Module 1: Inventory Fundamentals
Build a strong foundation in cannabis inventory management principles and Ohio-specific requirements.
Why Inventory Management Matters
- Compliance: Ohio law requires exact tracking of every gram
- Financial: Inventory errors directly impact profitability
- Operational: Accurate inventory ensures smooth operations
- Legal: Discrepancies can lead to license suspension
⚠️ Critical Requirement
Ohio regulations require all cannabis businesses to maintain perpetual inventory tracking. Every single product movement must be recorded in METRC within the same business day.
Ohio Inventory Requirements
| Requirement | Frequency | Documentation |
|---|---|---|
| Daily inventory tracking | Every business day | METRC entries |
| Weekly audits | Once per week | Audit reports |
| Monthly reconciliation | Monthly | Reconciliation records |
| Annual full count | Yearly | Complete inventory report |
Key Inventory Categories
🌱 Plants
- Immature plants
- Vegetative plants
- Flowering plants
- Mother plants
🌿 Bulk Product
- Harvested flower
- Trim
- Shake
- Pre-rolls in process
📦 Packaged Products
- Flower packages
- Pre-rolls
- Concentrates
- Edibles
Legal Accountability
Under Ohio law, licensees are strictly liable for:
- All inventory under their license
- Accuracy of METRC entries
- Physical security of products
- Employee actions regarding inventory
💡 Best Practice
Implement a "two-person rule" for all inventory movements. Having a witness reduces errors and provides accountability for high-value transactions.
Module 2: Daily Tracking Procedures
Establish consistent daily routines that ensure accurate inventory tracking and compliance.
Morning Inventory Procedures
🌅 Opening Tasks (First 30 Minutes)
- Security Check: Verify no overnight breaches
- Temperature Logs: Record storage area conditions
- METRC Sync: Ensure system is online and current
- Quick Count: Verify high-value items
- Review Overnight Reports: Check for system alerts
Throughout the Day
Receiving
- Verify manifests
- Check METRC tags
- Accept transfers
- Physical inspection
Processing
- Create packages
- Apply tags
- Update weights
- Record waste
Sales/Transfers
- Verify limits
- Complete sales
- Print receipts
- Update METRC
End-of-Day Procedures
🌆 Closing Tasks (Last Hour)
- Daily Sales Report: Reconcile POS with METRC
- Cash Count: Match drawer to sales
- Inventory Adjustments: Record any corrections
- Waste Documentation: Log all disposed products
- Final METRC Sync: Ensure all entries complete
- Secure Storage: Lock all product areas
Documentation Requirements
| Document Type | Required Info | Retention |
|---|---|---|
| Daily Inventory Log | Opening/closing counts, adjustments | 3 years |
| Transfer Manifests | All incoming/outgoing transfers | 3 years |
| Waste Logs | Product, weight, witness, method | 3 years |
| Adjustment Reports | Reason, amount, approval | 3 years |
⚠️ Zero Activity Reporting
If no inventory activity occurs within a 24-hour period, you must still submit a "zero report" to maintain compliance. This confirms your system is operational and no unreported activity occurred.
Common Daily Tracking Errors
- Delayed Entry: Waiting until end of day to enter transactions
- Estimation: Guessing weights instead of measuring
- Incomplete Tags: Not applying METRC tags immediately
- Missing Witnesses: Processing high-value items alone
- Poor Communication: Shift changes without proper handoff
Module 3: METRC Best Practices for Inventory
Optimize your use of METRC for efficient and compliant inventory management.
METRC Inventory Features
🌱 Plant Tracking
- Growth phase changes
- Plant movements
- Harvest recording
- Destruction logging
📦 Package Management
- Creating packages
- Adjusting weights
- Lab result linking
- Transfer preparation
📊 Reporting Tools
- Inventory snapshots
- Movement history
- Audit trails
- Compliance reports
Daily METRC Workflows
Creating Packages from Harvest
- Navigate to Plants > Flowering
- Select plants to harvest
- Record harvest weight by type (flower, trim, waste)
- Assign package tags immediately
- Enter drying location
- Submit and verify creation
METRC Shortcuts & Tips
⏱️ Bulk Actions
Use CSV uploads for multiple similar entries
🔍 Quick Search
Use tag numbers for instant package location
📅 Templates
Save package templates for repeat products
🔔 Notifications
Set alerts for low inventory levels
Avoiding METRC Errors
| Common Error | Prevention Method |
|---|---|
| Duplicate tag entry | Scan tags instead of manual entry |
| Weight discrepancies | Calibrate scales daily |
| Missing lab results | Link COAs before creating sales packages |
| Transfer errors | Double-check manifests before accepting |
💡 Pro Tip: METRC Bookmarks
Create browser bookmarks for frequently used METRC pages:
- Active inventory view
- Package creation page
- Transfer hub
- Daily sales reports
Integration Best Practices
- API Connections: Ensure POS system syncs properly
- Backup Procedures: Export data weekly
- User Permissions: Limit access based on roles
- Training Records: Document all METRC training
Module 4: Cannabis Waste Management
Master compliant waste disposal procedures to protect your license and maintain accurate inventory.
