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What Is Days of Inventory for a Cannabis Dispensary? (NY Retail Inventory Explained)
Days of inventory measures how long a dispensary’s cannabis inventory will last based on sales. Learn the formula, examples, and how NY retailers manage inventory and cash flow.
What This Page Covers
• What days of inventory means for a dispensary
• The exact formula used to calculate it
• Real examples from cannabis retail
• What a healthy inventory range looks like
• How inventory levels affect cash flow
• How METRC and POS systems relate to inventory tracking
What Is Days of Inventory in a Cannabis Dispensary?
Days of Inventory (DOI) measures how long your current cannabis inventory will last based on your current sales pace.
It answers a simple operational question:
“If we stopped ordering today, how many days could we keep selling before we run out of product?”
Dispensaries use this metric to control purchasing, avoid stockouts, and prevent too much cash from getting trapped in inventory.
Cannabis retailers in New York rely heavily on this metric because:
• Inventory purchases are expensive
• Vendors usually require payment quickly
• Cannabis taxes reduce available cash
• Some products lose demand or freshness over time
Managing inventory days helps operators balance cash flow and product availability.
Days of Inventory Formula
There are two common ways dispensaries calculate days of inventory. The most accurate method uses Cost of Goods Sold (COGS).
Primary Formula
Days of Inventory = Average Inventory ÷ Daily Cost of Goods Sold
Where:
Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2
Daily Cost of Goods Sold = Monthly COGS ÷ 30
This formula measures how many days the current inventory will last based on how quickly products are selling.
Example Calculation
Example Scenario
Beginning inventory value: $180,000
Ending inventory value: $220,000
Average inventory calculation:
(180,000 + 220,000) ÷ 2 = $200,000
Monthly cost of goods sold:
$100,000
Daily COGS:
$100,000 ÷ 30 = $3,333
Days of inventory calculation:
$200,000 ÷ $3,333 = 60 days
What This Means
At the current sales pace, this dispensary has about 60 days of product available.
If the store stopped ordering today, inventory would last about two months.
Simplified Inventory Days Formula
Some operators use a quicker version of the calculation.
Simplified Formula
Days of Inventory = Current Inventory Value ÷ Average Daily COGS
Example
Inventory value: $150,000
Average daily cost of goods sold: $4,000
$150,000 ÷ $4,000 = 37.5
Inventory will last approximately 38 days.
This simplified method is easier for weekly inventory checks.
What Is a Healthy Inventory Range for NY Dispensaries?
Inventory levels vary by store, but most dispensaries operate best within a predictable range.
Less than 20 days of inventory usually means a store is at risk of running out of product.
Between 30 and 45 days is generally considered a healthy inventory level.
Between 45 and 60 days indicates purchasing may be too aggressive and cash may be tied up in inventory.
More than 60 days often means the store has purchased too much product relative to its sales pace.
Most stable cannabis retailers operate in the 30 to 45 day inventory range.
Inventory Levels by Product Category
Different cannabis products move at different speeds.
Flower tends to move quickly and often sits between 21 and 35 days of inventory.
Pre-rolls often range from about 25 to 40 days.
Vapes typically range between 30 and 45 days.
Edibles often range from 30 to 50 days.
Concentrates may sit between 40 and 60 days depending on demand.
Beverages can range from 35 to 60 days due to slower sales in many stores.
Operators often monitor inventory levels separately by product category.
Why Too Much Inventory Is Dangerous
Inventory is usually the largest use of capital inside a cannabis dispensary.
When inventory levels climb too high:
• cash becomes locked inside product sitting on shelves
• vendors still expect payment on schedule
• payroll and operating costs continue
• products may sit long enough to lose demand
Example
Inventory value: $400,000
Monthly cost of goods sold: $100,000
Inventory days calculation:
$400,000 ÷ ($100,000 ÷ 30) = 120 days
This store is holding about four months of product inventory.
Many cannabis retailers experience cash shortages because inventory levels grow faster than sales.
Why Too Little Inventory Is Also a Problem
Low inventory can damage revenue.
Example
Inventory value: $40,000
Daily COGS: $4,000
$40,000 ÷ $4,000 = 10 days
This means the store will run out of product in about 10 days.
If wholesale suppliers require two weeks to deliver product, shelves will go empty.
Empty shelves often lead to:
• lost sales
• frustrated customers
• reduced customer loyalty
Healthy inventory management prevents both overstocking and stockouts.
How Inventory Connects to METRC
New York requires cannabis inventory to be tracked in METRC, the state seed-to-sale tracking system.
METRC tracks:
• product packages
• transfers between licensees
• retail sales
• inventory adjustments
• waste or destruction
However, METRC does not calculate business performance metrics such as days of inventory.
Operators usually calculate inventory metrics using:
• point-of-sale reporting
• accounting software
• inventory management tools
METRC ensures regulatory inventory tracking, while business systems analyze operational performance.
Example Dispensary Inventory Snapshot
Example Store
Monthly retail sales: $300,000
Cost of goods sold: $150,000
Average inventory value: $225,000
Inventory days calculation:
$225,000 ÷ ($150,000 ÷ 30) = 45 days
This store currently holds about 45 days of inventory.
This level is slightly above ideal but still manageable for many dispensaries.
How Dispensaries Use Inventory Days to Make Ordering Decisions
Many retailers create internal purchasing thresholds based on inventory levels.
When inventory drops below about 25 days, stores usually reorder product.
Between 30 and 40 days is considered normal operating range.
Between 45 and 60 days many operators slow purchasing.
When inventory exceeds 60 days, purchasing often stops until inventory levels decline.
Without inventory metrics, stores often order product based on vendor promotions rather than actual demand.
This is a common cause of inventory buildup.
Common Inventory Mistakes in Cannabis Retail
Ordering Too Many SKUs
Large product menus can slow product movement and increase inventory costs.
Buying Because Vendors Offer Discounts
Bulk deals can encourage stores to buy more inventory than they can sell quickly.
Ignoring Category Sales Trends
Some categories move much faster than others and inventory should reflect that demand.
Not Monitoring Inventory Weekly
Inventory metrics should be reviewed regularly to avoid unexpected shortages or excess inventory.
Inventory Metrics That Work With Days of Inventory
Days of inventory is most useful when combined with other retail metrics.
Operators often track:
• inventory turnover
• sell-through rate
• gross margin by product category
• dead inventory (products with no sales for 30 days)
Together these metrics help operators identify purchasing problems early.
Weekly Inventory Review for Dispensaries
Many operators perform a simple weekly review.
The review usually includes:
• total inventory value
• cost of goods sold for the past 30 days
• current days of inventory
• category level inventory
• products that have not sold recently
If inventory levels rise above about 45 to 60 days, purchasing decisions usually change.
Frequently Asked Questions (FAQ)
How many days of inventory should a dispensary carry?
Most cannabis retailers operate best with about 30 to 45 days of inventory.
Less than 20 days risks stockouts.
More than 60 days often traps cash in unsold inventory.
Why does inventory cause cash flow problems for dispensaries?
Cannabis vendors usually require payment within 15 to 30 days, but inventory may take 60 to 120 days to sell.
When inventory levels are too high, cash leaves the business long before revenue returns.
Does METRC calculate days of inventory?
No.
METRC tracks inventory movement but does not calculate financial inventory metrics such as days of inventory or inventory turnover.
These metrics must be calculated using POS or accounting systems.
