Aria Biswas

Aria Biswas is head of marketing and cannabis events at Meadow, a cannabis retail software system for dispensaries.

Explore how to set up a cannabis dispensary 

Cannabis retail store flows to consider

When you're setting up a compliant cannabis retail storefront in California, there are several things to consider.

In this article, we'll review three of the most common dispensary store models (plus, the benefits of adding Express Pick-Up), including the pros and cons of each model and how it relates to security, staffing, sales, [dispensary inventory management](https://getmeadow.com/blog/tags/dispensary-inventory-management") workflows, compliance, your store design, and the customer experience. Because the cannabis retail space is so highly regulated, it's essential to consider how compliance and inventory management will affect the way customers shop with you.

We talk about retail stores in terms of:

__1. FRONT OF HOUSE:__
This refers to everything from your parking lot, outside the store, the reception/check in area, and your sales area.

__2. BACK OF HOUSE:__
This refers to your back entrance (if you have one), your inventory reception, inventory backstock, inventory staging areas, and back offices.

![Synchronicity Holistic Cannabis dispensary](//images.ctfassets.net/6kwu1u6s8j23/6fpFHYCWAtaetphZpaK2zi/998447459ff9eae69c34494a03403b07/Synchronicity_Holistic_Cannabis_Dispensary.png)

## 1. Traditional Counter Service

This is the most common dispensary store model. In a traditional counter service setup, dispensaries are set up for customers to flow through in this way:

__INTAKE:__
Customers enter into a secure reception area with security present. Their ID's are checked; once they are cleared, they are allowed onto the sales floor.

__SALES AREA:__
Once on the sales floor, customers go to counters and are helped by budtenders at display cases, with registers on the counters. This is an important thing to note: Each salesperson is responsible for their customer transactions, which makes it easier to hold your team accountable if you find mistakes or want to reward top-selling employees.

__INVENTORY:__
Live/Real inventory is kept in the display cases or behind the counter. Once the customer chooses their products, each salesperson gathers the items, bags them in compliant bags, and rings them up on the POS system.

__PROS AND CONS OF THE TRADITIONAL COUNTER SERVICE LAYOUT FOR CANNABIS DISPENSARIES__  

__PROS:__
There are a lot of reasons why this is the most common dispensary store model. It offers a high amount of security controls because all products are kept in dedicated areas in the display cases or behind in the counter in a drawer storage system, and customers only touch products with the help of a budtender. Don't forget: As of right now, retail cannabis is still primarily a cash business; with counter service, there is a very strict customer store flow with usually only one entrance and exit to the sales floor which is good for security purposes.

__CONS:__
Customer has limited interaction with products and is very reliant on sales staff to pull and explain products, which are typically locked away behind the glass; dispensaries need very knowledgeable sales staff who can thoroughly explain products and upsell, or sales can suffer.

<figure>
![Atrium cannabis dispensary](//images.contentful.com/6kwu1u6s8j23/2mZxpwk0F8Sff9yLsY4Eqx/b64eac54e0880b968a9fad3ed6226ae4/Atrium_cannabis_dispensary.jpg)
<figcaption>The [Atrium dispensary in Topanga](https://atriumtopanga.com/) utilizes the Floating Sales Staff model: their well-trained budtenders roam the sales floor with iPads to help customers find exactly what they're looking for; they can place orders on the spot, which get sent to the back of house and then are paid for at the register.</figcaption>
</figure>

## 2. Floating Sales Staff, Open Floor Dispensary Model

Now, let's talk about floating sales staff or the open floor model. Sometimes this is called the "Apple Store" model. Its very open and inviting to customers. Here's the store flow:

__INTAKE:__
Customer enters directly into the store sales area with no fixed reception.

__SALES AREA:__
Customers browse display cases which are located througout the store (sometimes on the walls, sometimes in the center of the store). Orders can be placed with floating sales staff who carry iPads, and then orders are fulfilled and paid for with the cashier at the counter.

__INVENTORY:__
This is really similar to any retail clothing store at a mall. In this store model, some live inventory is kept on the sales floor and some is kept behind the cashier station.

__PROS AND CONS OF THE FLOATING SALES STAFF, OPEN FLOOR DISPENSARY MODEL__

__PROS:__
The pros of this kind of store is that it has a really great, engaging customer experience with lots of opportunities to connect with your customers with a 1-to-1 guided experience. This dispensary model creates an opportunity for your budtenders to connect with customers personally and help change the stigma of cannabis. 

