible. The inventory storage room should also be tightly secured. Use your state’s regulation to guide you as you improve the security of your inventory. By doing this, you will ensure your business remains compliant and also effectively protect your inventory from unexpected inconsistencies.

Do not over purchase products

When most people think about inventory management, they often think of running out of a particular product or having the shelves go empty. Inventory management is all about making sure that you are not overstocking your shelves. Overstocking your inventory will cause your products to spoil or expire if they are not purchased by your customers in time. You may be forced to sell these items at discounted rates that could cause a severe impact on your financial revenue. Figure out what is selling and what is not by using the intel you have gathered from your POS to see what products are popular and the less popular items going into your customer’s hands. Stay aware of the expiration date for every one of your products, and make sure you are stocking up on them at the right time. If you do not do so, you could lose the value and shelf date of specific products as time passes by.

Train your employees for inventory management

While you may have implemented a high degree of automation to ensure your business remains compliant to continue selling cannabis, that does not mean that cannabis employees should be allowed to slack off on inventory or how to count the inventory suitably or accurately. There is no such thing as a foolproof software solution. Employees should still receive a degree of training for manually taking inventory as well as how to integrate their inventory counts into your chosen inventory management system. If something were to happen to the software they are using, and the support team is having trouble fixing the issue, you can at least rely on your employees to keep count of everything. That way, your business can continue to run smoothly white the software gets back in order.


Managing your dispensary inventory is crucial to your overall success. If you are incapable of keeping your inventory in proper shape, your business will start to lose out in revenue. In recent years, technology has managed to make running inventory a smoother process. If you haven’t already implemented an automation tool, consider doing so immediately. Hopefully, this article has managed to help you with handling your inventory. Are you looking for an all in one customer conversion & retention platform that can help you automate your order fulfillments and increase your customer engagement? If so, we’re here to help! Please schedule a demo with us directly here.