Inventory is where most dispensaries hide their cash. FundCanna, which sells inventory financing, puts a healthy target at 20 to 35 days on hand and says one mid-sized dispensary it reviewed was carrying more than 70 days, with over $800,000 in excess capital sitting on its shelves. In a business where bank credit is scarce and expensive, that money is hard to replace.
This is the first habit we flagged in Inside The Habits Of Profitable Cannabis Retailers. Here is how to put it to work.
Why Is Inventory A Cash Problem, Not Just A Stocking Problem?
Because every unsold unit is cash you already spent. A dispensary that carries 70 days of product when it needs 30 has paid for 40 days of goods that are not yet earning anything. For a typical store, freeing that money matters more than finding a new customer.
Banking makes it worse. Federal regulators still treat marijuana businesses as higher-risk customers, as we covered in our look at the Fed's latest guidance, so few operators can lean on a cheap credit line when stock piles up. The inventory is the credit line.
Inventory Strategy: Calculate your days on hand this week: current inventory value at cost divided by average daily cost of goods sold. If the answer is far above 35, you have cash to recover.
How Does Aging Stock Cost You Money?
Cannabis loses value as it sits. A study published by the United Nations Office on Drugs and Crime found dried cannabis stored at room temperature lost an average of 16.6% of its THC in the first year. Customers notice potency, so old flower sells slower and usually at a discount.
The cost shows up three ways: markdowns to move aging product, write-offs for anything that expires, and shelf space that could hold something that actually sells. Flower, the category most exposed to aging, is also the biggest one. BDSA puts 2025 U.S. flower sales at $11.8 billion, more than any other category.
Run FIFO so older batches leave first.
Tag every batch with its received date and review anything past 60 days.
Mark down early and in small steps rather than late and deep.
How Often Should A Dispensary Count Inventory?
Count high-value categories every week or two, with a full reconciliation at least monthly. Frequent counts catch theft, data entry errors and shrinkage before they become compliance problems.
The rules are strict. In California, a 5% gap between physical inventory and the state's track-and-trace records counts as a significant discrepancy, and the licensee must report it to the Department of Cannabis Control and local law enforcement within 24 hours. In Massachusetts, the Cannabis Control Commission fined Olde World Remedies $60,000 in 2024, in part for failing to report an inventory discrepancy within 24 hours.
Inventory Strategy: Cycle count your top 20 SKUs by dollar value every week. They hold most of your cash and most of your risk.
Who Owns Inventory In A Profitable Store?
Everyone, with different jobs. Owners set the days-on-hand target and the budget. Managers run the counts, review slow movers and make reorder calls from sales data, not instinct. Budtenders are the first to see a product stall, a damaged package or a count that does not match, and the best stores make it easy for them to flag it.
Assortment discipline helps all three. A Cannabis Business Times survey found 28% of dispensaries carried 100 or fewer SKUs per location. A shorter, sharper menu is easier to count, easier to sell and ties up less cash. For more on matching the menu to demand, see Optimizing Dispensary Inventory For The Modern Consumer.
FAQ
How many days of inventory should a dispensary carry?
FundCanna's guidance is 20 to 35 days on hand, depending on the operating model. Stores well above that range likely have cash tied up in slow-moving product.
How do I calculate days on hand?
Divide the cost value of current inventory by your average daily cost of goods sold. Track it monthly by category, not just store-wide.
What happens if my count does not match state records?
Rules vary by state. In California, a discrepancy of 5% or more must be reported to regulators and local law enforcement within 24 hours.
Does flower really lose potency on the shelf?
Yes. Research published by the UN Office on Drugs and Crime found dried cannabis at room temperature lost an average of 16.6% of its THC in a year.
The fastest money most dispensaries will make this quarter is already in the back room. Count it, age it and move it before it moves your margin.