__CONS:__
This is not as security friendly as the Traditional Counter Service model, especially if there is live inventory on the floor; products are within arms reach of customers instead of kept behind glass in cases. There is also no clear customer flow in store, which means it is not as volume-friendly if you are in a high-traffic location. 

![Cannabis Retail layout](//images.ctfassets.net/6kwu1u6s8j23/5u5wbktZjPnrTlWc6T9QOC/0941463b7b5cfe08d1d4053e2b57f9c1/Cannabis_Retail_layout.png)

## 3. Fulfillment Pharmacy Flow

A favorite dispensary layout for many shops is the fulfillment or a pharmacy-style floor layout which is kind of like a hybrid of the Traditional Counter Service and Open Floor layouts, but is much more volume-oriented.

__INTAKE:__
In this retail model, customers usually enter into a dedicated secure reception area where ID's are checked before they are admitted to the sales floor.

__SALES FLOOR:__
In the sales area,  customers can browse products in display cases but there is no live product on the floor. Customers step to a dedicated checkout counter or window to place and fulfill order.

__INVENTORY:__
All inventory is kept back of house.

What's great about this dispensary model is you can still have a salesperson on the sales floor guiding the customer experience, but products are not within arms reach, so you're maintaining security controls, and making it easier to conduct cycle counts and internal audits.

Sale are packed and completed at a window or a counter.

<callout>Remember: Efficient, secure workflows add up to less labor, reduced product loss, and more profits.</callout>

__PROS AND CONS OF THE FULFILLMENT PHARMACY FLOW__

__PROS:__
Volume oriented, very secure (can be window service), Clear customer flow, easy & efficient back of house workflows for your staff. This setup is great because it's volume oriented, meaning you can really move people along and reduce counter time. There's a very clear customer flow and with all the inventory in the back, there's a very easy and efficient back of house workflows for your staff. 

__CONS:__
This model can be really sterile, sometimes with little to no customer interaction unless you have dedicated staff available on the sales floor; customers often are just coming up to a window without getting personal guidance from budtenders.

![Express pickup cannabis retail](//images.ctfassets.net/6kwu1u6s8j23/5V8FYg7lx22OVfyoGmiVpz/bc32cf9d5cc68609a0cb8a6bb392a55d/Express_pickup_cannabis_retail.png)

## 4. EXPRESS PICKUP

Because of the COVID-19 pandemic, the express pickup dispensary model became a very popular option to minimize contact between people. Many cannabis consumers now expect Express Pick-Up to be an optional retail flow, and it's easy to add it to any of the above dispensary storefront models.

__INTAKE:__
Customers place orders online or via the phone, then show ID at either the designated window (or curbside) when they arrive at your location.

__SALES AREA:__
Customers receive pre-ordered products at the to-go window (or at the cars in a designated parking location in front of the store or in a parking spot).

__INVENTORY:__
All inventory is kept in the back of the house and is packed upon receipt of the order at a dedicated staging area.

<callout>Meadow's omnichannel sales functionality——the ability to power your sales in-store, online as well as delivery and pickup——is what sets us apart and makes us the most complete cannabis POS system in California. The ability to accept orders everywhere your customers are shopping in a single solution means dispensaries maintain clean sales and inventory data
while creating a personalized experience for each and every customer.
 </callout>

__PROS AND CONS OF THE EXPRESS PICKUP DISPENSARY MODEL__

__PROS:__
Volume oriented, very secure (can be window service), clear and convenient customer flow, easy & efficient back of house workflows for your staff. This is a really complementary addition to any store.  

__CONS:__
Customers may only order products they are already familiar with and may not be as willing to try new products without having the budtender interactions and personalized experience. 

Read more about setting up your [Cannabis Retail](https://getmeadow.com/blog/tags/cannabis-retail "Cannabis Retail") operation.

Synchronicity Holistic is a cannabis dispensary in California powered by Meadow's cannabis POS

Cannabis dispensary retail store flow

Review the three of the most common dispensary store models, including the pros and cons of each

How Compliance and Dispensary Inventory Management Dictates Your Cannabis Retail Store Flow

Mellows cannabis infused marshmallows

For brand new cannabis dispensaries, planning your inventory is all trial and error. But experienced operators with data to analyze know that buying and planning the perfect mix of products is the best way to boost revenue and keep your customers happy.

