Loss Prevention SOP for Cannabis Dispensary and Retail Businesses

The legal cannabis industry is thriving. The global cannabis market size is growing at a CAGR of 24.3% and is expected to reach USD 82.3 billion by the end of 2027. 

As more and more businesses are venturing into the business and competition is growing tougher, it’s important for businesses to prevent loss to build a sustainable business in the cannabis industry. 

This article will discuss cannabis loss prevention using loss prevention SOP.

What is a loss prevention SOP? 

Business loss can happen for a number of reasons, like theft, fraudulent activity, or waste. But, a large extent of it can be prevented by taking proactive measures. Loss prevention is one of the serious undertakings by small business owners. As a part of this measure, businesses implement various daily habits that can help them prevent loss in the long run.

However, the list of these daily habits is quite long, and remembering them all every day by all the staff can be tricky. A loss prevention SOP comes in handy and has many benefits. An SOP or standard operating procedure is a set of written instructions that gives step-by-step guidance to perform any task. It helps to minimize the scope of human error and saves time and cost for the company while keeping everyone accountable. 

Recommended read: List of must-have cannabis dispensary SOPs

Why is loss prevention SOP so important to cannabis businesses? 

There are several benefits of loss prevention SOP for cannabis businesses. For example,

the management can identify where fraud and theft are occurring in the dispensary by accessing vast amounts of data. 

Here are some major benefits of having loss prevention SOP for your cannabis business:  

1. Stay compliant

Helps the business to stay compliant as cannabis is a highly regulated industry, and not adhering to guidelines can attract license cancellations and similar serious punishments.

2. Monitor loss prevention measures

It helps to implement and monitor various loss prevention measures like granulated system access, inventory auditing, physical security measures, limiting access to the back-end operations, etc. 

3. Maintain better communication and organization structure

It also helps in maintaining better business structure and organization, improving communication and workload efficiency along with quality control across all levels of the team. 

What to include in your loss prevention SOP? 

There are various measures that you can take for loss prevention. Hence, it’s good to have loss prevention SOP segregated as simple preventive measures, measures to track and trace, and theft and fraud scenarios and how to mitigate them. Let’s look at each.

1. Simple preventive measures

These are some of the daily habits that your staff needs to build to prevent loss in the long run. For example:

Keep everything organized

This is an immediate measure that your staff can take to prevent loss. Your SOP should include how all products will be organized in the dispensary. For example, keeping both the front and back of the dispensary organized helps you track stock and identify immediately if certain items are missing. Your SOP should define storage space for each item and designate a time slot every day to return stock to its designated place and keep a count. 

Access to the cash drawer

The SOP should mention who should have access to the cash drawer. Ensure that too many people don't have access to the cash drawer. If you find a pattern of cash misplacement over a period of time, it will be easy to address the issue immediately.

Shift timing

The SOP should have clear instructions on how budtenders should maintain shift timing. This ensures your books are reconciled every day to prevent fraud and theft. In case there’s a discrepancy, you can identify and address it quickly. 

Clutter-free counter

Always keep your check out counter clutter-free so no one can grab items and walk out without paying. The SOP document should have clear points on how to maintain a clutter-free counter. 

CCTV camera

Install a CCTV camera inside and outside of your cannabis dispensary. Mention in the SOP how you are going to keep a tab on the footage. For example, you may want to check the footage every day at a random time to spot if any malicious practice is happening in the store. 

2. Preventive measures to track and trace

Some of the preventive measures to track and trace every day that are worth incorporating in the SOP documents are: 

Cycle count

Mention clearly in the SOP document how you want to conduct cycle count. For example, keeping a daily count will help you understand the velocity of product sales. If there’s a sudden change in pattern, you will be able to track it quickly. Make it a point to conduct a cycle count every time you do a restock. Regular cycle account also narrows the window to investigate should you identify a problem. Conduct spot counts if you’re unable to do a daily cycle count. This will also help you to detect fraud, if any. 

Automate discounts

Automating discounts helps you to prevent custom discounts initiated by employees. Automation helps you to have better control over managing discounts. Mention in the SOP document how you want to keep track of your discount report. For example, you may want to review it weekly or monthly. Don't forget to mention about spot-check for fraud in your SOP document. 

Spot check for discounts

Fraud can happen when customer groups combine with auto discounts through overuse or stack. If you’re using this method, audit for custom discounts regularly. Friends and family are the hardest and most abused cases of auto discount, so use caution with this type of auto discount while creating your SOP. Also, keep provision to conduct spot-check regularly for auto discounts. Maintaining an up-to-date list of auto discounts with each customer group will help you spot if there is any overuse of any specific discounts. 

SOP for returned items

Create an SOP for returned items. For example, where it should be kept, away from unsecured bins or counters as they can be easily picked up by someone else without paying.

SOP for restocking

Have a clear SOP set for restocking products. For example, your SOP may mention about restocking schedule. Avoid stocking one at a time because it may cause tampering and theft. So consider restocking in batches. Have a clear protocol for tamper proofing. It may be time-consuming, but it secures the stock and makes it easy to trace in case of discrepancies. 

Tamper proofing also makes you stay compliant. The SOP should also mention how you will be tamper proofing the stock. For example, a vacuum or tape seal can solve the purpose. Also indicate in the SOP how you want to arrange the stock in the sore. 

One of the best practices for restocking is keeping two batches on the shelf. So, if you sell seven items from a batch throughout the day, you are not restocking the three items. You can sell the remaining three and then restock with a new, whole, or complete batch. 

3. SOP for theft and fraud 

One of the most common reasons for loss is theft and fraud. So, your SOP should cover some preemptive measures to mitigate the risk.

Bag stuffing

Bag stuffing is a common theft due to a collaboration between the staff and customers. Some preventive measures, such as CCTV cameras, cycle counts, and spot counts, can help detect such acts of theft. Indicate in the SOP how these measures will be implemented and monitored. 

Gaming rewards points

Staff may add reward points to random profiles and then take out products for themselves. This is another common form of fraud that often occurs in cannabis dispensaries. You may prevent it by having a loss prevention SOP that mandates manager approvals for employees when taking products themselves. 

Sleight of hand

When customers return products, they are left unattended on the counter and may get stolen by the next customer in line. Include in the SOP how a returned item should be handled. For example, the returned product must be kept in a secured bin that’s out of reach of customers or staff. Having a spot-check protocol is also helpful to avoid theft.

Conclusion 

SOPs are important to run a cannabis dispensary business successfully. It helps to save time and money and ensures you adhere to all the compliance guidelines. 

Treez is a leading cannabis point of sale (POS) software. It offers various solutions for retail analytics, cashless payments, and integrated partner solutions. Treez has built various SOPs on important parameters to help business owners run their cannabis dispensary business smoothly. Check them out here.