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Retail Inventory Management Part Three

Today we will be continuing our series on inventory management and control in retail cannabis shops which are operating in a state legal, compliance driven environment.

In previous articles, I discussed a process for adding new products in your store, preventing aging inventory and dealing with dated inventory to manage cash flow effectively, as well as steps to keep vendors and our team from becoming complacent regarding the quality of products being produced in state to maintain an inventory of quality products on our shelves. This article focuses on replacing a vendor in your shop.

I am a big believer in loyalty. The longer the relationship and the more valuable it is to me, the harder I will work to sustain it even if the relationship begins to become strained. Everyone can go through tough times, things that come up that throw us just a bit (or a lot) off our normal track. I respect the effort that is necessary to start, open and operate a successful business but especially what we have had to contend with in the controversial cannabis industry.

Much like in sports, it’s much easier to win a championship than it is to repeat, to stay on top. I respect longevity and excellence, that is something to behold and admire. Employees can come and go, businesses may change locations, add or delete products, change business models or partners or take on a new investor. Any or all of these things may affect a company and their products.

One consistent theme that I have written about is that this is a business, it’s my business, my livelihood, and the source of my retirement (hopefully not for many years!). Therefore, it has always been my policy to be friendly with people involved in my business but retain a business relationship. Do not become friends with employees, with landlords, with bankers, and most importantly, do not become friends with growers. One day you may have to fire them and friends do not fire friends.

Below is a list of how we handle this relationship.

  • We constantly evaluate vendors in a variety of ways and for a myriad of reasons. The product quality, or at least our perceptions of quality, are constantly being reviewed. We look at dates of production, THC, check price and thoroughly compare to what we were told at the time of ordering.
  • We look at delivery times promised vs actual delivery times.
  • We evaluate how the communication is between our operation and the salesperson (s), delivery consistancy and our purchasing manager.
  • We take into account the efficiency and the accuracy of invoices and manifests.
  • We make it a point to take close inventory of all incoming deliveries for accuracy, making sure we are getting the promised number of pre-rolls, cartridges or cookies and drinks and that it equals what is on the manifest. Point of order: we will never accept an order that is inaccurate or incomplete. We must always make absolutely sure what we are accepting electronically agrees with what we are physically confirming. If there is a problem with reconciliation, the order will be rejected or at least the affected parts of the order will be rejected.

If the manifest is not in our BioTrack THC POS, if it is not ready to be accepted electronically, we will not accept it. (Traceability, the movement of cannabis and cannabis infused products into and out of State licensed cannabis retail shops, is the cornerstone of legal cannabis until the Feds legalize or reclassify cannabis. As operators, we have promised to adhere to the spirit of the Cole Memo and, to Washington State’s credit, they have always taken very seriously this commitment to the Department of Justice). The State of Washington reserves the right to audit inventory at anytime, in fact there have been occurrences where the Washington State Patrol has followed a delivery driver and at the time of the exchange at the retail location verified that what is supposed to happen via the manifest vs what actually occurs.

Bottom line; we evaluate vendors based on many factors and we juxtapose these factors against the backdrop of how long the business relationship has been in existence.

We have replaced vendors previously, and although it hasn’t happened often, we have been forced to make changes. In business we have ascribed to the theory you hire slowly and fire fast.

Since we go to great lengths to evaluate all potential vendors using the same process, if things begin to deteriorate, we make every effort to quickly communicate our concerns. If we do not see improvement, we move quickly to move on and end the relationship. We will be respectful in communicating the reasons behind our decision and we will almost always leave the door open to invite them to begin anew in the future with samples, etc. utilizing our process of evaluation as has been previously described. In the event we find we have been deceived or outright lied to, we will permanently ban the offending vendor and as the owner, we will see to it they never get into our store again. 

Inventory and the management and control thereof is not just an inventory and/or cash management issue. It is in fact a critical component in the ongoing effort to maintain a healthy and mutually respectful relationship with the Washington Liquor and Cannabis Board, our primary regulatory agency commonly referred to as the LCB. By maintaining high standards in inventory acceptance, management and control, and holding vendor partners to the same high standards, we can coexist and truly partner with the LCB and by extension, the State of Washington. 

Inventory control and management is key to running your business, but especially important in legal cannabis. Make it easier on yourself by doing things the right way at all times and asking and expecting your employees to follow your lead. There are no short cuts to achieving or maintaining excellence. 

In Case You Missed It

Rob Hendrix

Rob Hendrix

Rob Hendrix has been a resident of Ellensburg, Washington since 1990. After 29 years in the retail automotive business, the last 7 as GM at a dealership in Yakima, he opened Cannabis Central, a retail location in Washington in August of 2014 and has operated profitably and violation free since. As a result of his extensive experience and success, he founded Cannabis Consulting Nationwide and is its Founder/Owner.

Hendrix has successfully navigated the invasive rules and regulations in Washington since launch. He has been politically active, is a member of the Washington Cannabusiness Association (WACA) and a member since September 2014 and a board member since January 2016.

Hendrix understands the challenges associated with starting any business but understands better than most the “extra” stress that comes with opening a retail cannabis store including issues related to; banking, finance, security, insurance, community reaction and push back, dealing effectively with local government and law enforcement, as well as family and friend reaction.

Hendrix has been married to his wife Diane for nearly 40 years and has 3 children and 5 grandchildren. He is available to help anyone already in the business or those who are contemplating getting into cannabis retail and can be reached at:

Cannabis Central LLC/Cannabis Consulting Nationwide LLC
Cell: 509.833.5556
Office: 509.201.1144

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