In our Retail Forecasting webinar with Senior Consultant Sara Betesh, Betesh Buying Group and Cem Atli, Senior Omni-Channel Merchandise Planning Manager at MedMen, we gleaned lots of valuable insights from this expert cannabis buyer and planner team.

Below are five key takeaways when thinking about how to plan your product offerings at a new dispensary or delivery service. The future of your company depends on what sells; you want to appeal to a wide audience but ensure you're establishing a strong customer base that wants what you have to offer. 

## 5 Things All Dispensary Buyers and Planners Should Consider When Planning Your Inventory Assortment:

1. **Analyze your demographics and location to find trends**

    The tone, brand and types of products at your cannabis retail business will be set by the company; what is your target demographic? Tourists, new consumers, longtime smokers, moms who are looking for alternatives to an evening glass of wine? To create the right product mix, get to know your consumer by asking them questions, analyzing their buying behaviors, and identifying trends. Demographics and location will determine what moves fastest; each dispensary is unique in who they're targeting and who they'll serve. A cannabis delivery service in downtown Los Angeles will have a different customer base than a mom and pop dispensary storefront in Humboldt. Some consumers are more concerned around price, some care more about THC percentages, some want to support local brands and sungrown farms in their region. The dispensary buyer and planner are responsible for working together to identify  trends and connect with vendors to see what and how much of the desired product is available.

2. **Use your data and test products**

    Whether you're a new licensee or an existing dispensary operator, you'll need to actively experiment with your product mix. Finding the right products to carry is a mix of using your intuition and also digging through data as it accumulates; you have to be confident that the product you're bringing in will have demand. Start slow; if you haven't sold a product before, you won't have any data yet for that particular SKU, but you can use historical information about the category or brand to try to anticipate demand. Typically a buyer and planner look at sales history together to forecast how fast things will move and when you need to restock. Start by ordering a small amount of a new product to see if there's interest with your customers; if something sells quickly, that's a good sign and can be the baseline for your next test, whether that's increasing inventory of that SKU or testing similar products to see the demand. 

3. **Protect your core dispensary business** 

    It's good to understand who is coming in, how frequently, and what they're looking for. If you're limited on shelf space and you're still getting to know your customers, it's best to start with tried and true products that you know will move. Flower has always been king; figure out which brands you want to work with and then start adding other categories (vapes, edibles, tinctures) to build a cohesive assortment of product options that meet your customer where they are.  Is your customer interested in buying top shelf eighths once a month, or are they primarily looking to buy a single pre-roll that they come in once a week for? Some new products will sell; some won't. When you have a solid customer base, you've established top selling products, and can reasonable predict your inventory velocity, that's when there's usually extra dollars to test new offerings. Most buyers are allocated a certain amount to spend on products; look to see if your existing product categories are actually driving business, which then gives you flexibility to try out new products and increase offerings.

4. **Expand product offerings slowly to mitigate risk, and educate your budtenders and your customers**

    If, for instance, you are seeing an uptick in female shoppers and you want to develop a women's section dedicated to beauty, sleep & intimacy, you can do small tests to see if your customers are interested in these new types of products. With each new product you introduce, ensure your budtenders understand what the product is, how to use it, what the benefits are, and how to speak about it to customers. Or, if you're introducing a new line of pet products, this is an opportunity to attract a new segment of customers who might not otherwise come to your business; ensure you have proper marketing channels in place to distribute new product information. Consider the idea of related selling; if you drive one person who is a pet owner into your business for the first time, what other incremental products might they buy if they're nurtured and educated the right way? Selling one dog CBD tincture is insignificant to your business, but if that customer ends up also buying a pre-roll that they didn't expect to love, and they keep returning to shop with you, and tell their friends, that's a sustainable way to increase your business and grow your customer base. Always consider: how can I keep my loyal customers returning and simultaneously bring in new demographics to introduce them to products they'll love?

5. **Review inventory data weekly to identify inventory glut vs. opportunity**

    Get in the habit of reviewing your inventory data weekly, at the same time, to begin to identify trends. You want to look for Glut vs. Opportunity: __Inventory glut refers to anything you have an excess amount of__, and sales aren't there. This is what you want to markdown because you're wasting money on this product if you keep it around. If products aren't selling, you need to get rid of it. Work with your planner to bake in discounts and promos, and assume that not everything is actually going to sell at it's full listed price. You'll also begin to see __inventory opportunities which are products that sold out quickly__, which means that you likely left dollars on the table by not stocking enough of them. 

