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.
Loss-Prevention SOPs: Essential FAQs
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.
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.
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.
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.
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.
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