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How to Set Up and Maintain an Efficient, Reliable, Compliant Inventory System for Your Marijuana Dispensary or Cannabis Retail Store

Ask any successful retailer what the key to a healthy, profitable business is and they’ll tell you: proper inventory management. Without it, sales suffer, customer satisfaction tanks and your bottom line takes a serious hit.

Cannabis retail is no different.

In fact, in our industry, inventory control is not only inextricably linked to profitability, but also mandated by regulation; an inventory-based compliance infraction can incur fines or even license suspension, among other penalties.

So how can you run a profitable dispensary or retail store while ensuring your operation remains compliant with the inventory control and reporting requirements of your market? Thanks to advances in cannabis retail technology, it’s actually not as hard as you might imagine — and we’re going to show you exactly how it’s done in this comprehensive guide.

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you exactly how it’s done in this comprehensive guide. 1 THE ULTIMATE GUIDE TO CANNABIS RETAIL

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

TABLE OF CONTENTS

Why Is Inventory Management So Important?

What You Need To Know About “Seed to Sale” Tracking

1:
1:

Choosing the Right Cannabis POS and Inventory System

2:
2:

Setting Up Products in Your Inventory Management System

3:
3:

Establishing Procedures and Key Personnel

Step-by-Step Guide to Inventory Auditing and Reconciliation

Designate a Regular Inventory Auditing Schedule

Prepare Tools and Start Counting

Save and Report Inventory Discrepancies

4:
4:

Optimizing Your Inventory

5:
5:

Key Takeaways

About Cova

Your Inventory 5: Key Takeaways About Cova THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT 4

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

THIS GUIDE IS FOR YOU IF:

You’re applying for a dispensary or cannabis retail license and need to demonstrate your understanding of inventory management. Many license applications require you to explain your plan for tracking inventory and preventing product diversion — a thorough and thoughtful response will be critical to winning a license.

You’re launching a medical marijuana dispensary or recreational cannabis store and want to learn best practices for setting up and managing your inventory.

You already operate a dispensary but want to streamline your inventory system to reduce costs, reduce labor, automate inventory reporting and leverage data to optimize inventory levels and maximize profits.

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data to optimize inventory levels and maximize profits. 3 THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

WHY IS INVENTORY MANAGEMENT SO IMPORTANT?

MANAGEMENT WHY IS INVENTORY MANAGEMENT SO IMPORTANT? The truth is that inventory management is the heart

The truth is that inventory management is the heart of any retail operation, regardless of industry. But particularly when dealing with perishable and highly valuable product, understanding exactly how much inventory you have becomes even more critical to the success of your store. Keeping too much stock on hand can lead to storage issues — not to mention profit losses via product expiration and damages. On the other hand, constant backorders and lack of inventory can drive customers away and cost you in lost sales.

Of course, with compliance concerns looming large over the cannabis industry, dispensary and retail owners must be even more diligent in their inventory control measures. As a cannabis retailer, you must track and report your inventory according to the laws and regulations of your market; fail to do so, and your business could take a big hit in the form of a compliance violation.

It’s also important to understand that the inventory management regulations of our industry weren’t designed arbitrarily. The intention behind seed to sale tracking is to prevent product diversion and accessibility to minors — a responsibility cannabis industry operators shouldn’t take lightly.

Finally, smart inventory management helps enhance customer service, which can lead to increased customer acquisition and retention. Cannabis patients and consumers who are particular about their preferred strain or solution won’t hesitate to ditch your store for another one that routinely has what they’re looking for in stock.

PRO TIP

routinely has what they’re looking for in stock. PRO TIP “Stay on top of soon to

“Stay on top of soon to expire products. Practice FIFO. It’s really easy to want to jump to a new strain before cycling through what’s already on the shelf.”

before cycling through what’s already on the shelf.” Chance Harrison Business Intelligence Manager Native Roots

Chance Harrison Business Intelligence Manager Native Roots Cannabis Co.

Business Intelligence Manager Native Roots Cannabis Co. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT 4

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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WHAT YOU NEED TO KNOW ABOUT “SEED TO SALE” TRACKING:

The term “seed to sale” gets tossed around a lot these days. But as a cannabis retailer, it’s important to understand the distinction between true seed-to-sale software and retail software that is seed-to-sale compliant.

Since the start of the regulated adult-use cannabis market, government traceability programs have required licensed operators to track and report all cannabis product as it moves through each stage of the supply chain — literally from seed to sale. The intent, of course, is to account for every gram of cannabis so as to prevent diversion to the illicit market and help manage product recalls.

