Preventing Negative Inventory: Managing Dispensary Inventory
Can a dispensary have negative two pre-rolls on the shelf?
It’s not a good sign if a cannabis dispensary shows negative inventory on their point of sale. Negative inventory points to issues of selling more products than were received; ultimately putting the dispensary at risk for compliance violations. In California, for example, each violation can carry up to a $30,000 fine.
In this article, we share how selling into the negative happens, how to fix these issues, and how to prevent them from happening in the future.
How does selling into the negative happen?
This could happen if a budtender rings up an incorrect item of the same price. For example, OG Kush might sell for the same amount as Purple Kush and be rung up by mistake. The inventory will reflect this as one product being negative, and one being up by one extra unit.
Additionally, a budtender might ring up products under the wrong batch or state tracking number. In manual entry systems, it could be that the budtender entered the wrong tracking number. Your shelf will be stocked with products that look the same, but they are different according to the state track and trace system.
If you have a situation where you have negative inventory of one tracking number and positive inventory of another tracking number, this could point to sales in which budtenders didn’t scan barcodes when ringing up items. A common occurrence of this might happen with pre-rolls. For example, say a customer wants to buy five pre-rolls. Instead of scanning each one, the budtender scans the same one five times to achieve the same price. This will cause the POS inventory to show as the store overselling one tracking number.
How do you fix negatives in inventory?
We recommend investigating anything that shows up negative as soon as possible because it will be easier to spot what went wrong closer to the mistake occurring.
Once you discover and fix these discrepancies, we recommend creating a feedback loop in auditing. Feed those insights into new procedures and best practices for budtenders and other employees to make sure that variance decreases over time.
How do you prevent negative inventory?
The best way to prevent negatives is to have budtenders (or anyone who rings up customers) scan each item at the register to make sure it is associated with the correct package ID.
In order to be able to scan every item, there must be a barcode on every item. A best practice is to barcode every item to reduce your inventory discrepancies. We recommend working with your vendors to ensure all products come with accurate and scannable barcodes. This will decrease the amount of products you have to barcode.
We also recommend auditing products that have stalled in sales. Imagine there is a product that averages five sales a day and suddenly it stops moving. Although your POS says you have it, no sales are going through. This might indicate that the POS inventory is incorrect and that the item is actually not in stock.
Auditing and finding discrepancies in physical counts of inventory often points to problems rooted in store operations. For example, the audit may reveal theft. After the audit, you might put stricter theft prevention procedures in place, and you may find the additional security resolves the count discrepancies.
From this, we can draw two best practices for preventing negative inventory:
- Work with your vendors to ensure all products are properly barcoded.
- Scan all products when ringing up customers at the register.