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Part 1 of 3: What California Dispensaries can do to prepare for Track and Trace

This is a 3 part series in collaboration with BriAnne Ramsay, CEO of Rocky Mountain Cannabis Consulting. This series will explain how California dispensaries can succeed in a Track and Trace environment. Part 2 will cover what happens during the migration to Track and Trace and part 3 will cover what dispensaries will have to do differently after migrating to Track and Trace.

Here's how California dispensaries can prepare for Track and Trace.

What California dispensaries can do to prepare for Track and Trace

1. Learn the basics of Metrc.

Metrc is a reporting platform. Because of that, there are no “guardrails” to keep you from making an error and going out of compliance.

If you make a mistake there will be a clear ledger of the timestamp, user, and date when that error happened and when it was trying to be corrected. We recommend centralizing all data entry through an internal Metrc administrator to eliminate opportunities for discrepancies within your virtual records. While one error won’t sink your business, it’s important to make as few errors as possible to avoid an audit, fine, temporary shutdown, or the loss of your dispensary license and a permanent shutdown. In short, the penalties can vary based on how significant the error is.

Get a free Metrc readiness assessment.

If you use Green Bits, you don't need to manually report your sales to Metrc, but there are a few tasks you will always need to do in Metrc:

  • Purchase tags: Purchase tags from Metrc for your inventory and accept the tags in Metrc.

  • Accept manifests: After you request a package from your producer, accept the manifest in Metrc.

  • Transfer inventory: If you need to return products or transfer part of a package to another store, transfer inventory in Metrc.

With Green Bits, you should not do anything else in Metrc. You do not need to add item names either, even though Metrc will advise you to do so. We take care of that in Green Bits. If you do anything else in Metrc, your sales may not report correctly and you may be out of compliance.

If you are a Green Bits user, here are guidelines for working in Green Bits and Metrc, as well as an overview of how Green Bits and Metrc interact.

2. Plan for thorough and regular inventory audits of your 3 inventories.

Physical inventory must be reconciled with your records within every 30 days.

This means within every 30 days you need to conduct an audit of your 3 inventories and ensure they all match. Your 3 inventories include:

  1. Metrc

  2. POS

  3. Physical inventory

If your store is in the Emerald Triangle, you also need to manage CalOrigin. This means you need to manage 4 inventories:

  1. Metrc

  2. POS

  3. Physical inventory

  4. CalOrigin

Auditing inventory can be a daunting process, especially in a busy dispensary with thousands of items. And although auditing inventory may seem less important than keeping up with day-to-day operations, regular, consistent, and thorough audits will save you time and effort (and therefore, money) in the long run. These audits can prevent small discrepancies from becoming much larger and more complicated compliance headaches in the future.

We recommend developing and sticking to a consistent schedule of auditing one or two product types each day, preferably just before or shortly after opening, or towards the end of the business day when it's less busy.

It can also help to strategically audit product types with less inventory on busier days of the week, and product types with larger inventory on slower days (if you have them!). For example:

  • Monday - Concentrates and cartridges

  • Tuesday - Pre-rolls

  • Wednesday - Pre-pack flower (although any active flower should be counted daily if there’s a high volume of sales)

  • Thursday - Edibles

  • Friday - Topicals

  • Saturday - Extracts

  • Sunday - Other merchandise

Are you a Green Bits user? Here are best practices for auditing your inventory.

3. Determine who will verify your record keeping.

There are lots of documents you need to review and verify in order to stay compliant. For example, the big 3 are:

  1. Waste logs

  2. Metrc adjustment logs

  3. Manifests

For manifests, it’s important to ask these questions:

  • Are all the signatures collected on the manifests?

  • Are they organized in a way that you, an employee, or an auditor can easily reference them?

Assigning a team or individual to verify your record keeping is another essential piece to keeping your store compliant.

4. Budget for a compliance department.

Most people rely on lawyers or a policy team to advise them through this compliance chaos, but that typically isn’t enough.

You need a team onsite to verify all of the data, inventory, and record keeping that comes with correctly managing Metrc. Successful stores typically have some combination of the following roles:

  • Compliance officer

  • Metrc auditor

  • Inventory manager AND someone doing inventory control at every facility

BriAnne shares her best practices on staffing for inventory managers and having someone do inventory control, “I'd recommend having an inventory manager/logistics and an inventory control. Inventory control is usually overseen within the store location by the store manager and is responsible for all reconciles and Metrc adjustments while the inventory manager/logistics oversees stock levels, sales, promotions, etc.”.