In the earliest days of legalization, when most cannabis businesses were vertically integrated and only operating from a single location, full-scale seed-to-sale software made sense. This software helped those operators manage their entire operations — from cultivation to processing to retail — in one system.

Today, thanks to advances in government traceability systems and cannabis software, retailers who are not vertically integrated no longer need full-blown seed-to-sale systems in order to be compliant with regulations. They simply need a dispensary point of sale (POS) and inventory management system that can integrate with the government’s traceability system for tracking and reporting. On the other hand, while vertically integrated retailers can choose to use vertically integrated software, they can also simply connect a capable retail POS with their cultivation and processing software programs for a unified system.

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and processing software programs for a unified system. 5 THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY

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“We are completely vertically integrated; we grow, process, and we’ve got a kitchen that provides all our edibles. We chose Cova POS for our dispensaries because we needed the right tool for the right job. Cova focuses on retail operations and does so really well, with a user-friendly app that helps us streamline inventory management and create a great customer experience.”

management and create a great customer experience.” Justin Lund Vice President, Operations Minerva Canna of

Justin Lund Vice President, Operations Minerva Canna of Oklahoma

The fact is, your dispensary relies on your sales and inventory reporting system to stay in business — because if your compliance reporting is compromised, so is your license. However, a well-designed cannabis POS will help you streamline the compliance process and safeguard your operation.

Here’s how Cova’s two-way integration helps retailers and dispensary owners simplify compliance:

• Cannabis cultivators and processors are required to report cannabis sales and inventory data to government traceability systems (Metrc, BioTrack, etc.).

• Because Cova is fully integrated with the traceability systems in every market we serve, those wholesales are auto-populated in the Cova manifest.

• Retailers can simply log in to Cova to receive their manifests from the cultivators and processors.

• All retail sales to consumers are automatically tracked and reported back to the traceability system, closing the loop of seed-to-sale tracking.

With that, let’s dig into the meat of inventory management for cannabis retailers.

into the meat of inventory management for cannabis retailers. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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CHOOSING THE RIGHT CANNABIS POS AND INVENTORY SYSTEM

As we’ve seen, inventory management is the key

to a successful cannabis retail operation — and

good inventory management begins with a proper

inventory management system. But with so many

options on the market, choosing the right solution

can be overwhelming. Not every system will suit your

specific needs, so it’s important to consider your

dispensary’s goals and strategies and pick a POS

that will support them.

For example, if you run a high-volume store, you’ll

definitely want to look for system reliability, swift

transaction times and an offline mode for backup in

case your Wi-Fi connection drops. Extra bells and

whistles will be worthless if your system is slow or,

even worse, crashes on a major sales day like 4/20.

If a unique customer experience is what sets your

dispensary apart, then you’ll want to employ a

system that facilitates different sales flows and

enables budtenders to provide impeccable service

— for instance, having product and stock info at their

fingertips, and being able to send orders straight

from their tablet to the cashier for expedited checkout

and to the back room for product prep.

Another consideration is mobility. As a busy executive

or store manager, you may need an inventory system

that provides a mobile dashboard so you can monitor

your operation’s performance on the go. Additionally,

you’ll want to think about your customers’ mobile

experience; if you have an online menu, then you

need to make sure your solution plays nice with third-

party systems like Leafly and Weedmaps.

Of course, it’s also important to think beyond your

current needs and consider future possibilities. For

instance, if you’re running a high-volume store and

are thinking about expanding to multiple locations,

you’ll want to know that your chosen system has the

capability to scale with you.

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your chosen system has the capability to scale with you. 7 THE ULTIMATE GUIDE TO CANNABIS

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PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

Knowing your needs from the get-go will enable you to more easily narrow down the field of choices and

ultimately make your search less overwhelming. Here’s a brief list of questions to consider as you begin your

search for an inventory management system:

• Is your inventory system integrated with the most popular online menus like Weedmaps and Leafly?

• Does your inventory system have open APIs for easy integration with current or future services and apps at a low cost?

• How easy is it to perform an inventory audit on the system?

• Can the system track batch IDs and manage recalls?

• Have you implemented a barcoding system to track and label inventory?

• Do you offer delivery or sell in multiple channels, and if so, are you able to track and manage your inventory across different stores and channels?

• How robust is the system’s inventory reporting? Does it give you insight as to when and how much inventory to restock?

