10 Cannabis Inventory Turnover Optimization Tips

Here’s a quick guide to improve your cannabis inventory turnover:

Use inventory management software
Apply the FIFO (First-In-First-Out) method
Do regular inventory checks
Improve your product mix
Set up automatic reordering
Track key performance indicators
Work well with suppliers
Set smart prices
Train staff on inventory management
Use technology to predict demand

Reduce waste
Lower costs
Increase sales
Improve cash flow
Keep products fresh

Tip	Benefit
Inventory software	Automates tracking and tasks
FIFO method	Ensures older stock sells first
Regular checks	Catches issues early
Better product mix	Focuses on best sellers
Auto reordering	Prevents stockouts
KPI tracking	Guides decision-making
Supplier relations	Improves deals and supply
Smart pricing	Optimizes sales and profits
Staff training	Reduces errors
Demand prediction	Helps with planning

Implement these strategies to boost your cannabis inventory turnover and business performance.

1. Use a Good Inventory Management System

Picking the Right Software

Choose software that fits your cannabis business needs. Look for these key features:

Real-time stock tracking
Batch monitoring
Rule compliance tools
Order handling
Ability to work with other systems

When choosing, think about:

How easy it is to use
If you can change it to fit your needs
If it can grow with your business
What kind of help you can get
How well it works with what you already have

Good software will help you work better, make fewer mistakes, and get more done.

How Automation Helps

Automation is a big plus in inventory software. It can:

Cut down on manual work
Reduce human errors
Make things faster and more accurate
Keep customers happy

With tasks done automatically, you can focus on growing your business, making new products, and taking care of customers.

What Automation Does	How It Helps
Tracks stock	Always know what you have
Makes reports	See how you’re doing quickly
Orders new stock	Never run out of products
Manages compliance	Stay within the rules

2. Apply the FIFO Method

How FIFO Works

FIFO (First-In-First-Out) helps keep cannabis products fresh and sellable. It’s like how grocery stores manage their stock. Using FIFO can cut down on waste and make the most of your inventory.

How to Use FIFO

Follow these steps to use FIFO in your store:

Check expiration dates: Keep an eye on products that will expire soon.
Remove bad products: Throw away any damaged or expired items.
Arrange shelves: Put older products in front, newer ones in back.
Sell oldest first: When filling orders, use the oldest products first.

These steps help you use FIFO well and waste less while making more money from your stock.

FIFO Benefits	How It Helps
Less waste	Sells products before they go bad
More money	Uses all products before they lose value
Happy customers	Gives customers fresh products

Using FIFO can help your store run better, waste less, and keep customers happy. This can lead to more sales and help you stand out from other stores.

FIFO in Action

Let’s say you sell cannabis candy. You get a new shipment that lasts 30 days. You already have candy that’s 20 days old. To use FIFO:

Put the 20-day-old candy in front
Put the new candy in back
Sell the 20-day-old candy first

This way, you sell the older candy before it goes bad.

Common Mistakes to Avoid

When using FIFO, watch out for these errors:

Not checking stock often
Putting shelves in the wrong order
Selling new products before old ones

Avoiding these mistakes helps FIFO work better for your store.

Best Ways to Use FIFO

Here are good habits for using FIFO:

Check your stock often
Keep shelves in the right order
Always sell the oldest products first

Following these tips helps you get the most out of FIFO and run your store better.

Wrap-up

FIFO helps keep cannabis products fresh and sellable. By checking dates, removing bad products, arranging shelves right, and selling old products first, stores can waste less and make more money. Avoiding common mistakes and following good habits helps stores use FIFO well and manage their stock better.

3. Do Regular Inventory Checks

How Often to Check

Checking your inventory often helps keep your stock numbers right, find problems, and cut down on waste. How often you should check depends on:

How big your business is
What you sell
How fast you sell it

Most stores should check at least once a week. But this can change:

Busy stores might need to check every day or two
Smaller stores with slower sales might check once a week or every two weeks

Best Ways to Check Inventory

There are a few ways to check your inventory. Pick the one that works best for you:

Method	How it works
Count by hand	Count each item yourself
Use a scanner	Scan barcodes to count items quickly
Count in parts	Check a small part of your stock often
Use special software	Let a computer program track your stock

No matter how you check, make sure you do it right:

Check that labels match the products
Look at expiration dates
Count carefully
Fix any mistakes you find right away

4. Improve Your Product Mix

Find Your Best-Selling Products

To sell more cannabis products, know which ones customers like best. Look at your sales data to see what sells well. Think about:

What type of product it is
How strong it is
How much it costs

For example, if edibles sell well, stock more of them.

