A couple of months before we opened our dispensary, my wife Meghan and I went to Las Vegas to celebrate a friend’s 40^th birthday. One of the members of our party was an old buddy who has been a medical marijuana grower for some time. In fact, he is one of the most successful and accomplished growers that I know. He also works closely with many Bay Area dispensaries.

He asked me who would be in charge of inventory for Pure Green.

“I will,” I told him.

“Perfect,” was his response. “As your business grows, you’re going to feel a lot of pressure to pull away from operations, to run your business instead of your store. That’s fine. Just make sure you hold onto inventory for as long as you can. You understand it. You have good instincts. And inventory is the key to everything you’re doing.”

We opened our store and over time the business grew. Just as my friend predicted, I began to transition from running the store to running the business. But I never forgot his advice. I still run inventory for Pure Green.

To state that advice another way, if you understand your customers’ needs and their buying habits, you can use that data to optimize your inventory. This is one of the keys to our success.

To accomplish this, you must begin with the right person running inventory. You need a real weed geek—someone who can look at a pound of flower and know what strain it is (or isn’t), whether it has been cured properly and other details that an experienced buyer can glean from looking at a sample or talking to a grower.

While you must trust your inventory manager, and she must trust her instincts, you can also use data to further refine your purchasing. Your POS software has a treasure trove of useful information. The key is to find the right reports that allow you to access that data.

Strike a balance between your data and your gut. For example, if a strain didn’t sell last month it probably won’t sell this month. On the other hand, if this is a different batch from a different grower and you just know your customers will love it, don’t be afraid to take a chance.

So what exactly do customers want? I can’t tell you what all customers want, but I can share some data about what Pure Green customers want.

Product Mix

In Oregon, as of October 1, we have been operating under a limited recreational system. Medical shops can sell flower, concentrates, edibles and topicals to medical patients, but only seven grams of flower per day to rec customers. As you can imagine, our product mix has changed significantly since October 1.

Before October 1, the breakdown of sales between those categories looked like this:

Percentage of Sales Jan-Sept. 2015

• Flower: 63-75%
• Concentrates: 16-25%
• Ediblbles: 10-15%
• Others: 1-5%

After October 1, and the massive influx of new flower-only customers that followed, flower jumped to 80% of sales, with concentrates around 10-12%. Edibles, topicals and non-cannabis items account for the rest.

Strains

Platinum Girl Scout Cookies has been our most popular strain since we opened and continues to hold that title to this day. Our Cookies grower, 10-4 Farms, has a truly exceptional cut which they grow almost flawlessly. Other consistently top selling strains include Gorilla Glue, Dogwalker OG, Sour Tangie and OG Kush.

We have heard that rec customers in other states prefer lower THC cannabis. So far, that is not the case here in Oregon (or at least at Pure Green). Those top selling strains listed above were the same before and after the launch of rec. None of them are lightweights. The Dogwalker can top 30% THC and Gorilla Glue typically tests in the high 20s.

We began selling a new strain in late September called Silverjack (Super Silver Haze x Jack Herer). The batch tested at 30% THC. Even though it was among the most expensive strains in the store, it was our second top seller for the month of October.

If you are vertically integrated, be mindful of the production lag that you face. If you identify a strain that you want to grow and sell, it can take six months or more to bring it into production.

First, you must secure the genetics, then veg and flower the plants. With a new strain, we always grow out one or two plants first to make sure we like the plant and the plant likes us. This means that we don’t have a significant amount of that strain until at least the second time that we harvest it. If you are growing from seed, it may take even longer as you hunt for particular phenotypes.

This means you have to be thinking far ahead. It’s not enough for a strain to be popular now. You have to be confident that it will be popular a year from now. I call this seeing around the corner and it is incredibly hard to do.

To succeed, you must stay current with the marketplace. That means watching your POS data closely. I also rely on my staff to help me stay on top of what strains are hot and why.

CBD

Every shop, whether medical or rec, should have some CBD products on hand. But which ones? In our store, the CBD flowers that sell best are strains like Cannatonic and Critical Mass, with 1:1 or 2:1 CBD:THC ratios. The 10:1 and 20:1 strains like Harlequin Tsunami and ACDC sell much slower.

With other CBD products like capsules and tinctures, the opposite is true. Our best sellers in this category are the products containing the most CBD and the least THC.

From this data we have concluded that folks who smoke flower want some THC with their CBD and that people who want straight CBD prefer to eat it.

We have noticed a bit of an uptick in the high ratio CBD:THC strains since the launch of rec. I call this the aspirin effect. What I mean is that many people with mild aches and pains want to use cannabis as medicine, but for any number of reasons don’t want to get a medical card. These people are using CBD flower as an over the counter medicine, like aspirin.

Stocking the right inventory is one of the most important responsibilities of any dispensary owner. Put a weed geek in charge of your inventory and make sure that he has data to supplement his gut. This balance of information and instinct is the key to optimizing inventory.

Know what products your customers want so that you can always have them on hand. Stay on top of your market so that you know which strains will sell and which will not. Be mindful of CBD products and stock the right one for your customers.

A successful retail cannabis business must have a strong brand, a welcoming environment and a staff that offers outstanding customers service. But none of that matters if you don’t have the right inventory.