    "Only look at inventory data on Mondays, from the previous week," says Sara Betesh, Senior Consultant at Betesh Buying Group. "If you look at it everyday, you’re going to drive yourself crazy. Monday is reporting day. Then build your plan for the week, and execute. You can't be scared to mark products down. If the product doesn't sell, GET RID OF IT. You need the space for something else." 

Atli Cem, Senior Omni-Channel Merchandise Planning Manager at MedMen, suggests "doing sales forecasting for the year, quarter, month, and week to see trends and give yourself flexibility for things like seasonality. 

<callout>If you have an unproductive SKU on the floor, look at the previous 3 months worth of sales. Replace that one SKU with your average performing SKU, and see what that does. You will be mind-blown." -Atli Cem, Senior Omni-Channel Merchandise Planning Manager at MedMen</callout>

<figure>
<iframe width="560" height="315" src="https://www.youtube.com/embed/QfHFuUJHVDM" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
<figcaption>Senior Consultant Sara Betesh at Betesh Buying Group shares her perspective about how dispensaries should be thinking about buying inventory.</figcaption>
  </figure>

Meadow's [inventory management](https://getmeadow.com/features/inventory-management) solution makes life easier for both inventory buyers and planners. Meadow's new Velocity & Insights tools help:

- Forecast inventory demand with precision
- Maximize inventory & shelf space
- See any product performance in an instant
- Identify which products need to be moved off shelves
- Understand who your customers are, and how those demographics are shifting
- Identify growth in sales channels like delivery, pick-up and online ordering.
- Take a break from Excel reports with easy-to-read (and beautifully displayed!) data that you can customize right in Meadow Admin.
- Get answers FAST with at-a-glance analytics on any device.

Discover what dispensary buyers and planners should consider when planning an inventory assortment

5 Tips for Cannabis Retail Forecasting & Smart Inventory Buying

First In, First Out as a dispensary inventory management best practice that cannabis dispensaries should follow to ensure that the oldest inventory gets sold first. 

Brother David's cannabis products on the shelves of Vapor Room

*First In, First Out (FIFO) is an inventory management best practice to ensure that the oldest inventory gets sold first.* 

Because cannabis products do have expiration dates, it's important that your entire staff knows how to follow the FIFO method to reduce waste and prevent products from spoiling on your shelves. Most testing laboratories’ display the product expiration date on the Certificates of Analysis, typically six months after the date of analysis. 

In a Metrc world, you don't want to mix your product batches physically, so it's important to set up workflows that make it easy to sell the oldest products you have in stock before opening up new batches.

Make sure you are following best practices for dispensary inventory management, keeping your packages organized with proper labeling, and moving products as new packages arrive so the oldest inventory always gets sold first. 

After receiving products, we recommend labeling your packages with the date received and the sell-by date on the outside of the cardboard box. Stick the corresponding Blue Metrc UID tag outside of the box as well; that way you can quickly identify the package. Next, ensure these boxes are physically organized so that newest products get stored in the back, and the oldest products are in front, always the first to go out the door. 

Each dispensary has different inventory requirements and inventory must be received and stocked differently in each store plan.

![Leune cannabis product](//images.ctfassets.net/6kwu1u6s8j23/5SYlCW3G7KVpW4b33BJjOx/4631be175a38e3b0ddb3ba19070f1d85/Leune_cannabis_product.png)

**Counter/Traditional Store Model**

In the Counter/Traditional store model, inventory is kept in display cases that customers shopping in store can view. The newest product must go closest to the customer in the display case so your salesperson pulls from the back and doesn't have to reach in and pick the wrong product from the wrong package.

**Back of House Fulfillment**

All inventory is kept in the back of the house and you can have a really organized, easily audit-able inventory that is easy to pull from and you're able to get orders together quickly. FIFO is a breeze in this setup.

**Open Floor Dispensary Flows**

In the open floor dispensary model, it gets even more tricky if you're keeping some live product on the floor and some in back of house; ideally everything is kept in back of the house and orders are put together in a dedicated staging area, but sometimes operators want to keep some live product on shelves. Multiple locations add a layer of complexity to operations; make sure you have clear SOPS so your team knows how to keep track of inventory with this model.

