Dispensary Loss Prevention: How SOPs Stop Shrinkage

For cannabis retail operators, the difference between a profitable year and
a devastating setback can come down to one factor: shrinkage. Whether it’s
cash mysteriously missing from the drawer, inventory discrepancies that
don’t reconcile, or large-scale thefts that make headlines, loss prevention
is a constant challenge for dispensary owners.

What’s worse, the risks are only rising. In 2025, dispensary theft cases
included a $75,000 cash heist and more than $100,000 worth of product stolen
in a single incident. For businesses already operating in a razor-thin
margin environment with limited access to banking services, losses like
these can be catastrophic.

There is good news, though: Shrinkage is not inevitable. With disciplined
operations and well-designed dispensary standard operating procedures, you
can dramatically reduce your risk, strengthen compliance, and build a
resilient cannabis retail operation.
The alarming scale of retail shrinkage

Retail shrinkage is not a new problem, but the scale has grown sharply in
recent years. Across United States retail as a whole, the National Retail
Federation reported that shoplifting incidents were 93 percent higher in
2023 than in 2019, with total losses climbing almost 90 percent in the same
period. In the same survey, retailers cited an average of 177 shoplifting
incidents per day in 2023, with some retail sectors reporting higher daily
totals, especially during busy periods.

The stakes are even higher for cannabis retailers. Dispensaries are often
cash-heavy operations, and the products themselves are high in both value
and demand, making them prime targets for theft. Within the industry, it’s
estimated that as much as 90 percent of product loss stems from internal
theft rather than external actors. That means the greatest risk isn’t
always someone breaking through your door at night; it may just be a
trusted employee failing to follow procedures.

Unlike traditional retailers that can absorb some shrinkage into their
margins, dispensaries face not just financial losses but also potential
regulatory consequences and even license risk if discrepancies aren’t
explained and corrected.
SOPs as the defensive backbone

Here’s the reality: You can’t rely on security cameras and strong locks
alone. The foundation of effective dispensary loss prevention is a
well-designed set of standard operating procedures (SOPs) that govern every
aspect of your operations.

Dispensary SOPs are detailed, step-by-step instructions that guide your
team through critical tasks — from opening and closing the store to
reconciling cash drawers, conducting cycle counts, and managing deliveries.
They turn best practices into routine habits, ensuring your staff executes
tasks consistently and that no corner is cut in the name of convenience.

Strong SOPs improve compliance, reduce training time, and increase
efficiency — but when it comes to loss prevention, their biggest advantage
is accountability. With SOPs in place, you can pinpoint exactly who was
responsible for each action, when it was performed, and whether it followed
the prescribed process. That level of documentation creates both deterrence
and protection.
Cash-management SOPs: securing the most tempting target

Cash is both the most tempting and the most vulnerable asset in a
dispensary. Because many cannabis businesses still operate heavily in cash
due to banking restrictions, large amounts of currency can accumulate
quickly. Without strict procedures, this creates enormous risk.

Cash-management SOPs should start by limiting the amount of money kept in
each drawer. By enforcing maximum thresholds, you reduce potential losses
if a till is compromised. When drawers exceed their limit, excess cash
should be transferred into a secure safe through safe drops — recorded,
time-stamped deposits that can only be completed following protocol.

Access to safes and vaults should be governed by dual-control procedures,
meaning no single employee can open them alone. This reduces opportunities
for internal theft and ensures oversight during critical cash-handling
activities.

End-of-day reconciliation is equally vital. Every register should be
counted, variances logged, and discrepancies investigated immediately. Over
time, these reconciliations create a record that can highlight patterns of
error or theft, enabling managers to address issues before they escalate.

Some dispensaries have reduced losses significantly by integrating digital
payments into their point-of-sale (POS) system. One retailer reported
saving more than $1,000 per month by simply eliminating manual
reconciliation errors with an integrated payments solution. That kind of
operational upgrade shows how technology and SOPs can work together to
prevent shrinkage.
Inventory and track-and-trace SOPs: closing the gaps

If cash is the most obvious theft target, cannabis products themselves are
the most regulated. Every gram must be accounted for, and regulators demand
precise reporting through systems like Metrc or BioTrack. Any discrepancies
can lead to fines, audits, or even license suspension.

To prevent losses, inventory SOPs should require frequent cycle counts, not
just end-of-month reconciliations. By performing daily or weekly counts,
missing products can be identified quickly, before losses accumulate.

Every variance, no matter how small, should trigger variance reporting that
documents the discrepancy, investigates the cause, and records corrective
actions. Even if the issue turns out to be a data-entry mistake,
documenting the resolution demonstrates diligence to regulators.

SOPs also should govern how products are received, labeled, stored, and
transferred. Every item must be tagged correctly and recorded in both POS
and track-and-trace systems. Staff should never “skip the system” to speed
up sales or transfers.

Aligning your inventory SOPs with your tech stack creates a closed loop
where every product’s movement is visible and auditable. That’s not just a
compliance necessity. It’s a theft deterrent.
Security SOPs: protecting the premises

Even the most sophisticated inventory system can’t prevent physical
break-ins or careless lock-ups. That’s why dispensaries need rigorous SOPs
for security protocols, especially during opening and closing.

Opening routines should include a walkthrough inspection of the premises to
identify signs of forced entry or tampering. Staff also should test alarms
and verify cameras are functioning before customers arrive.

