A method of categorizing inventory into three groups (A, B, and C) based on value and sales volume. Group A items are high-value, fast-moving products; Group B are mid-range; Group C are low-value or slow-moving items.

Products that have been sitting on the shelves or in storage for a long time without selling. Aging inventory often ends up being discounted just to get rid of it, which cuts into profits.

The process of deciding how much of a product to send to each store or department based on demand, sales trends, and inventory levels.

A physical count of inventory to ensure that the stock levels in your system match what is on your shelves, helping to maintain accuracy and compliance.

A system where inventory management software automatically places an order with suppliers when stock falls below a preset level (e.g., PAR or reorder point).

The total cost of all inventory on hand divided by the number of units, giving a baseline for pricing and profitability calculations.

Orders that have been placed but not yet fulfilled due to stock shortages or delays in the supply chain.

When a product is ordered from a supplier but is currently out of stock. It will be delivered when the supplier restocks.

Backstock refers to the extra inventory stored in your dispensary’s stockroom or storage area that isn’t currently displayed on shelves for customers. It’s essentially a reserve supply of products that can be used to restock the sales floor as needed.

A unique identifier assigned to a specific group of cannabis products produced or processed at the same time, often required for compliance and traceability.

A standard or reference point used to measure inventory performance, such as ideal stock levels, sales trends, or reorder points. Helps buyers compare current data to past performance or industry standards.

Any days or seasonal periods that should be omitted from inventory analysis that would otherwise skew results for determining activities associated with customer demand and reordering.

Extra inventory kept on hand to prevent stockouts in case of unexpected demand spikes or supply chain delays, also known as safety stock.

Purchasing large quantities of products at once, often to take advantage of discounts or to prepare for high-demand periods.

A system like METRC or Biotrack used to track cannabis products from seed to sale, ensuring compliance with state regulations.

The money spent on big, long-term investments like equipment, building improvements, or new technology for your dispensary. CapEx is essential for growth, but it ties up cash that might otherwise be used for daily operations.

The total cost of holding inventory, including storage, insurance, depreciation, and opportunity costs. These costs increase with overstocked items.

The total money spent on purchasing stock that is currently available for sale.

The money coming into and going out of your business. Positive cash flow means you have more money coming in than going out, which is critical for covering expenses like inventory, payroll, and rent.

The amount of money tied up in products that are sitting unsold due to over-ordering or slow sales.

A group of similar products, like edibles, flower, or prerolls.

Adhering to state and local laws regarding the handling, storage, and sale of cannabis products.

Your COGS is the total cost of the products you sell, including what you paid your suppliers and any other direct inventory costs. It’s what you subtract from your sales to figure out how much profit your dispensary is making.

A method of counting a small portion of inventory regularly (instead of all at once) to keep stock levels accurate without interrupting dispensary operations.

The number of days you can sell your current inventory before running out, based on average sales rates.

Inventory that hasn’t sold and is unlikely to sell, taking up valuable storage space and increasing carrying costs.

The amount of a specific cannabis product that customers want to buy within a certain period.

The maximum amount of a product that customers will buy within a given time frame before demand drops off.

The process of predicting customer demand for products based on historical sales data, trends, and seasonal factors.

The process of selecting and managing products to offer customers, ensuring a balanced mix of high-demand, seasonal, and specialty items while maintaining profitability.

Working with multiple vendors or carrying a wide range of products to reduce risk, avoid stockouts, and meet customer demand.

A formula used to determine the ideal order quantity that minimizes the costs of ordering and holding inventory. EOQ helps balance inventory levels efficiently.

Stock that exceeds demand, leading to overstock. Excess inventory ties up capital and may result in waste, especially for perishable goods like cannabis flower and edibles.

The last date a cannabis product is considered safe or effective to consume, especially important for perishable items like edibles and beverages.

An inventory management method where the oldest stock (first in) is sold first (first out) to promptly rotate older inventory off shelves.

A method of managing perishable goods like cannabis products where items that are closest to their expiration date are sold or used first to avoid spoilage.

Gross margin is the amount of money your business keeps after paying for the products you sell. It shows how much profit you’re making from your inventory before covering other expenses like rent or salaries. A higher gross margin means you’re making more profit on each sale, which is critical for running a successful cannabis retail business. How to calculate gross margin: (Sales Revenue − Cost of Goods Sold (COGS) ​/ sales revenue) x 100

The costs associated with storing and maintaining inventory, including warehousing, security, and insurance.

Intake is the process of receiving and logging new inventory when it arrives at your dispensary. This involves checking the delivery against your purchase order, ensuring compliance with regulations, and adding the products to your inventory management system.

Having too much unsold stock, tying up cash and storage space.

