Smart Solutions for Cannabis Inventory Management

There are a few industry-specific problems that contribute to the challenges of cannabis inventory management.

Cannabis has many unique characteristics, such as potency, strain names, and terpene content that can make it challenging to classify. Do you sort by strain name? Potency? Cannabinoid content? How your inventory is organized and managed also has an impact on your loss. Cannabis companies must also carefully guard their inventory against left and loss, since the product still carries a high street value.

The regulations that govern your state’s market may play a role in inventory classification as well. Compliance with product tracking, labeling, and taxation is vital for the success of your canna-business, but all of these requirements can make inventory management a challenge.

One challenge that is not unique to the cannabis industry is the limitations of inventory management software and data accuracy. These are ongoing problems for all CPG businesses: the best inventory management software in the world is no good if the data isn’t accurate.

There’s no need to reinvent the wheel when it comes to cannabis inventory management. There are plenty of tools and systems that businesses already use that you can too.

Use an Inventory Tracking System

Using a dedicated inventory management system can help streamline your inventory process by giving you one dedicated area for monitoring inventory. There are many inventory systems out there, and which one is best for you depends on price, system capabilities, the size of your business, regulation requirements, and the types of tracking systems (such as barcode scanners, RIFD, and cloud-based software.)

Manage Physical Inventory

Consumer-facing cannabis businesses must maintain a physical stock of cannabis products — and must keep track of all of them. Theft and loss can happen with physical inventory, so it’s important to have regular counts of your inventory and to reconcile that with your inventory system’s records. Any discrepancies should immediately be a red flag. How you track physical inventory is again, up to you: scanning barcodes, electronic counting, cycle counting — there are dozens of established methods that you can integrate into your business.

Seed-to-Sale Tracking

Seed-to-sale tracking is popular in the cannabis industry, where supply chain transparency is important for regulatory compliance and customer safety. Some cannabis-specific inventory systems will help you track seed-to-sale compliance and give you one place for both cannabis inventory management and seed-to-sale compliance. Getting these systems into place can be challenging as it requires a complete product inventory, getting everything into the system, and establishing new systems moving forward. However, having one comprehensive system simplifies your systems moving forward — and simplification is an important part of scaling your business.

Security and Loss Prevention

Cannabis inventory must be stored safely and securely. Dispensaries, warehouses, processing facilities — any plant-touching part of the supply chain must have a way to secure inventory at the end of the night to prevent theft (and oftentimes, comply with insurance requirements.) This may include a specialized safe with multiple points of confirmation to access, secure transport vehicles, comprehensive video and audio surveillance, armed guards at night, and any other number of established loss-prevention tactics.

Regulator Compliance

Cannabis inventory management is an integral part of regulatory compliance. Cannabis businesses have to navigate a sea of red tape, and nothing incurs more regulatory interest than storing and transporting cannabis products. It is vital to understand your regulatory requirements at a local and state level: the detail needed in record keeping, digital versus physical copies, audit requirements, and more. Keeping up with regulations is doubtless one of the most challenging parts of being a cannabis business.

Having the proper umbrella of insurance coverage can help you navigate some of the challenges of cannabis inventory management. Every business is unique, but there are a few types of insurance policies that most, if not all, cannabis businesses need.

Property Insurance

This property insurance policy is first-party coverage that protects the Total Insurable Value (TIV) of your operation’s property, reimbursing cannabis companies for direct property losses.

General Liability Insurance

General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.

Product Liability Insurance

Cannabis companies offering tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Product liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.

Crime Insurance

Whether employees steal from you, a thief robs your armored car, or you receive a forged check or fraudulent wire transaction, money theft happens in many ways. Crime insurance guards your cannabis company against damages from these particular crimes.

Having the right insurance coverage for your cannabis business provides you with a safety net if something goes wrong: financial protection against loss or theft and peace of mind that your exposures are covered. Insurance can also help you comply with regulatory requirements, which often mandate certain policy coverages.

The cannabis industry brings with it industry-specific and general business challenges to navigate. Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by email [email protected] or calling 646-854-1093 for a customized letter or learning more about your cannabis insurance options.