Inventory Reconciliation SOP

End-of-Day Reconciliation (Retail/Dispensary)

Perform at close of business each day (typically 8pm-10pm):

• Step 1: Close all POS terminals and generate sales reports
• Step 2: Count cash in registers and safes (reconcile with POS totals)
• Step 3: Physical count of high-value products (concentrates, edibles)
• Step 4: Compare physical counts to tracking system inventory
• Step 5: Investigate any variances over acceptable limits
• Step 6: Document all counts and variances in reconciliation log
• Step 7: Update tracking system with any adjustments (if approved)

Daily Plant Count (Cultivation)

Perform during morning rounds (typically 8am-10am):

• Immature Plants: Count all plants in propagation/clone rooms
• Vegetative Plants: Count all plants in veg rooms (verify RFID tags)
• Flowering Plants: Count all plants in flower rooms (verify RFID tags)
• Destroyed Plants: Document any plants destroyed due to disease/males
• Tracking System: Verify counts match METRC/BioTrack exactly
• Zero Tolerance: Any plant count discrepancy must be resolved immediately

Two-Person Count Requirement

• All physical counts must be performed by two employees (dual verification)
• One person counts, second person verifies and records
• Both employees sign reconciliation log
• Employees should rotate counting duties (prevent collusion)
• Manager or supervisor must review and approve all reconciliations

Count Preparation

• Schedule counts during low-activity periods (early morning or after close)
• Ensure all inventory is organized and properly labeled
• Print current inventory report from tracking system
• Prepare count sheets with product names, SKUs, and expected quantities
• Gather counting equipment (scales, barcode scanners, clipboards)
• Assign specific areas/products to each counting team

Counting Methods by Product Type

Count Documentation

• Record all counts on standardized count sheets
• Include: date, time, location, product name, SKU, quantity, unit (count/weight)
• Note any discrepancies, damaged products, or quality issues
• Both counters sign and date each count sheet
• Photograph high-value inventory counts (recommended)
• Enter counts into inventory management system immediately

Acceptable Variance Thresholds

• Plant Count: 0% variance (must match exactly)
• Flower (by weight): ±3% variance acceptable (moisture loss, handling)
• Concentrates (by weight): ±2% variance acceptable
• Edibles (by unit): 0% variance (must match exactly)
• Cash: $0.00 variance (must balance exactly)
• Variances within acceptable limits require documentation but no investigation
• Variances exceeding limits require immediate investigation

Variance Investigation Steps

When variance exceeds acceptable limits:

• Step 1: Recount immediately (verify count accuracy)
• Step 2: Review tracking system entries for data entry errors
• Step 3: Check for unreported sales, transfers, or waste
• Step 4: Review security camera footage (if theft suspected)
• Step 5: Interview staff involved in handling product
• Step 6: Document investigation findings in variance report
• Step 7: Implement corrective actions to prevent recurrence

Common Variance Causes

Variance Resolution

• If Error Found: Correct tracking system entry, document correction
• If Legitimate Loss: Create waste/loss entry in tracking system
• If Theft Suspected: File police report, notify state authority, conduct internal investigation
• If Unexplained: Document as unexplained loss, adjust inventory, report to state if required
• All variance resolutions must be approved by manager or owner
• Maintain variance investigation reports for 7 years

Daily System Verification

• Log into METRC/BioTrack and generate current inventory report
• Compare system inventory to physical count results
• Verify all sales, transfers, and waste entries from previous day are recorded
• Check for any pending transfers or unresolved discrepancies
• Confirm all package tags are active and properly assigned
• Review system error messages and resolve immediately

Common System Discrepancies

• Pending Transfers: Transfers sent but not yet accepted by recipient
• Rejected Transfers: Transfers rejected due to discrepancies (investigate immediately)
• Inactive Tags: Package tags deactivated but product still in inventory
• Duplicate Tags: Same tag assigned to multiple packages (system error)
• Missing Tags: Physical product has no tag in system
• Sync Errors: POS system not syncing with METRC/BioTrack (check API connection)

System Adjustment Procedures

When adjustments are necessary:

• Document reason for adjustment in variance report
• Obtain manager approval before making adjustment
• Use appropriate adjustment type in tracking system (waste, loss, correction)
• Include detailed notes explaining adjustment
• Retain supporting documentation (count sheets, photos, investigation reports)
• Some states require notification for adjustments over certain thresholds

Planning & Preparation

• Schedule inventory during low-activity period (Sunday evening, early Monday morning)
• Notify all staff of inventory date and time
• Suspend all inventory movements 2 hours before count (no sales, transfers, or processing)
• Organize all inventory by location and product type
• Print comprehensive inventory report from tracking system
• Assign counting teams and specific areas
• Prepare count sheets, scales, scanners, and other equipment

Count Execution

• Count all products in all locations (retail, storage, processing, waste)
• Use two-person teams for all counts
• Count systematically (left to right, top to bottom) to avoid missing items
• Mark counted items with stickers or tags to prevent double-counting
• Document any damaged, expired, or quality-issue products
• Take photos of high-value inventory counts
• Typical duration: 4-8 hours depending on facility size

Post-Count Reconciliation

• Enter all count data into inventory management system
• Generate variance report comparing physical count to system inventory
• Investigate all variances exceeding acceptable thresholds
• Recount any items with significant discrepancies
• Document all variance investigations and resolutions
• Make approved adjustments in tracking system
• Generate final reconciliation report for management review
• Submit inventory report to state authority (if required)

Required Documentation

• Daily Reconciliation Logs: Date, products counted, quantities, variances, signatures
• Count Sheets: Physical count documentation with counter signatures
• Variance Reports: Investigation findings, root cause, corrective actions
• System Adjustment Records: All tracking system adjustments with approvals
• Monthly Inventory Reports: Full facility counts and reconciliation summaries
• Photos: High-value inventory counts and variance evidence

Retention Requirements

• Maintain all reconciliation records for 7 years (standard requirement)
• Store records in secure location (locked file cabinet or encrypted digital storage)
• Organize by date for easy retrieval during audits
• Ensure records are accessible to regulators upon request
• Backup digital records regularly (cloud storage recommended)

Regulatory Reporting

• Significant Variances: Report losses over 3% to state authority within 24 hours (typical requirement)
• Theft: Immediate notification to state authority and law enforcement
• Monthly Reports: Some states require monthly inventory reconciliation reports
• Audit Requests: Provide all reconciliation records upon regulator request