Cannabis Stores Industry Terminology

Adult-Use Cannabis

Non-medical cannabis permitted for adults (typically 21+) under state law; often called recreational.

Adult-use sales begin at 9 a.m. per local ordinance; We have separate medical and adult-use menus; The new store is licensed for adult-use only, not medical patients.


Age Verification

The process of confirming a customer’s legal age (e.g., ID check and scan) before entry and at POS to meet state compliance.

Security performs age verification at the door; The POS prompts a second ID scan for age verification; Our policy requires age verification on all deliveries.


Average Order Value (AOV)

The average revenue per transaction, calculated as total revenue divided by number of orders; a key retail KPI.

We lifted AOV by bundling a pre-roll with gummies; Weekend promos reduced AOV but grew traffic; Track AOV by category to target upsell opportunities.


Batch Number

A lot identifier assigned during production used for inventory tracking, COAs, recalls, and shelf-life management.

Scan the batch number to pull the COA; We quarantined all units from that batch number; Mix-ups in batch numbers can trigger compliance issues.


BOGO (Buy One, Get One)

A promotion offering an additional item free or discounted with purchase; may be subject to price, advertising, and stacking rules.

Today’s BOGO is buy one eighth, get one half off; BOGOs are not stackable with loyalty points; We need to verify BOGO compliance with state promo rules.


Budtender

The trained retail associate who advises customers, checks IDs, executes sales, and ensures compliance.

Our budtenders complete product and compliance training monthly; A budtender recommended a low-dose edible for a beginner; Budtender notes in the CRM improved repeat purchases.


Cannabinoid

Active compounds found in cannabis and hemp (e.g., THC, CBD, CBG) that interact with the endocannabinoid system.

The product label lists major cannabinoids and terpenes; Educate customers on minor cannabinoids like CBN; We segment inventory by cannabinoid profile.


CBD (Cannabidiol)

A non-intoxicating cannabinoid associated with relaxation and wellness; widely sold in many jurisdictions.

Stock CBD topicals near checkout for attachments; Confirm CBD products meet local testing and labeling rules; Customers often ask for CBD:THC ratios for balance.


Certificate of Analysis (COA)

A lab report verifying potency and safety (e.g., residual solvents, heavy metals, microbials) for a product batch.

Link the COA via QR code on the menu; Pull the COA if a customer questions potency; COA mismatches can trigger recalls and fines.


Child-Resistant Packaging

Packaging designed to be difficult for children to open, required by regulation for most cannabis products.

Verify child-resistant packaging on all edibles; Repack non-compliant items before sale; Our vendor supplies compliant, resealable pouches.


COGS (Cost of Goods Sold)

Direct costs of products sold (purchase cost, inbound freight, certain handling), critical for pricing and tax strategy under 280E.

Improve gross margin by negotiating COGS; Only COGS are deductible for cannabis businesses; We track COGS by category to set price floors.


Delta-8 THC

A psychoactive cannabinoid often synthesized from CBD; legality varies widely by state and city.

Check local rules before stocking Delta-8; We label Delta-8 separately from delta-9; The chain discontinued Delta-8 due to regulatory risk.


Deli-Style vs Pre-Pack

Deli-style weighs flower from bulk for each sale; pre-pack sells sealed, pre-portioned units; rules vary by state.

Pre-pack reduces handling and speeds checkout; Deli-style requires rigorous FIFO and humidity control; Our state banned deli-style post-COVID.


Edibles

Food or beverage products infused with cannabinoids; typically labeled by mg THC per serving and per package.

Educate new consumers on 2.5–5 mg servings; Store edibles away from heat to preserve potency; We track edible sell-through by flavor and dose.


Entourage Effect

The theory that cannabinoids and terpenes work synergistically, potentially altering the user experience.

Use terpene profiles to discuss the entourage effect; Full-spectrum products market the entourage effect; Avoid making medical claims when referencing the entourage effect.


Excise Tax

A cannabis-specific tax assessed by state or locality (sometimes based on price, weight, or potency).

Our menu shows tax-included out-the-door pricing; Excise tax rates changed this quarter; Train staff to explain excise vs sales tax.


FIFO (First-In, First-Out)

Inventory rotation method selling oldest-dated product first to reduce staleness, shrink, and write-offs.

Use FIFO especially for infused pre-rolls; Audit shelves to correct FIFO violations; FIFO dashboards flag slow-moving SKUs.


Flower

Dried cannabis buds sold by weight or as pre-rolls; quality depends on cure, moisture, and terpene preservation.

Place top-shelf flower at eye level per planogram; Monitor jar humidity packs for deli-style; We track returns due to dry flower.


Gross Margin

The percentage of revenue retained after COGS; a core profitability metric.

Our target gross margin is 52% across categories; Gross margin on vapes fell due to price compression; Bundle pricing protected gross margin on flower.


Hemp-Derived Cannabinoids

Cannabinoids sourced from hemp (≤0.3% delta-9 THC by dry weight under federal law), including CBD and novel isomers; state rules vary.