New products like drinks, vapes, and pre-rolls are becoming popular. People like these because they’re different from regular cannabis. Keep an eye on what customers want and change what you sell to match.

Remove Slow-Moving Items

Get rid of products that don’t sell well. They take up space and cost money to keep. Use the ABC method to sort your products:

Group	Description	Action
A	Sells fast, makes good money	Keep lots in stock
B	Sells okay, makes some money	Keep some in stock
C	Sells slow, makes little money	Remove or reduce

Getting rid of slow items helps you:

Waste less
Make more room
Focus on what sells

This helps you keep the right amount of products and not have too much or too little.

Product	How Well It Sells
Edibles	Very well
Drinks	Okay
Vapes	Very well
Pre-rolls	Okay
Flower	Not well

Use this table to help decide what to keep and what to change in your store.

5. Set Up Automatic Reordering

When to Reorder

To keep your stock moving, you need to know when to order more products. This means watching your stock levels, sales patterns, and how long suppliers take to deliver. Setting up automatic reordering helps make sure you don’t run out of products and can always meet customer needs.

One way to figure out when to reorder is using the Economic Order Quantity (EOQ) formula. This formula looks at:

How much it costs to order
How much it costs to keep stock
How much customers want

Here’s the EOQ formula:

Formula	What It Means
EOQ = √(2DS/H)	D = How much customers want S = Cost to order H = Cost to keep stock

Let’s say you have a product that:

Sells 100 units a month
Costs $10 to order
Costs $5 per unit to keep in stock

Using the formula, you’d get:

EOQ = √(2 x 100 x 10 / 5) = 20 units

This means you should order 20 units when your stock drops to 20 units.

Link Reordering to Your System

Once you know when to reorder, you can set up your inventory system to do it automatically. This means setting a point where your system will order more when stock gets low.

For example, you could set up your system to order 20 more units when you only have 20 left. This helps make sure you always have enough products for your customers.

Linking reordering to your system helps:

Benefit	How It Helps
Avoid running out	Always have products for customers
Avoid too much stock	Don’t waste money on extra products
Save time	Less work for you to do
Keep customers happy	Always have what they want

6. Track Important Numbers

Key Numbers for Cannabis Inventory

To sell more and waste less, keep an eye on these numbers:

Number to Track	What It Tells You
Product sales	Which items sell best
Inventory turnover	How fast you sell and replace stock
Category sales	Which types of products do well
Sell-through rate	How much of your stock you sell
Lost sales	How often you run out of products
Shrinkage	How much stock you lose to theft or damage
Gross margin	How much money you make on each sale

Using Numbers to Make Decisions

Here’s how to use these numbers to help your business:

Number	How to Use It
Product sales	Stock more of what sells well
Inventory turnover	Keep the right amount of each product
Category sales	Choose which types of products to sell
Sell-through rate	Order the right amount of stock
Lost sales	Make sure you don’t run out of products
Shrinkage	Find ways to lose less stock
Gross margin	Set prices to make more money

By watching these numbers, you can:

Know what to keep in stock
Avoid running out of popular items
Sell more of what customers want
Lose less money on theft or damage
Make more money on each sale

7. Work Well with Suppliers

Get Better Deals

Working closely with suppliers helps cannabis brands sell more and save money. Here’s how to get good deals:

Talk about prices: Build a good relationship with suppliers and ask for better prices if you buy a lot.
Look for discounts: Ask if suppliers have any special offers, especially for big orders.
Check other suppliers: Look at prices from different suppliers to make sure you’re getting a good deal.

Improve Communication

Talking well with suppliers helps everything run smoothly. Good communication lets you:

Know what’s available: Get updates on what products are ready and when you can get them.
Fix quality issues: Quickly solve any problems with product quality.
Make new products: Work with suppliers to create new items customers might like.