Ohio Waste Disposal Requirements
⚠️ 7-Day Advance Notice Required
You must notify the Board of Pharmacy at least 7 days before any waste disposal. This is a strict requirement with no exceptions for emergency disposal.
Types of Cannabis Waste
🌿 Plant Waste
- Root balls
- Stalks and stems
- Dead plants
- Male plants
- Pruned fan leaves
📦 Product Waste
- Failed lab samples
- Expired products
- Damaged goods
- Customer returns
- Recalled items
Compliant Disposal Process
Step 1: Notification
Submit disposal notice to Board of Pharmacy 7 days in advance
Step 2: Segregation
Separate waste in designated quarantine area with "WASTE" labels
Step 3: Weighing
Record exact weight in METRC waste tracking
Step 4: Rendering Unusable
Grind and mix with 50% non-cannabis waste
Step 5: Documentation
Complete waste manifest with witness signatures
Step 6: Disposal
Transport to approved facility with manifest
Rendering Cannabis Unusable
| Waste Type | Approved Mixing Materials | Ratio |
|---|---|---|
| Compostable | Food waste, yard waste, sawdust | 50/50 minimum |
| Non-compostable | Cat litter, sand, paper waste | 50/50 minimum |
| Liquid waste | Absorbent materials, solidifiers | Until solid |
Documentation Requirements
📋 Waste Manifest Must Include:
- Date and time of disposal
- Description of waste (type, weight)
- Disposal method used
- Destination of waste
- Employee conducting disposal
- Key employee witness signature
- Video surveillance confirmation
✅ Best Practice: Waste Staging Area
Designate a specific area for waste accumulation with:
- Clear "WASTE - DO NOT USE" signage
- Limited access controls
- Full camera coverage
- Separate bins for different waste types
- Posted disposal schedule
Common Waste Violations
- Improper Notice: Disposing without 7-day advance notification
- Inadequate Mixing: Not achieving 50% non-cannabis mixture
- Missing Documentation: No witness signature or video record
- Unauthorized Disposal: Using non-approved disposal methods
- METRC Errors: Not recording waste in tracking system
Module 5: Cycle Counting Methods
Implement systematic counting procedures to maintain inventory accuracy without disrupting operations.
What is Cycle Counting?
Cycle counting is a systematic approach to verifying inventory accuracy by counting a small subset of inventory on a regular, recurring basis rather than conducting a full physical inventory count.
Benefits of Cycle Counting
- Continuous Accuracy: Catch discrepancies early
- Less Disruption: No need to shut down operations
- Root Cause Analysis: Identify patterns in errors
- Staff Development: Regular practice improves accuracy
- Audit Readiness: Always prepared for inspections
ABC Analysis for Cannabis Inventory
A Items (Count Weekly)
- High-value concentrates
- Premium flower
- Fast-moving products
- Products prone to theft
20% of items = 80% of value
B Items (Count Bi-weekly)
- Mid-range flower
- Edibles
- Pre-rolls
- Moderate movers
30% of items = 15% of value
C Items (Count Monthly)
- Accessories
- Slow-moving items
- Low-value products
- Overstock
50% of items = 5% of value
Implementing a Cycle Count Program
| Day | Count Focus | Time Required | Staff Needed |
|---|---|---|---|
| Monday | Concentrates & vapes | 30 minutes | 2 people |
| Tuesday | Premium flower (top shelf) | 45 minutes | 2 people |
| Wednesday | Pre-rolls & joints | 30 minutes | 2 people |
| Thursday | Edibles & tinctures | 45 minutes | 2 people |
| Friday | Problem areas/variances | 60 minutes | 3 people |
Cycle Counting Best Practices
🎯 Accuracy Tips:
- Count Blind: Don't show expected quantities to counters
- Double Count: Have two people count independently
- Use Technology: Barcode scanners reduce errors
- Count by Location: Complete entire shelves/sections
- Document Immediately: Record counts in real-time
Variance Investigation Process
1. Identify Variance
Physical count ≠ METRC
2. Recount
Different person verifies
3. Check Records
Review recent transactions
4. Investigate
Camera review, interviews
5. Correct
Adjust with documentation
📊 Acceptable Variance Thresholds
- Flower: ±0.5% by weight
- Pre-packaged: 0% (exact count match)
- Bulk concentrates: ±0.1g
- Overall inventory: <0.5% monthly
Module 6: Discrepancy Resolution
Learn systematic approaches to identify, investigate, and resolve inventory discrepancies while maintaining compliance.