The total expenses involved in acquiring, storing, and managing products, including purchase price, shipping fees, warehousing, and handling.

Money tied up in unsold products that can strain cash flow and limit a retailer's ability to invest in new stock.

The quantity of products currently in stock. Proper management of inventory levels ensures that you can meet customer demand without overstocking.

The process of tracking, controlling, and organizing the products in your dispensary to ensure you have the right amount of stock available to meet customer demand without overstocking or running out.

Inventory on hand refers to all the products your dispensary currently owns, including sellable inventory and other items stored in backstock or storage areas.

Moving products between store locations to balance stock levels.

The loss of inventory due to theft, damage, or administrative errors, leading to discrepancies between actual stock and inventory records.

A ratio that measures how often inventory is sold and replaced over a given period. High turnover indicates efficient inventory management, while low turnover suggests overstock.

A database or list of all products in your inventory system, including details like SKU, price, supplier, and product category.

An inventory management strategy where products are ordered and received only as needed, reducing storage costs but requiring reliable suppliers.

The time it takes for a product to arrive after placing an order with a supplier. Longer lead times require higher inventory levels to prevent stockouts.

The amount of inventory you expect to sell during the lead time (the period between ordering and receiving stock). Helps determine how much to reorder.

A specific time period (e.g., 7 days, 30 days) used to analyze past sales trends and predict future inventory needs.

Marijuana Enforcement Tracking Reporting Compliance, a system used in many states to track cannabis products from cultivation to sale for regulatory purposes.

Margin is the difference between what you paid for a product (your cost) and what you sell it for (your selling price). It shows how much profit you're making on each item sold.

Strategies or agreements to maintain or improve profit margins on the products you sell. This can include negotiating with vendors for discounts, buyback programs, or credits for unsold inventory. For example, if a vendor agrees to take back unsold inventory, this reduces the financial hit to your dispensary and protects your profit margin.

The strategies and actions you use to promote your dispensary, attract customers, and increase sales. Marketing helps build awareness about your products and create interest among your target audience.

The smallest amount of product a supplier requires to fulfill an order.

Inventory that is outdated or no longer in demand. Obsolete products can result in lost revenue and increased carrying costs.

The amount of product physically available in your dispensary at a given time.

How often you place orders with suppliers. Finding the right balance between frequent small orders and less frequent large orders can help control inventory levels and reduce costs.

Order padding is when a buyer orders more inventory than they actually need to avoid running out of stock. While it might seem like a safe move, it often leads to overstock, tied-up cash, and unnecessary discounts to clear excess products.

Ordering costs are expenses associated with ordering inventory, such as transportation and labor costs for loading, unloading or overseeing delivery.

When more inventory is held than necessary, often leading to wasted product and tied-up capital.

The minimum amount of stock that should be kept on hand to meet customer demand. Once inventory falls below this level, it’s time to reorder.

The likelihood of a product, especially flower, edibles, or beverages, to lose freshness or expire over time, requiring careful stock management.

Inventory that is possessed by the business and in a backstock room, like a vault, but not present on the sales floor or other "sellable" space.

The Point of Sale (POS) is the system or place where a customer pays for their purchase in a dispensary. It combines software and hardware to manage transactions and keep track of sales, inventory, and customer data.

Estimating how long a product will sit on your shelves before it sells out — before it becomes aging inventory. This lets buyers take action early — like ordering less, bundling it with promos, or skipping the next order — before it turns into old, unsellable inventory.

The process of sourcing, negotiating, and acquiring the products needed for inventory, including selecting suppliers and managing purchase orders.

Product velocity refers to how quickly a product sells through your dispensary’s inventory. It’s a measure of demand for individual items, indicating how fast they move off the shelves.

A document sent to a vendor specifying the products and quantities being ordered for restocking inventory.

The process of removing a product from the shelves, often due to quality or safety concerns. Cannabis retailers must follow state protocols for recalls and notify customers if necessary.

The inventory level at which a new order should be placed to avoid running out of stock before the new supply arrives. Calculated based on sales velocity and lead time.

The process of restocking inventory that has been sold or used, ensuring you have the right amount of products available to meet demand.

Replenishing products that are running low on the sales floor or in storage.

The price at which a product is sold to customers, which is usually higher than the wholesale price paid by the retailer to cover costs and make a profit.

The total amount of money your dispensary earns from selling cannabis products before subtracting any costs or expenses.

Moving newer inventory to the back and older inventory to the front to ensure older products sell first, preventing expiration.

The run rate is how quickly a product is selling over a specific time period. It helps inventory managers predict how much stock they will need in the future. For example, if a product sells 30 units in 30 days, the run rate is 1 unit per day.

A unique code or identifier assigned to each product in your inventory, used to track and manage stock.