Around 43% of small businesses in the U.S. either don’t track their inventory or do so using a manual system. Yet a smooth inventory operation and visibility are vital to every business. The cannabis industry also faces its own unique inventory challenges — namely the pressures of staying compliant with each state’s strict rules.
Keeping a firm grasp on cannabis inventory management will help you stay on the right side of the law and see greater profits. Here are the most common inventory challenges cannabis retailers face, and how to make sure your dispensary doesn’t fall foul of them, too.
Implementing the Wrong Stock Management Method
Even if you conduct daily stock counts — as you should — in a poorly managed stock room, it’s easy to accidentally sell a cannabis product past its expiry date. However, it’s one of the worst mistakes to make and is certain to land you in hot water with your state’s regulatory authorities.
There are multiple types of inventory management methods to choose from, but the most successful among cannabis retailers is “first-in, first-out” (FIFO). As well as steering clear of a potential compliance issue, FIFO helps reduce product waste. As the name suggests, you sell your merchandise in the same order in which you received it. Stock stays organized so the products you’ve had for the longest sit at the front of the shelves.
Not Using Cannabis-Specific Inventory Software
By managing your stock with a generic inventory management system or even Excel spreadsheets, you’ll waste countless hours entering, verifying, and creating frameworks for cannabis-specific data. Manual entry mistakes or forgetting a crucial reporting figure may also affect your compliance with industry regulations.
With the stakes so high in the cannabis industry, opting to integrate your business records with marijuana enforcement tracking reporting compliance (METRC) software is a good idea. You’ll gain batch tracking and purchase limit calculations, as well as regular inventory audits, projections, and reconciliations. METRC software can also integrate directly with the government’s reporting system, automating your business’ compliance obligations.
Too often, cannabis dispensaries find themselves running out of products. This happens either at peak times and major holidays during the year, or as overall demand grows for cannabis products. If you’re not prepared with adequate stock, you’ll instantly lose sales and might even find your customers visiting the dispensary down the road instead of yours.
Pull sales and inventory reports from your stock management software. Pay close attention to past customer patterns to predict future spikes in sales. Project when you’ll run out of stock and set dates to reorder estimated amounts, allowing for lead times and other delays.
Not Considering Inventory Financing Services
It’s tricky to manage your cash flow effectively while trying to make payroll and cover other operational costs too. Yet you want to be able to order the right amounts of inventory to grow your business and compete with other dispensaries.
With specialized cannabis inventory financing from Bespoke Financial, you can gain more freedom to manage your inventory in the ways you know are best for your business. Find out more about inventory financing and make managing your inventory easier and more effective.