As you can see, there’s a lot to think about when choosing a cannabis retail inventory system. For even more

questions to consider, download our guide to the 20 questions you should ask when buying a cannabis POS.

the 20 questions you should ask when buying a cannabis POS. THE ULTIMATE GUIDE TO CANNABIS

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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SETTING UP PRODUCTS IN YOUR INVENTORY MANAGEMENT SYSTEM

Once you’ve settled on the right inventory management

solution for your store, it’s time to set up your products in

the system. This process can vary slightly depending on

the program your system uses, but typically, you’ll have

the option of either importing product info directly from a

CSV file or entering the information manually.

Whichever method you use, you’ll want to dedicate time

beforehand to compiling and organizing your data; this

will make the setup process much easier and more

efficient. Even if it takes a few hours — or days — to

prepare your product data for entry into the system, it will

be worth it to ensure your inventory management efforts

get off on the right foot. Of course, if you already have

all your product info neatly organized in a CSV file or

if you’re using existing barcodes, the process will take

considerably less time than manually entering the data.

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PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

Here are some of the key item details you’ll want to have on hand when adding your products to the inventory

system:

Cannabis Product Name: The name or title you give each item. Be descriptive, but keep it brief and accurate so it’s easy to find (for example, Brand Name - Strain Name - Grams).

Product Description: Cannabis products can be complex; equip your budtenders with short, succinct descriptions to help them educate and guide your customers. If the description will be displayed on your website or a third-party menu site, make your descriptions fun and inject some personality into them.

Product Image: Upload product images into your inventory system. This will help you and your staff members find products more easily when ringing up sales. Images will also make your products more appealing to customers browsing your inventory online.

SKU: The stock keeping unit, a.k.a. SKU, is a product’s unique identifier. If you have existing barcodes or supplier-barcoded products, you can simply scan or enter them into the system. You’ll also have the option of creating your own barcodes using your inventory software.

Cost: The amount you spent creating or sourcing the product.

Price: The amount you’re selling the product for.

Supplier Information: The business or individual from which you source your inventory.

Quantity: The amount of stock you have of each product. If you’re using a modern inventory system, this field should automatically update as you sell products throughout the day.

This list isn’t comprehensive, and the inventory software you’ve chosen may have additional data fields. Just

remember — the more product information you have in your system, the easier it will be to track exactly what’s

going on in your store.

Finally, be consistent with data formatting. For instance, if you enter a product name using the format “Product

Type + Brand + Strain + Grams,” then you’ll want to be sure that all other item names appear the same way.

This will ensure your system stays organized and that you and your staff can easily find and sort items.

Now that we’ve discussed choosing and setting up your inventory system, let’s look at the people and processes

that will round out your inventory management strategy.

that will round out your inventory management strategy. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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ESTABLISHING PROCEDURES AND KEY PERSONNEL

While technology is a critical piece of the puzzle, successful inventory management involves more than just

your software system. A solid inventory strategy also needs the right people and processes in place — and

that’s what we’re looking at next.

CHOOSE THE RIGHT PEOPLE

From the C-suite to the sales floor, the roles and responsibilities involving inventory management are multi-

layered. Let’s break them down:

Compliance Officer: Responsible for developing, maintaining and revising policies, procedures and practices to prevent illegal and improper conduct in company operations. The compliance officer oversees implementation of the inventory control plan and compiles, reviews and submits compliance reports to the government.

Inventory Manager: Responsible for developing and implementing inventory control procedures and best practices. The inventory manager works closely with the store manager to coordinate product orders from suppliers. The inventory manager is also responsible for ensuring that inventory audits and reconciliations are routinely conducted, as well as handling any inventory reports or inspections by governing or regulating agencies. The most important job of the inventory manager is ensuring that only the safest, highest-quality product is available at the dispensary at all times.

Store Manager and Budtender: Both are responsible for implementing inventory procedures. Store managers and budtenders directly handle sales transactions and inventory, and often are the ones performing inventory counts and audits. They’re the first line of defense in ensuring all transactions and inventory movements are recorded accurately.

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and inventory movements are recorded accurately. 1 1 THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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PRO TIP

GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT PRO TIP “Hire someone who has experience in the industry,

“Hire someone who has experience in the industry, but don’t just take their word for it. Do your diligence in vetting this employee.”

word for it. Do your diligence in vetting this employee.” Chance Harrison Business Intelligence Manager Native

Chance Harrison

Business Intelligence Manager

Native Roots Cannabis Co.

