In cannabis retail, proper inventory management is not just about efficiency - it’s about compliance, profitability, and customer satisfaction. Choosing the right method to track and sell your stock can impact your bottom line significantly. Two common approaches are FIFO (First In, First Out) and LIFO (Last In, First Out).
In this article, we’ll explain these methods, highlight the pros and cons, and show why cannabis FIFO inventory is often the best fit for dispensaries.
What Is FIFO?
FIFO (First In, First Out) means the products that arrive first are sold first. In cannabis retail, this ensures older batches move off the shelves before newer ones.
Benefits of Cannabis FIFO Inventory:
Compliance-Friendly: Many regulators require FIFO for seed-to-sale tracking.
Reduces Waste: Older products get sold before expiry.
Better Quality: Customers receive fresher products.
Simplified Audits: Easier to reconcile with compliance systems like METRC or BioTrack.
Example: If you receive 10 jars of flower on Monday and 10 more on Friday, FIFO ensures Monday’s jars are sold first.
What Is LIFO?
LIFO (Last In, First Out) means the most recently received products are sold first. While this method is more common in industries with non-perishable goods, it is rarely used in cannabis.
Why LIFO Is Risky in Cannabis:
Higher Risk of Expiration: Older cannabis batches may sit too long.
Compliance Issues: Harder to align with seed-to-sale regulations.
Poor Customer Experience: Products may lose potency or freshness.
Example: Using the same scenario above, LIFO would sell Friday’s jars first, leaving Monday’s jars sitting longer.
Cannabis FIFO Inventory in Action
Most cannabis dispensaries use FIFO because:
Cannabis products degrade over time.
Regulatory agencies want clear batch tracking.
Customers demand freshness and consistency.
FIFO works especially well with:
Flower (potency declines over time)
Edibles (clear expiration dates)
Concentrates (can degrade if not rotated)
Best Practices for FIFO in Cannabis Retail
Label Inventory Clearly
Use batch numbers and dates on all products.Train Staff on Rotation
Teach budtenders and stockers to always move older stock to the front.Automate with POS & Seed-to-Sale Systems
Use software to track inventory by batch, ensuring FIFO compliance.Audit Regularly
Compare physical inventory with digital records weekly.Integrate with Loyalty Programs
Use loyalty insights to create promotions for products nearing expiration.
Final Thoughts
While LIFO has its place in some industries, cannabis retailers almost always benefit from cannabis FIFO inventory. It keeps products fresh, reduces waste, and makes compliance reporting far easier.
At Sticky Cards, we connect loyalty data with your inventory system so you can move products strategically, reward loyal customers, and maintain compliance, all in one place.
