What are the New York Cannabis Dispensary Inventory Management Rules (and METRC)?

What Inventory Management Covers

You must track:

• Every product received
• Every internal movement
• Every sale
• Every return
• Every waste or destruction event

This applies to all cannabis, not just what is on the sales floor.

Intake: When Product Arrives

Every shipment must be:

• Accepted only at the licensed premises
• Checked against the shipping manifest
• Verified for product type, quantity, batch or lot number, and labeling
• Logged into the POS and inventory system before storage
• Placed into secure storage immediately

If product does not match the manifest, document the discrepancy immediately. Do not accept and fix it later.

Storage Requirements

Cannabis must be stored in:

• A locked room, vault, or cage
• A space listed in your approved security plan
• An area not accessible to customers
• A location that matches your approved floor plan

Inventory stored outside approved areas is a compliance issue.

Internal Product Movement

All internal movement must be logged, including:

• Storage to sales floor
• Sales floor back to storage
• Sales floor to quarantine
• Storage to destruction
• Storage to delivery intake

Every movement must update inventory counts the same day.

Unlogged movement is treated as missing product.

Daily Inventory Reconciliation

Each day, operators must:

• Reconcile POS sales with inventory reductions
• Log returns, quarantines, and waste
• Check for miscounts or missing items
• Confirm that display inventory matches secured storage

Daily reconciliation reduces enforcement risk during inspections.

Weekly Cycle Counts

You must conduct:

• Weekly cycle counts
• Full physical counts on a regular schedule

Each count should document:

• Date
• Staff involved
• Areas or SKUs counted
• Variances found
• Corrective actions taken

Unresolved variances are red flags during audits.

Quarantine and Returns

Returned or questionable products must be:

• Logged immediately in the inventory system
• Removed from sellable inventory
• Clearly labeled
• Stored in a designated quarantine area

Products cannot return to the sales floor until resolved through approved procedures.

Waste and Destruction

Products marked as waste must be:

• Logged with reason, date, and batch or lot number
• Placed in a locked waste area
• Destroyed according to your written SOP
• Recorded in the inventory system the same day

Failure to log destruction events is treated as diversion risk.

METRC Requirements

All New York dispensaries must use METRC for seed-to-sale tracking.

Physical inventory, POS records, and METRC data must match exactly.

If the systems do not match, OCM assumes a compliance issue.

What Must Be Entered Into METRC

You must record:

• Intake and acceptance
• Sales and inventory reductions
• Returns and quarantine
• Waste and destruction
• Inventory adjustments

Delayed entries are violations, even if physical inventory is correct.

POS and METRC Integration

Your POS must:

• Integrate directly with METRC
• Deduct inventory automatically at sale
• Match SKUs and batch numbers
• Push adjustments the same day
• Prevent sales if syncing fails

Manual workarounds create compliance exposure.

Transfers and Adjustments

When accepting a transfer:

• Verify physical product before accepting in METRC
• Confirm quantities and batch numbers
• Reject or correct discrepancies immediately

Never accept product into the system and fix discrepancies later.

What Inspectors Look For

During inspections, OCM may verify:

• Physical inventory matches METRC
• Product locations match movement logs
• Quarantine and waste areas are properly labeled
• POS data aligns with inventory records
• Full batch and lot traceability

Inventory is often reviewed before sales procedures.

Common Inventory Violations

Frequent issues include:

• Accepting product without full verification
• Missing or late METRC entries
• Unlogged internal movement
• Improper quarantine handling
• Waste not logged or destroyed correctly
• Unresolved inventory variances

Small daily gaps become large audit problems.

Why This Matters

Inventory violations are treated as operational failures.

Consequences may include:

• Stop-sale orders
• Corrective action plans
• Increased inspection frequency
• Civil penalties
• License suspension

Inventory is proof that your business is under control.
If your counts do not match, OCM assumes your controls do not exist.

Go Here Next

• Packaging & Labeling Requirements
• Waste, Returns, Recall & Destruction Rules
• Sales Operations
• Delivery Rules

Source Material

• OCM Guidance
• METRC Implementation Guide (October 2025)