Closing SOPs should be just as thorough. Every door, display case, and safe
should be locked, with a checklist completed and signed off by staff.
Security sweeps should confirm no one remains inside and alarms are set.
These procedures, when documented and enforced, create multiple layers of
assurance.

In addition, SOPs should establish clear rules for access control. Not
every employee needs access to safes, vaults, or restricted areas. Limiting
access to key personnel reduces opportunities for internal theft and
ensures sensitive areas are always monitored.
Role SOPs: building a culture of compliance

Loss prevention isn’t just about locks and cameras; it’s also about people.
Employees who understand their responsibilities and the consequences of
deviation are far less likely to commit errors or theft.

Staff SOPs should clearly define who is responsible for each task. From
handling cash to approving refunds, there should be no room for ambiguity.
Every transaction, discount, and void should be traceable to a specific
employee.

It’s also crucial to prohibit risky behaviors. SOPs should bar employees
from ringing up their own purchases, applying unauthorized discounts, or
distributing free products. These “small exceptions” often open the door to
larger losses.

Regular audits of employee activity — reviewing voids, refunds, and
inventory adjustments — help reinforce accountability. When staff members
know their actions are being monitored, they are more likely to follow
procedures diligently.

Finally, building a culture of compliance means celebrating adherence, not
just punishing violations. Recognize teams that maintain clean audit
records and successfully pass surprise inspections. This creates positive
reinforcement that aligns with your broader business values and fosters
team cohesion and trust.
Technology as a loss-prevention ally

Even the best SOPs can be undermined by human error or deliberate
misconduct. That’s where technology really shines. Modern dispensary
software and hardware can automate many loss-prevention functions and
provide real-time visibility into operations.

An integrated POS and payments system ensures every transaction is recorded
with a complete audit trail, reducing the risk of mismatched sales and
deposits. Real-time variance alerts notify managers immediately when actual
inventory diverges from expected counts, allowing for quick investigation.

Role-based access control within software platforms can help limit which
employees are able to perform sensitive actions, such as processing refunds
or changing product data. Meanwhile, surveillance systems can be linked to
POS data, so suspicious transactions can be cross-referenced with video
footage.

Automated audit logs can bolster accountability further by recording every
change, override, or adjustment. This data is invaluable during
investigations and demonstrates diligence during regulatory audits.

When technology and SOPs are aligned, loss prevention becomes proactive
rather than reactive. Instead of discovering theft weeks after it occurs,
anomalies may be detected in real time, allowing response before losses
begin to compound.
Best practices for cannabis retailers

To create a robust loss-prevention strategy, dispensary operators should
combine SOPs, technology, and culture. Some proven best practices include:

- *Treating SOPs as living documents.* Regularly review them, especially
as theft tactics evolve or regulations change. Outdated procedures are
nearly as risky as no procedures at all.
- *Conducting surprise audits.* Unannounced cash counts and inventory
checks keep staff vigilant and highlight issues early.
- *Training continuously.* Don’t relegate SOP training to the first week
of employment. Hold regular refresher sessions and role-play scenarios to
reinforce best practices.
- *Fostering accountability and recognition.* Track loss-prevention
metrics and recognize staff for clean audit results, encouraging a culture
where compliance is valued.
- *Layering security measures.* Use a combination of cameras, alarms,
secure cabinetry, and access controls. No single measure should be your
only line of defense.
- *Planning for scale.* If you’re expanding to multiple locations,
design SOPs and choose technology that can scale without compromising
oversight or consistency.

SOPs protect more than the bottom line

Failing to implement robust loss-prevention strategies can have devastating
consequences. Beyond the immediate financial loss, shrinkage can trigger
regulatory scrutiny, strain cash flow, and damage customer trust. In some
cases, persistent discrepancies can even lead to license suspension or
revocation.

Shrinkage is an unavoidable risk in any retail environment, but in
cannabis, the stakes are much higher than in other industries. The
combination of valuable inventory, cash-heavy transactions, and strict
regulatory oversight makes loss prevention a critical discipline for every
dispensary operator. By investing in robust dispensary standard operating
procedures backed by integrated technology and reinforced through staff
accountability, you can turn loss prevention from a vulnerability into a
competitive strength.
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Loss-Prevention SOPs: Essential FAQs

1. What type of SOPs have the biggest impact on loss prevention?

Cash-handling procedures and inventory controls typically deliver the
highest ROI because they create an auditable trail of every touchpoint and
reduce internal theft risk.
2. How often should dispensaries audit their SOPs?

At least quarterly — but high-risk functions like cash drops and product
reconciliation benefit from weekly or even daily touchpoints.
3. Are loss-prevention SOPs required for compliance?

Not always explicitly, but regulators look for documentation,
reconciliation, and accountability. SOPs are often the difference between
“explainable variance” and a licensing issue.
4. What role does technology play in SOP enforcement?

Integrated POS and payments systems, along with real-time variance
alerts reinforce SOPs by narrowing loopholes, reducing manual error, and
flagging anomalies quickly.

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[image: Faai Steuer, VP of marketing, Cova Software]

*Faai Steuer* is vice-president of marketing at *Cova Software*, an
award-winning cannabis retail platform trusted by more than 2,000 stores
across North America. Recognized as Retail Software of the Year at the 2024
Emjay Awards, Cova helps dispensaries launch strong, stay compliant, and
grow with confidence through its reliable point-of-sale, e-commerce,
payment, and analytics solutions. With twenty years of experience in retail
tech and consumer packaged goods, Steuer is passionate about helping
cannabis entrepreneurs build successful, sustainable businesses.