PHOTO TAKEN AT GARDEN VARIETY. ALL RIGHTS RESERVED.

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DEVELOP INVENTORY PROCESS AND FLOW

With the right personnel in place, you can now draft your inventory management processes and procedures — everything from placing orders and receiving product to restocking shelves, performing inventory audits and conducting recall procedures. Creating a flowchart can make it easier to spot deficiencies or areas for improvement.

PRE-PACKAGED CANNABIS PRODUCT INVENTORY FLOW CHART

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IN POINT-OF-SALE
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ORDER PRODUCT/
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RETAIL/
ORDER NEW PRODUCT
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EXISTING PRODUCTS
CREATE PO
RECIEVE MANIFEST &
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PRODUCT
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BUY PRODUCT
Go through every element of the flowchart and determine who’s in charge of each item and how tasks will be
carried out. Who’s monitoring stock levels and reorders? Who receives products? Who performs inventory
auditing? When and how often should it be done?
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often should it be done? . . . . . . . . . . 1

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

STREAMLINE THE PROCESS WITH AUTOMATION

Now that you have your inventory process laid out, comb through it to identify any tasks that can be automated. What are you doing manually that could be done by your inventory software or another app?

For example, If you publish your inventory and pricing on a menu either on your website or a third-party

marketplace like Leafly or Weedmaps, consider using a system that is already integrated with those platforms

or that has an open API for the ability to integrate. This will ensure that inventory updates from your POS automatically sync with your online menus, saving you time in manual entry and eliminating human error.

One of the most important tasks you’ll want to automate is compliance reporting. Every state and province requires retailers to report all transactions as well as inventory updates and reconciliations; although you have the option to do this manually in certain markets, some U.S. states actually mandate that your POS integrate directly with the government traceability system. However, there are different levels of integration, and if your system doesn’t fully integrate, you’ll still spend hours manually reconciling and reporting inventory.

In Canada, there is no traceability system. Rather, every cannabis retailer must generate provincial compliance reports for submission to the government. This means that if you’re using a non-cannabis POS that doesn’t auto-

populate the mandated reports in the correct format, you’ll have to create these reports by hand — painstakingly ensuring that they comply with the provincial template and are error-free.

Regardless of which market you’re in, a leading cannabis POS like Cova automates reporting by fully integrating with state traceability systems and helping you easily generate complex provincial compliance reports in just a few simple steps.

provincial compliance reports in just a few simple steps. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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MAINTAIN INVENTORY ACCURACY WITH ROUTINE AUDITING

Even with an integrated, compliant inventory and POS system in place, you’ll still need to conduct regular

inventory audits to ensure that the amount of merchandise you have in your system is consistent with what you

actually have in your store.

Why is this important? Here are a few key reasons:

• Ensures confidence in your budtenders and customers that the inventory displayed in your system

is accurate; this is particularly important if you have online menus where customers browse and make selections before traveling to your store.

• Helps prevent fraud and reduce shrinkage.

• It’s required by law! The frequency with which you’ll have to audit and report will depend on your particular state or province, but all discrepancies and adjustments must be reported.

Every government has developed robust laws regarding inventory tracking and reporting for cannabis

businesses. You will have to regularly perform inventory audits, counting the physical inventory in your store

and comparing it to the inventory reported in the state or provincial traceability system. If there are any

discrepancies, local governments expect those to be properly reported — and failure to comply will cost you

money or, even worse, your license.

While it is possible to audit your inventory and adhere to reporting guidelines without an inventory management

system, it will cost you a lot of time and headache. The number of SKUs in any given dispensary ranges from

500 to 3,000+ — counting and adjusting them all by hand is cumbersome, time consuming and tedious.

Luckily, a solid cannabis inventory system will help make the auditing process significantly smoother and take

the complexity — and time commitment — out of reporting.

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— and time commitment — out of reporting. 1 5 THE ULTIMATE GUIDE TO CANNABIS RETAIL

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PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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STEP-BY-STEP GUIDE TO INVENTORY AUDITING & RECONCILIATION

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GUIDE TO INVENTORY AUDITING & RECONCILIATION 1 7 THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

1: DESIGNATE A REGULAR INVENTORY AUDITING SCHEDULE

1: DESIGNATE A REGULAR INVENTORY AUDITING SCHEDULE First, you’ll want to create an auditing schedule.