Managing multiple inventory locations with Meadow is easy; you can easily track products across different physical locations (ie. Sales Floor, Flower Room, and The Vault). It also enables you to set up more than one sales channel so you can differentiate between inventory for orders made via your website (for Pickup and Delivery) or at POS (in store).

__>> Learn more about [dispensary inventory management](https://getmeadow.com/features/inventory-management "dispensary inventory management")__

Following FIFO in your cannabis dispensary prevents waste and spoilage

FIFO: The Importance of This Dispensary Inventory Management Best Practice

David Hua

David Hua CEO and Cofounder of cannabis POS startup Meadow.jpg

David Hua CEO and Co-Founder of Meadow

Conduct cycle counts at minimum every 30 days for the most accurate dispensary inventory management

Cycle counts are the best way to do dispensary inventory management

Do you know how much product loss you experience in a given week, month, year? 

California dispensaries are required to do full inventory counts at
a minimum of every 30 days to make sure your physical inventory matches with your POS inventory and Metrc inventory. You're required by law to know your monthly inventory discrepancy percentage and keep it under 3 percent.

<callout><a href="#inventory-management-guidebook">Get the Guidebook Now: Smarter Inventory Management for Dispensaries</a></callout>

While the minimum requirement is counting your inventory once every 30 days, we suggest conducting "Cycle Counts" much more frequently to keep your inventory organized both physically and digitally.

![Cannabis dispensary inventory management requires diligent cycle counts](//images.ctfassets.net/6kwu1u6s8j23/7AjyMk2iFmJolYgOAmV59R/8ec62513fd16a1b102b348f2c681a7a1/Blog_Banner_Image__9_.png)

A Cycle Count is when a retail shop physically counts all of the inventory in their possession to compare what your inventory system THINKS you have with what's actually there. In a perfect world, those numbers always match exactly, but in reality that's rarely the case due to inventory shrinkage. The only way to find discrepancies between your assumed inventory numbers and actual inventory numbers is to do a full count of all physical products.

Cycle Counts is a feature that’s already included with Meadow, and we’ve seen it dramatically **reduce theft and loss, ensure the right product mix on shelves, and smooth the transition to Metrc.**  Here are some of the key features of our Cycle Counts tool:

- **Barcode scanning synced to an iPad or laptop** for super fast and accurate counts.
- **Count while you're open** using our 'Conflicts' tab, which identifies any changes in inventory (i.e. if someone sells a unit while you are counting inventory, you can easily adjust for the sale).
- **Easy delegation** with allowances for multiple employees to do counts simultaneously.
- **Immediate loss/theft detection** that notifies you of any discrepancy with your expected inventory.
- **Metrc optimization** with drop-downs for counting within Metrc packages.
- **Other smart features, including**: notes to record if a product was lost, found, damaged, moved, etc; manager review and approval settings; and summary reports with missing products and conflicts.

Another reason we always recommend using the Cycle Counts tool is because there are huge implications when it comes to avoiding an audit by the BCC (or worse!). Under Track and Trace, any inventory discrepancy over 3% will have to be reported to the BCC, setting you up for greater scrutiny and increasing your chance of an audit. If the discrepancy is not reported, you could risk losing your license. So let’s put the safeguards in place to avoid these scenarios!  

__>><a href="#inventory-management-guidebook">Get the free guidebook on the right way to do dispensary cycle counts now</a>__

Get the free guidebook on the right way to do dispensary cycle counts now

Posts tagged “Dispensary Inventory Management”

How Compliance and Dispensary Inventory Management Dictates Your Cannabis Retail Store Flow

5 Tips for Cannabis Retail Forecasting & Smart Inventory Buying

FIFO: The Importance of This Dispensary Inventory Management Best Practice

Cycle Counts for Smarter Dispensary Inventory Management

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Posts tagged “Dispensary Inventory Management”

How Compliance and Dispensary Inventory Management Dictates Your Cannabis Retail Store Flow

5 Tips for Cannabis Retail Forecasting & Smart Inventory Buying

FIFO: The Importance of This Dispensary Inventory Management Best Practice

Cycle Counts for Smarter Dispensary Inventory Management

Product

Company

Social

Support