Discover how counting your inventory can help dispensaries avoid costly mistakes amid increasing cannabis recalls.
Cannabis recalls are on the rise, and the risks for dispensaries are growing. In California, fines for selling recalled cannabis products can reach $10,000 per unit sold, climbing into six figures in worst-case scenarios. The consequences of selling recalled items go beyond financial penalties—they can erode your customers' trust in your store and trigger regulatory audits.
The California Department of Cannabis Control (DCC) outlines the cannabis recall process to ensure that defective or potentially unsafe cannabis products are promptly removed from the commercial market.
There are two types of recalls:
1. Mandatory Recalls:
- Initiated and ordered by the DCC when there's an immediate and serious threat to human life or health, and other remedies would cause unreasonable delay.
- Licensees must immediately cease distribution and recall the affected cannabis products from the commercial supply chain.
- The DCC posts recall information on its website and issues consumer advisories to inform both licensees and consumers about the recall.
- The DCC collaborates with licensees to ensure that recalled cannabis products are properly handled, remediated, and/or disposed of.
2. Voluntary Recalls:
- Initiated and implemented by the licensee upon identifying that their cannabis product is mislabeled, defective, or unsafe for consumption (adulterated or misbranded).
- The licensee notifies the DCC about the recall.
- Similar to mandatory recalls, the DCC posts information on its website and issues consumer advisories.
- The DCC works with licensees to ensure proper handling, remediation, and/or disposal of the recalled cannabis products.
What Is a Cycle Count?
A cycle count is a periodic, targeted inventory check that helps dispensaries maintain accurate stock records without shutting down operations for a full inventory audit. Instead of counting all products at once, staff perform smaller, more frequent counts of specific inventory sections to catch discrepancies early.
By regularly verifying that physical stock matches what’s recorded in the POS and compliance system (like METRC), cycle counts help prevent costly errors, reduce shrinkage, and ensure compliance with state regulations. Automating cycle counts with a reliable POS system streamlines the process, making it easier to stay compliant and avoid fines.
A Costly Scenario: The Impact of Inventory Inaccuracy
Imagine this situation:
A dispensary receives a state-mandated recall notice for a cannabis product they no longer have in physical stock.
Due to user error, their POS system and METRC account still show 10 active units of the recalled package.
These discrepancies occurred because staff had unknowingly been selling from the wrong package—physically, the cannabis product was gone, but the recalled package remained "in stock" in both systems.
Despite the customer receiving a safe cannabis product, the recorded sale violates compliance regulations, triggering fines of $10,000 per unit sold. In this scenario, the dispensary could face penalties of up to $100,000 for an error that could have been easily avoided.
This is just one of many scenarios where inventory inaccuracy can have serious financial consequences.
Regular cycle counts and real-time inventory tracking can prevent costly mistakes like:
- Compliance Red Flags: If your physical inventory doesn’t match your state’s compliance software, regulators may flag discrepancies, leading to violations and penalties.
- Catching Inventory Errors: Regular cycle counts help identify mistakes, such as missed product entries in your POS system, so your team can correct them before they become bigger issues.
- Preventing Losses: A lack of cycle counts can allow for theft or shrinkage to go unnoticed, leading to financial losses.
- DCC Requirement: Auditors will ask to see your cycle count history. If you don’t have records, you risk fines and compliance issues!
How to Prevent This: Best Practices for Dispensary Inventory Management
Avoiding costly mistakes requires proactive inventory management and strong operational practices. Here’s how dispensaries can stay compliant and minimize risks:
1. Regularly Count Your Inventory
Best practice: Count by category or brand, rotating through them systematically so that over the course of a month, you’ve completed a full inventory count. This approach helps you stay compliant with DCC regulations while reducing the risk of unnoticed discrepancies—all without disrupting daily operations.
How Meadow makes it easier: Meadow allows dispensaries to conduct cycle counts while remaining open, making the process seamless and efficient. Learn more: Optimize Your Dispensary Inventory Management with Intuitive Workflows
2. Flag and Reconcile Missing Products
Best practice: Track missing products to ensure your inventory records are always up to date. If your POS system shows active stock for an item that isn’t physically present, it could indicate an error, theft, or shrinkage.
How Meadow makes it easier: Meadow’s Missing Products feature automatically flags any packages with active inventory that weren’t physically counted. Reviewing and reconciling these discrepancies ensures that records remain accurate, including batch numbers for all cannabis products.
3. Monitor and Sync with Metrc Daily
Best practice: Regularly compare your POS inventory to Metrc to catch and resolve discrepancies before they become compliance violations.
How Meadow makes it easier: Meadow’s automated Metrc sync performs daily checks, resolves discrepancies, and prevents negative inventory—ensuring compliance while saving valuable time. Unlike other systems, Meadow eliminates Metrc-related negative inventory issues entirely, giving dispensaries confidence in their records. Learn more: Never Worry About Metrc Again
4. Scan Packages at Point of Sale
Best practice: Scanning product barcodes ensures the correct package and batch numbers are associated with each sale. This eliminates errors caused by selling from the wrong package and keeps your records aligned with cannabis regulations.
How Meadow makes it easier: Features like scan-only mode and requiring a manager PIN to confirm package sales provide extra compliance safeguards.
The Bigger Picture: Rising Recalls and Regulatory Risks
Cannabis recalls are not just increasing in California—they’re becoming a nationwide challenge:
- In Michigan, fines were issued for selling recalled cannabis products and mislabeling THC content.
- In New Jersey, a cultivator faced penalties for contaminants like insects and human hair found in recalled items.
- Across the U.S., stricter compliance requirements are driving the need for accurate inventory management.
Dispensaries that fail to adapt risk severe financial penalties, customer trust issues, and operational disruptions.
Protect Your Business from Costly Mistakes
With recalls on the rise and compliance risks growing, it’s never been more important to prioritize inventory accuracy.
Don’t wait for a costly mistake to happen. Integrate these features into your workflow today to safeguard your dispensary and ensure compliance.
Meadow: Your Partner in Compliance
Meadow's dispensary software is built in lockstep with shifting state and local cannabis regulations, with robust compliance guardrails designed to keep businesses protected. Unlike other systems that require manual data entry or CSV uploads into Metrc—introducing risks of user error and compliance issues—Meadow automates compliance reporting, ensuring accuracy and efficiency every step of the way.
These built-in safeguards not only protect cannabis businesses from fines but also streamline operations, so dispensaries can focus on serving customers with confidence.
Additional Resources: Read more about Dispensary Inventory Management on the Meadow Blog