First, you’ll want to create an auditing schedule. Routine, consistent auditing ends up saving you time and

effort by preventing small discrepancies from becoming much bigger headaches down the road. Of course,

you’ll want to make sure your auditing schedule is aligned with your state or province’s reporting regulations;

for example:

Oklahoma requires that dispensaries conduct a monthly reconciliation and submit a report by the 15th of every month.

California requires an inventory reconciliation report every 30 days.

Alberta retailers must maintain a perpetual inventory system that includes point-of-sale tracking, weekly data backup and secure storage; full inventory counts must be completely monthly.

• In Ontario, retailers must properly track, report and submit the required inventory and sales data by the 5th of every month.

While you could count all your inventory at once, it would require shutting your store down or paying your staff

overtime to work into the wee hours. Likewise, trying to count during peak business hours means your inventory

will be in flux — not to mention you’ll be pulling resources away from customer service.

Here are a couple of strategies you can use to create an efficient auditing schedule:

Counting by product category: assign one or two product categories to be counted on designated days.

Counting by product location: divide your store into sections and count certain sections each day.

To make the process as efficient as possible, conduct product counts during slower business hours — either

just before or shortly after opening, or toward the end of the day. Also consider assigning categories or sections

with higher product volume on slower business days, and vice versa.

product volume on slower business days, and vice versa. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY

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2: PREPARE TOOLS AND START COUNTING

Once you’re ready to start counting, gather the materials and tools you’ll need for the job. There are two main

ways* to perform the inventory count:

MANUAL COUNTING:

• In your inventory management system, go to

the inventory on-hand report and filter for the

items you want to audit.

• Print the list of products; if you’re conducting a blind count, omit the number of inventory on- hand in your list.

• Count your physical inventory, then enter the amounts you counted into your POS system.

• Review your adjustments and save your audit.

BARCODE SCANNING:

• Alternatively, you can conduct your count using the barcode scanner.

• Upon scanning a product, the inventory item will be counted in your POS.

• Any discrepancies will be flagged for review.

• While the barcode scanning method can increase accuracy, it may sometimes be faster to conduct a manual count.

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it may sometimes be faster to conduct a manual count. 1 9 THE ULTIMATE GUIDE TO

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

3: SAVE AND REPORT INVENTORY DISCEPANCIES

MANAGEMENT 3: SAVE AND REPORT INVENTORY DISCEPANCIES With the count completed, you’re ready to report your

With the count completed, you’re ready to report your reconciliation to the government. Remember: you’ll need

to provide reasons for any inventory adjustments. Depending on your market, if your POS is fully integrated

with the traceability system, all adjustments and reason codes will be automatically populated, saving you even

more time.

*Note: Cova facilitates both inventory auditing processes, and authorized personnel can approve bulk

adjustments and reason codes with just a few simple steps. This considerably reduces the time cost of

performing inventory audits and managing recalls.

REDUCE INVENTORY INACCURACIES

Discrepancies in your inventory counts — also known as shrinkage — need to be identified as quickly as

possible. Of course, regularly auditing your inventory will help you spot shrinkage early and correct it before it

becomes a bigger problem.

Some of the most common causes of retail shrinkage include shoplifting, supplier fraud, employee theft and

administrative errors. For example, if your inventory isn’t syncing correctly or your system is down, you may

need to deduct inventory manually, which can easily lead to human error. Using a reliable POS that’s equipped

with an offline mode and a real-time inventory management system can help prevent these types of errors.

The right cannabis POS can also help guard against internal theft and fraud by allowing you to set permissions

for each staff member, restricting certain abilities to managers only and prohibiting employees from selling

to themselves or giving unauthorized discounts to friends. You can also help prevent internal theft at your

dispensary by cultivating a loyal staff and diligently performing your inventory audits as scheduled.

diligently performing your inventory audits as scheduled. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT 2

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PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

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OPTIMIZING YOUR INVENTORY

With your inventory management system and processes running like a well-oiled machine, it’s time to optimize

your inventory for maximum profitability. Your inventory and merchandising strategies should keep up with

seasons, trends and consumer demands — which are always changing.

This is where data really comes into play. With a sophisticated POS, you’ll be able to identify and track inventory

metrics that will give you a deep understanding of exactly how products are moving through your store.

Some of the most common key performance indicators (KPIs) for cannabis retailers and dispensaries include:

Inventory Turnover: A measurement of how your products are performing. The higher your turnover, the less time your inventory spends collecting dust on the shelf — and the less it ends up costing you. This is a great metric for determining the efficiency of your inventory management system as a whole, and it’s typically calculated on an annual basis.