Common Causes of Discrepancies
📝 Administrative Errors
- Data entry mistakes
- Wrong package selected
- Decimal point errors
- Duplicate entries
⚖️ Physical Errors
- Scale calibration issues
- Moisture loss/gain
- Trimming variations
- Package settling
👥 Human Factors
- Training gaps
- Miscommunication
- Process shortcuts
- Theft/diversion
Investigation Protocol
🔍 Step-by-Step Investigation Process
- Document the Discrepancy
- Product details (name, tag, location)
- Expected vs. actual quantity
- Date/time discovered
- Who discovered it
- Immediate Verification
- Recount by different person
- Check surrounding packages
- Verify scale accuracy
- Look for obvious errors
- Transaction Review
- Last 5 transactions for item
- Recent adjustments
- Transfer history
- Sales records
- Expand Investigation
- Camera footage review
- Staff interviews
- Pattern analysis
- Related product check
Resolution Decision Tree
Is discrepancy <3%?
Clear cause identified?
Pattern detected?
Making Adjustments in METRC
⚠️ Adjustment Documentation Requirements
Every METRC adjustment must include:
- Detailed reason for adjustment
- Supporting documentation attached
- Manager approval (documented)
- Investigation summary if >3%
Prevention Strategies
| Strategy | Implementation | Expected Result |
|---|---|---|
| Daily reconciliation | Match POS to METRC every night | Catch errors same day |
| Barcode scanning | Scan all package movements | Reduce selection errors |
| Weight verification | Spot-check 10% of packages | Identify scale issues |
| Access controls | Limit who can make adjustments | Reduce unauthorized changes |
✅ Best Practice: Discrepancy Log
Maintain a master log of all discrepancies to identify patterns:
- Product types most affected
- Times/days when errors occur
- Employees involved in transactions
- Common root causes
- Resolution effectiveness
Module 7: Inventory Audit Preparation
Ensure your inventory management system is inspection-ready with comprehensive audit preparation strategies.
What Inspectors Check
🔍 Primary Inspection Points:
- Physical vs. METRC Match: Random product counts
- Tag Compliance: Every package properly tagged
- Storage Conditions: Proper segregation and labeling
- Documentation: 3-year record retention
- Waste Records: Proper disposal documentation
- Adjustment History: Justified and documented
Monthly Audit Checklist
📋 Complete Monthly Review:
- 100% tag verification (all packages have valid tags)
- Random count 25% of A-items
- Review all adjustments with >3% variance
- Verify waste disposal compliance
- Check employee METRC access logs
- Confirm backup documentation filed
- Test scale calibration records
- Review security footage availability
Red Flags to Address
🚩 Inventory Issues
- Repeated discrepancies same product
- Adjustments without documentation
- Missing METRC tags
- Expired products in active inventory
🚩 Documentation Gaps
- Incomplete waste manifests
- Missing witness signatures
- No manager approvals
- Outdated SOPs
Mock Audit Process
| Audit Area | Check Points | Time Needed |
|---|---|---|
| Physical Count | 10 random products full count | 45 minutes |
| METRC Review | Reports, adjustments, history | 30 minutes |
| Documentation | Manifests, logs, training records | 30 minutes |
| Storage Areas | Organization, labeling, security | 20 minutes |
| Staff Interview | Process knowledge, compliance | 15 minutes |
Creating an Audit Trail
📂 Essential Records to Maintain:
- Daily Logs: Beginning/ending inventory counts
- Transaction Records: All movements with timestamps
- Adjustment Reports: Every change documented
- Training Records: Staff competency verification
- Audit Reports: Internal audit findings/corrections
- Corrective Actions: How issues were resolved
🎓 Course Complete!
Congratulations on completing the Inventory Management Best Practices course! Remember:
- Accuracy is not optional - it's required by law
- Daily diligence prevents major discrepancies
- Documentation protects your license
- Regular audits ensure ongoing compliance
Continue refining your inventory processes and stay current with regulatory changes!