DCC regulations require retail licensees to count their inventory at least monthly to ensure they do not have a significant discrepancy in inventory.
As of 2022, the latest version of the DCC's consolidated regulations defines significant discrepancies as follows:
"A significant discrepancy in inventory means a five percent difference between the licensee’s physical inventory and the inventory recorded in the track and trace system."
See §15034. Significant Discrepancy in Inventory for reference.
In order to ensure your physical inventory is accurate, perform regular cycle counts in Meadow.
Your Meadow inventory will match your Metrc inventory on a daily basis after all sales and inventory transactions are reported, so long as no changes are manually made within Metrc. All inventory transactions must take place within Meadow directly.
Prior the the current regulations, the DCC defined significant discrepancy in inventory as follows:
"A significant discrepancy in inventory means a difference in actual inventory compared to records pertaining to inventory of at least 3 percent of the average monthly sales of the licensee."
(see § 5034. Significant Discrepancy in Inventory for more detail).
This definition no longer applies in regulation, but it can be helpful to know your inventory discrepancy relative to your sales volume.
The Inventory Discrepancy report helps you keep track of your inventory's accuracy. A snapshot is generated at the moment the report is generated.
This report helps you calculate your significant inventory threshold using the following method:
Take your last 6 months of sales (or as many months as you've been operating) to calculate your average monthly sales.
Multiply this average monthly total by 3% to find your threshold in $.
Once you know the threshold value, you can compare it to your inventory accuracy on a cost basis to see how it compares to the threshold. We provide different calculations of accuracy that you can compare:
Package Variance: This is the strictest measure and compares how accurate your inventory is at the package level. If you count one unit more than expected in package 123 and one unit less than expected in package 456 of the same product, that is considered a discrepancy of 2 units (your inventory is off by two units from what's expected).
Option Variance: This measure compares how accurate your inventory is at the product option level. If you count one unit more than expected in package 123 and one unit less than expected in package 456 of the same product option, that is considered a discrepancy of 0 units (they net to zero at the option level, since you have the correct number of units for that option in inventory).
Product Variance: This measure compares how accurate your inventory is at the product level. If you count one unit more than expected of option A and one unit less than expected of option B of the same product, that is considered a discrepancy of 0 units (they net to zero at the product level, since you have the correct number of units for that product in inventory). If all of your products only have one option, this calculation will be the same as the Option Variance measure.
What values are used to calculate variance?
The DCC threshold is compared to your inventory variance on a cost basis.
When available, Meadow uses the cost per unit for the specific packages.
If an "Average Cost per Unit" is entered for a product option, it will be used.
The inventory variance is calculated based on changes made to inventory quantities by cycle counts and reconciliations:
Cannabis products added to or removed from your inventory over the last 30 days will be used to calculate your variance.
The unit quantity and cost value of all cycle counts and reconciliations in the 30 day time period will appear on the report's Transaction Log tab.
Remember: Using Meadow's Cycle Counting tools, you can make sure your inventory stays accurate and detailed records are kept.