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Days of Supply: The number of days it would take to run out of supply if not replenished. This helps you see how much available inventory you need to maintain normal operations for a given period of time in the event of a supply chain disruption.

Average Age of Inventory: The average number of days it takes you to sell a given product. This is important because the older your inventory is, the more it’s costing you. If the average age of a product exceeds 120 days, it’s time to drastically reduce its price, repackage it, bundle it — whatever it takes to get it off your shelves.

Product Performance: One of the most critical metrics in any retail operation — a deep understanding of product performance will help you maximize store performance and profit. A solid POS should provide a snapshot of your top-performing products at all times.

Category Performance: Just like products, knowing how different categories perform in your store will help you with inventory planning and strategic promotions.

Lost Sales: Tracking lost sales can help you see how much revenue you’re losing when high-selling products are out of stock. To calculate your total cost of an out-of-stock (OOS) item, multiply your inventory deficit (average daily sales of your OOS product) by the number of days the product has been OOS.

Sell-Through Rate: The percentage of products sold in relation to the number of products available for sale. This can be calculated for individual products or your entire inventory.

Gross Margin: The percentage of sales revenue you keep after deducting your cost of goods sold (COGS). The higher your gross margin, the more you keep of every dollar, which is also referred to as gross profit.

Shrinkage: Shrinkage is the difference between the inventory you have on paper (or in your inventory management system) and the physical inventory in your stockroom.

system) and the physical inventory in your stockroom. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

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DEMAND FORECASTING

Now that you’ve collected all that data, it’s time

to put it to use. Demand forecasting is a strategy

retailers use to anticipate trends, rather than react

to them — helping you fulfill your customers’ needs

and stay one step ahead of the competition. And

that’s exactly where all those metrics come in.

You use demand forecasting whenever you

reference your historical sales and inventory

data to identify key trends. For example, every

cannabis retailer knows they need to be well-

stocked for 4/20; but when you’re sitting on a war

chest of data collected by your POS, you’ll be

ready to capitalize on the biggest sales day of the

year with bundles, promotions and deals targeted

directly to your customers.

Of course, data isn’t the only component of

demand forecasting. You should also factor in

market research, customer feedback, industry

trends and seasons.

5
5

KEY TAKEAWAYS

feedback, industry trends and seasons. 5 KEY TAKEAWAYS PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS

PHOTO TAKEN AT GREEN LADY MARIJUANA. ALL RIGHTS RESERVED.

There you have it — the ultimate guide to cannabis retail inventory management. As one of the most vital

components of any cannabis dispensary or retail operation, we hope you’ve gained a few inventory management

insights and ideas that will help you in your store.

A few key takeaways:

• Proper inventory management is critical in any retail operation — but even more so in cannabis retail due to strict government compliance requirements.

• Making inventory management procedures as efficient and streamlined as possible saves time, lowers costs and mitigates the risk of penalties associated with a compliance violation.

• Using a POS and inventory management solution built specifically for the cannabis retail industry is crucial to optimizing operations and automating critical tasks including compliance reporting.

automating critical tasks including compliance reporting. THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT 2

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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ABOUT COVA

ABOUT COVA Cova is an award-winning, seed-to-sale compliant POS and Inventory Management solution designed to streamline

Cova is an award-winning, seed-to-sale compliant POS and Inventory Management solution designed to streamline cannabis retail.

A compliance-first company, Cova not only meets all system requirements in every market served, but constantly adapts to changing rules and regulations to make compliance simple for owners and employees, reducing the risk of infractions and fines. In addition to automated compliance features, Cova offers an intuitive, user-friendly design and lightning-fast transaction time. Its technology platform currently powers more than 500 cannabis stores of all sizes with virtually no downtime, even on 4/20, making it the most robust and reliable cannabis POS system available.

Our roots are in technology—but more importantly, they’re in retail. We work closely with our customers to solve problems and create great experiences for owners, staff, and their customers.

Growing your empire takes time, experience, and the right technology partner. We know how. Join us.

FAAI STEUER

PH: +1 (844) 667 2682 (COVA)

PH: +1 (844) 667 2682 (COVA) WWW.COVASOFTWARE.COM THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT 2

THE ULTIMATE GUIDE TO CANNABIS RETAIL INVENTORY MANAGEMENT

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