Inventory Turnover: What Your Numbers Are Telling You

What Turnover Means in Plain English

Inventory turnover is how many times your entire inventory sells through in a given period. If you carry $50,000 in inventory and sell $250,000 worth of product in a year, your turnover is 5x — you are cycling through your entire inventory five times a year.

High turnover means you are selling quickly, with less cash tied up in sitting product. If it is too high, you risk stockouts. Low turnover means product is sitting, cash is tied up, and quality is degrading. For cannabis retail, rough annual benchmarks: flower (12-20x), pre-rolls (10-15x), edibles (8-12x), concentrates (6-10x), accessories (4-8x).

How to Calculate It

Monthly turnover: Cost of Goods Sold ÷ Average Inventory Value for the period. For a simpler version that works with most POS systems: units sold ÷ average units on hand.

Run this by category, not just in total. Total inventory turnover masks category-level problems. Your overall number might look healthy while your concentrate category is sitting stagnant and degrading on the shelf.

The Real Cost of Slow Movers

Slow-moving inventory has three costs that most operators only see one of. The capital cost (that money could be in faster-moving products) is obvious. The quality cost (flower loses terpenes, edibles approach expiration) is often not calculated. The opportunity cost (shelf space taken by a slow mover is space a better seller cannot occupy) is almost never measured.

Run a slow mover report monthly. Any SKU that has not moved in 30 days is a slow mover. Any SKU with more than 60 days of supply on hand — based on its current sales velocity — needs a plan.

What to Do With Slow Movers

There is a playbook and it works in order. Try each step before escalating.

• Price adjustment: a 10-15% discount often moves slow product before it becomes a loss
• Bundle it: attach the slow mover to a fast mover — "buy two pre-rolls, get a 10mg edible for $5" moves edibles without hurting pre-roll margin
• Feature it: put it in the staff recommendation slot on your POS; "Staff Pick" badges have a measurable effect on sales
• Write it down: if a product has been sitting 60+ days and is not moving with promotions, adjust your inventory and do not reorder it

Using Turnover to Drive Better Buy Decisions

The goal of turnover analysis is better purchase orders. Before you reorder any SKU, check: current days-of-supply on hand, whether the velocity trend is up or down over the last 90 days, and whether there are substitutes already on the shelf that are outperforming it.

A well-run dispensary buys based on velocity data, not gut feeling or vendor relationships. Your best vendors will respect you more — and give you better terms — when you come to the table with data instead of guesses.