Working well with suppliers helps cannabis brands sell more, spend less, and do better in the market.

Benefits of Good Supplier Relationships	How It Helps
Better prices and discounts	Pay less for products
More products available	Always have what customers want
Better quality control	Fix problems with products quickly
New product ideas	Make new things customers might like
Fewer supply problems	Get products on time more often

8. Set Smart Prices

Change Prices as Needed

Setting the right price for your cannabis products helps sell more and make more money. Here are three ways to price your products:

Pricing Method	What It Is	Good Things	Bad Things
High Price at First	Start with a high price for new products	Can make more money per sale	Some customers might not buy
Low Price at First	Start with a low price to get more customers	More people might buy	Might not make as much money per sale
Price Based on Value	Set price based on what customers think it’s worth	Can match what customers want to pay	Need to know what customers think

Keep an eye on what’s selling and what customers say. Be ready to change prices if you need to.

Use Sales to Move Products

Sales can help sell products that aren’t moving fast. Here’s how to use sales well:

Sales Tactic	How to Do It
Discounts	Offer lower prices for a short time
Promotions	Tell people about your sales on social media or email
Product Placement	Put sale items where people can see them easily
Watch Your Stock	Keep track of what you have and adjust your sales

When you have sales:

Make sure you don’t lose money
Create a feeling that customers need to buy now
Put sale items near other things people might want to buy
Keep track of how much you have so you don’t run out or have too much

9. Train Staff on Inventory Management

What to Teach Staff

Good training helps staff manage inventory better. Create a training plan that fits your business and keep helping your team learn. Here’s what to focus on:

Area	What to Cover
Inventory software	How to use it for data, reports, and analysis
Inventory rules	Accurate data entry, regular counts, keeping storage clean
Product info	Types of products, features, and proper handling
Customer service	Answering questions, fixing problems, being helpful

Make Clear Rules for Inventory

Clear rules help everyone do things the same way and get it right. Write down how to:

Task	What to Include
Get and store products	Check new items, label them, put them away
Count and report	When to count, how to report problems
Handle and store	Temperature, humidity, and safety rules
Get rid of old stock	How to throw away expired or damaged items

10. Use Tech to Predict Demand

Use Data to Plan Better

In today’s cannabis market, using tech to predict demand helps businesses sell more. By looking at data, stores can learn about:

What customers buy
When they buy it
How much they buy

This helps stores:

Keep the right amount of products
Avoid having too much or too little
Make sure customers get what they want

Data Insights	How It Helps
Popular products	Stock more of what sells well
Slow-moving items	Reduce stock of less popular items
Seasonal trends	Prepare for busy times
Price effects	Set prices that help products sell

Predict Future Needs

Using data to guess what customers will want helps stores plan better. By looking at past sales and trends, stores can:

Order the right amount of products
Avoid running out of popular items
Spend less on products that don’t sell well

Good inventory software can:

Track what’s in stock now
Show what’s selling fast or slow
Tell you when to order more
Help you see how well your store is doing

Software Features	Benefits
Real-time tracking	Always know what’s in stock
Sales reports	See what’s popular
Low stock alerts	Never run out of products
Easy-to-read charts	Understand your business better

Conclusion

Recap of Tips

Here’s a quick look at the tips we talked about to help cannabis businesses sell more and waste less:

Tip	What It Does
Use good inventory software	Keeps track of products and does tasks automatically
Use FIFO method	Sells older products first
Check inventory often	Finds problems and ways to do better
Improve product mix	Keeps what sells well, gets rid of what doesn’t
Set up automatic reordering	Keeps the right amount of products in stock
Track important numbers	Helps make smart choices about what to sell
Work well with suppliers	Gets better deals and keeps things running smoothly
Set smart prices	Helps sell more and make more money
Train staff	Makes sure everyone knows how to handle inventory
Use tech to guess what will sell	Helps plan what to buy based on data

Next Steps

Now that you know these tips, it’s time to use them. Here’s what to do:

1. Look at how you manage inventory now

2. Find ways to do better

3. Try the tips that fit your business best

4. Keep an eye on how things are going

By using these ideas, you can:

Waste less
Lose less money
Sell more

This can help your cannabis business do well in a tough market.