How much should you budget for Metrc compliance department?

“This depends on the number of locations and volume of sales. Usually, 1 auditor can handle 3 stores if the gross revenue is $10,000 -$18,000 per day per store. However, the more stores you have the more auditors will be needed and someone to oversee them. Salary in Colorado ranges from $40,000 - $75,000 per person. I'd add roughly a 15% salary increase for California”, says BriAnne.

We recommend budgeting, and hiring, accordingly. Your compliance department will be essential in ensuring you maintain compliant operations so that you can continue to grow your business.

5. Audit current data for standardization.

In a track and trace environment, standardizing naming conventions is important because having clear naming conventions with the weight (e.g. 1g, 3.5g, etc.) will help keep your 3 inventories (Metrc, your POS, and your physical inventory) in sync. It can also make the audit process much easier.

Standardizing naming conventions is also important when you create item names in Metrc. Before you can create a Metrc package tag and attach that Metrc package tag to the physical inventory, you have to create item names. Green Bits helps all its retailers with this process -- make sure your POS does too!

We recommend auditing all current data within your POS and ensure it’s 1) standardized and 2) there are no duplicates. This means that each naming convention should contain:

  • Brand

  • Flavor or Strain

  • Product Type

  • Weight Unit or Potency

For example, a product would appear in the system as:

  • 710 Labs Sweeties Pre-Packed Flower 3.5g

From BriAnne, “I'd also recommend ensuring the cost is accurate within each naming convention. Remember, for concentrates, if the manufacturer used your trim, the trim grow cost and concentrate yield should also be calculated to ensure the product is not priced at a lower margin.”

We also strongly recommend working with your vendors to produce correct and scannable barcodes for all the products they sell and transfer to you. If they do not, you and your staff will be stuck with potentially hundreds of new products that you have to barcode or re-barcode.

Barcoding all products and scanning them at checkout is a best practice to ensure you consistently make compliant sales.

6. Ensure your physical inventory is organized.

If you have multiple batches of the same product type together, we recommend separating out those batches so that you can follow FIFO (first in, first out) inventory management. Following FIFO is important because your Certificate of Analysis (COA) tests expire after 6 months, so you want to make sure you don’t sell expired inventory to your patients or customers. We recommend all flavors, batches, and weight units are separated for easy tracking.

Get a free Metrc readiness assessment.

7. Create a reconcile schedule.

Analyze the highest volume sales days and the lowest level of inventory stock per product type. Going back to Tip #2: “Plan for thorough and regular inventory audits of your 3 inventories.”, we recommended you reconcile:

  • Any low stock item should be counted on a higher volume sales day.

  • High stock items should be counted on a lower volume sales day; typically Sundays or Mondays.

For example, if you notice the inventory amounts for a specific pre-roll are low, we recommended counting those items on days that are busy, such as a Friday, so that you don’t run out or create an undersold/oversold error in Metrc, which will be covered in Tip #8: “Get to know your inventory.”

8. Get to know your inventory.

By reconciling your inventory daily, patterns in inventory movement will appear, such as under/overs. Under/overs are Metrc terms that mean undersold and oversold. Products can be undersold and oversold, for example, if a pre-roll from Batch A is physically sold to a consumer, but your POS shows the pre-roll was sold from Batch B. In order to correct this, you would have to make two adjustments. And remember, making too many adjustments can trigger an audit from the state.

Additional Resources

A good friend of Green Bits, BriAnne Ramsay, CEO of Rocky Mountain Cannabis Consulting, offers free online compliance trainings. Her unique background in strategically planning the expansion of cannabis businesses, compliance, and seed-to-sale technology produces a fresh perspective to each operation.

RMCC Online Trainings:

Don’t know where to begin to start building your compliance team?

Do you have a California compliance related question?

We’d be happy to answer. Ask your question here.

We also offer free Metrc readiness assessments so you can see how prepared you are for Track and Trace.

Read "Part 2 of 3: What Track and Trace implementation will look like for California dispensaries" here.

Get a free Metrc readiness assessment.


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