How to Calculate Cannabis Sell-Through and Set Reorder Points
Calculate cannabis sell-through rate, days on hand, reorder points and par levels with worked formulas and a sample SKU table for dispensaries and brands.
Cannabis sell-through rate is the fastest way to see which products earn their shelf space and which ones are tying up cash. Paired with days on hand and a reorder point, it turns inventory from guesswork into a short weekly routine. This guide walks through each formula with a sample SKU table, then shows how brands and distributors use the same math with their dispensary partners.
The Core Inventory Formulas
You only need five formulas for most cannabis dispensary inventory management decisions. Pick one measurement period, such as four weeks, and use it everywhere so the numbers stay comparable.
- Sell-through rate (%) = units sold ÷ beginning inventory × 100
- Units per week = units sold ÷ weeks in the period
- Average daily sales = units sold ÷ days in the period
- Days on hand (also called days of cover) = current on-hand units ÷ average daily sales
- Reorder point = (average daily sales × lead time in days) + safety stock
If you receive product during the period, some teams add those receipts to the sell-through denominator (beginning inventory plus units received). Either approach works. Choose one, write it down and stay consistent.
Worked Example: Cannabis Sell-Through Rate and Days on Hand
The table below uses illustrative numbers for a single store over a 28-day period with no deliveries received. Ending on-hand equals beginning inventory minus units sold.
| SKU (illustrative) | Beginning units | Units sold (28 days) | Sell-through | Units per week | Avg daily sales | On hand now | Days on hand |
|---|---|---|---|---|---|---|---|
| A: Flower 3.5g | 120 | 84 | 70% | 21.0 | 3.00 | 36 | 12 |
| B: Vape cart 1g | 200 | 90 | 45% | 22.5 | 3.21 | 110 | 34 |
| C: Gummies 100mg | 80 | 20 | 25% | 5.0 | 0.71 | 60 | 84 |
| D: Pre-roll 5-pack | 60 | 54 | 90% | 13.5 | 1.93 | 6 | 3 |
Here is how to read it:
- SKU D sold 90 percent of its starting stock and has about 3 days left. It is close to a stockout and probably under-ordered.
- SKU A is healthy at 70 percent with 12 days of cover, but it needs watching against the supplier’s lead time.
- SKU B moves well in units but was over-ordered. With 34 days on hand, skip or shrink the next order.
- SKU C at 25 percent and 84 days on hand is tying up cash. Consider a smaller pack-out, better shelf placement, a staff education push or a price review before you reorder.
How to Set a Dispensary Reorder Point
A dispensary reorder point tells you when to order. Two inputs drive it: how fast the product sells and how long the supplier takes to deliver after you place the order.
Safety stock covers the days when sales run hot or a delivery runs late. A simple method that works for most stores is a fixed number of buffer days: safety stock = average daily sales × buffer days. Use more buffer days for top sellers and for suppliers who often run late.
Continuing the example, assume a 7-day lead time and 3 buffer days for every SKU:
| SKU (illustrative) | Avg daily sales | Lead-time demand (× 7) | Safety stock (× 3) | Reorder point | On hand | Action |
|---|---|---|---|---|---|---|
| A: Flower 3.5g | 3.00 | 21 | 9 | 30 | 36 | Order within about 2 days |
| B: Vape cart 1g | 3.21 | 22 | 10 | 32 | 110 | No order |
| C: Gummies 100mg | 0.71 | 5 | 2 | 7 | 60 | No order |
| D: Pre-roll 5-pack | 1.93 | 14 | 6 | 20 | 6 | Order now; expect a gap |
SKU D is already below its reorder point, so it will likely sell out before the next delivery. That gap is the cost of ordering by feel, and the fix is to raise its order quantity and check it more often.
Par Levels for Scheduled Ordering
Many dispensaries order on a fixed day each week. In that case, par levels are easier to run than reorder points. A par level is the quantity you order up to on each order day.
Par level = average daily sales × (lead time days + days between orders) + safety stock
Order quantity = par level − on hand − units already on order
For SKU A with weekly orders, par = 3.00 × (7 + 7) + 9 = 51 units. With 36 on hand and nothing on order, this week’s order is 15 units. For SKU B, par is about 55 and on hand is 110, so the order is zero. Recalculate par levels monthly, and sooner after a price change, promotion or new competitor.
Inventory Turnover and Weekly Review
Inventory turnover shows how many times you sell through your average stock in a period. The accounting version is cost of goods sold ÷ average inventory value. At the SKU level you can use units: units sold ÷ average units on hand.
For SKU A, average units on hand were (120 + 36) ÷ 2 = 78, so turnover for the 28 days was 84 ÷ 78 ≈ 1.08. That works out to roughly 14 turns per year if the pace holds. SKU C turned 20 ÷ 70 ≈ 0.29 times in the same period.
A 30-minute weekly review keeps all of this current:
- Export units sold and on-hand by SKU from your POS.
- Recalculate average daily sales and days on hand.
- Flag any SKU with days on hand below its lead time plus buffer days.
- Flag any SKU with days on hand above a ceiling you set (for example, 45 days).
- Place orders against reorder points or par levels, then confirm counts match your system of record. Oklahoma operators can pair this with our OMMA and Metrc inventory controls checklist.
How Brands and Distributors Use the Same Math
Brands and distributors sell to dispensaries, so their real demand signal is the dispensary’s sell-through. Shipping more product into a store that is not selling it creates returns, discounting and strained relationships.
- Ask for sell-through data. Many partners will share weekly units sold and on-hand by SKU. Agree on the period and format up front.
- Suggest orders from days on hand. When a store’s days on hand for your SKU falls below your delivery lead time plus buffer, send a suggested order with the math attached.
- Spot slow doors early. A store with low sell-through and high days on hand needs merchandising support, budtender education or a smaller assortment before it gets another case.
- Rank accounts. Units per week per store shows where reps should spend their time and where a promotion will actually move product.
A shared reorder sheet built on these formulas turns a sales call into a fact-based conversation. The buyer sees exactly why you are suggesting 24 units instead of 48.
How We Help
Our team builds sell-through reports, reorder workbooks and weekly review routines for dispensaries, brands and distributors in Oklahoma and California. Learn more about our cannabis operations service, or read how we set up a KPI dashboard for owner-led teams.
Frequently Asked Questions
What is a good sell-through rate for a dispensary?
There is no single benchmark, because it depends on the category, the period you measure and how often you reorder. Compare each SKU against its own category and its own history, and act on the outliers at both ends.
How do you calculate a reorder point?
Multiply average daily unit sales by the supplier lead time in days, then add safety stock. When on-hand inventory falls to that number, place the order.
What is the difference between a reorder point and a par level?
A reorder point is the inventory level that triggers an order. A par level is the target you order up to, which works best when you place orders on a fixed schedule, such as every Monday.