We require COAs for all hemp-derived cannabinoids; Some stores limit hemp-derived intoxicants; Check shipping restrictions for hemp items.


Indica/Sativa/Hybrid

Common consumer taxonomy for flower and vapes; not strictly scientific but widely used for merchandising.

We tag menu items as indica, sativa, or hybrid; Train staff to discuss effects beyond the label; Our filters let shoppers browse by indica/sativa.


Inventory Turnover

The number of times inventory sells through in a period; high turns reduce cash tied up and staleness.

Aim for higher turnover on pre-rolls; We cut SKUs with low turnover; Vendor terms improved turnover by shortening reorder cycles.


Lab Shopping

The practice of seeking labs likely to report higher potency or cleaner results; creates compliance and trust risks.

Avoid brands accused of lab shopping; Compare COAs across labs for consistency; Potency inflation often signals lab shopping.


Local Control

Municipal authority to permit, limit, or ban cannabis businesses and set operating conditions (hours, caps, buffers).

This city’s local control prohibits delivery; Local control caps retail licenses at five; Buffer zones under local control affect our site plan.


Loss Prevention

Policies and tools to reduce shrink, including surveillance, access controls, cash handling, and training.

Add cameras in vault and receiving for loss prevention; Cycle counts revealed loss prevention gaps; Staff sign SOPs that cover loss prevention.


Loyalty Program

Structured rewards (points, tiers, perks) to drive retention and increase AOV/UPT, subject to marketing restrictions.

Double points days lifted repeat visits; SMS loyalty messages must be compliant; Tiered loyalty boosted UPT on accessories.


Metrc

A state-mandated track-and-trace system using serialized tags and reporting for plants and products.

Reconcile POS sales with Metrc daily; Metrc tag errors caused negative inventory; Staff must complete Metrc training before handling intake.


MSO (Multi-State Operator)

A company operating in multiple states, navigating varied regulations, supply chains, and brands.

The MSO standardized planograms across markets; MSOs face complex 280E tax planning; Local brands compete with MSO house lines.


Omnichannel Retail

Integrating in-store, online menu, pickup, and delivery experiences with consistent pricing, promos, and inventory.

Our omnichannel menu syncs with POS inventory; Curbside and pickup are part of our omnichannel flow; Maintain consistent promotions across channels.


Onset Time

The time it takes to feel effects after consumption; varies by form factor (inhalable minutes vs edibles 30–120 min).

Coach new users on edible onset times; Sublingual tinctures have faster onset than gummies; Onset depends on tolerance and meal timing.


Out-the-Door Price (OTD)

The total price paid by the customer including all taxes and fees; often used in signage and online menus.

We advertise OTD pricing to reduce checkout surprises; POS is set to show OTD and pre-tax prices; OTD comparisons help price-position key SKUs.


Planogram

A schematic of product placement on shelves and displays to optimize conversion, compliance, and brand representation.

Update the planogram for holiday bundles; Planograms reserve endcaps for high-margin vapes; Compliance signage locations are on the planogram.


Point of Sale (POS)

The retail system for transactions, inventory, discounts, ID checks, and compliance integrations (e.g., Metrc).

Our POS enforces purchase limits automatically; POS outages trigger manual Metrc reporting; Choose a POS with native loyalty.


Potency Inflation

Reported lab results that overstate THC levels, sometimes linked to lab shopping or testing variance.

Beware of unusually high potency percentages; Cross-check COAs to detect potency inflation; Educate customers that potency isn’t the only quality indicator.


Pre-Roll

A pre-rolled joint or infused joint; popular entry price point and impulse add-on.

Feature pre-rolls near checkout to raise UPT; Track pre-roll returns for canoeing issues; Infused pre-rolls require clear labeling of total mg THC.


Purchase Limits

Legal quantity caps per transaction or per day (e.g., ounces of flower, milligrams of THC); enforced at POS.

The POS blocks basket sizes over the purchase limit; Explain purchase limits to tourists; Delivery orders count toward daily limits.


Section 280E

U.S. federal tax code disallowing ordinary deductions for businesses trafficking Schedule I substances; only COGS is deductible.

280E shapes our pricing and staffing decisions; We structured departments to maximize allowable COGS; 280E cash tax burden pressures margins.


Seed-to-Sale Tracking

Mandatory tracking of cannabis through the supply chain from cultivation to retail sale; typically via systems like Metrc.

Resolve seed-to-sale discrepancies daily; Intake requires seed-to-sale tags before shelving; Auditors review seed-to-sale reports during inspections.


Shrink (Inventory Loss)

Unexplained inventory reduction due to theft, damage, expiration, or administrative error.

Weekly cycle counts help control shrink; Logged a shrink event and adjusted Metrc; Loss prevention training reduced shrink by 30%.


SKU (Stock Keeping Unit)

A unique identifier for a specific product variant (brand, strain, weight, potency); used for inventory and reporting.

Avoid duplicate SKUs across sizes; Create SKUs that encode potency bands; SKU-level margins inform assortment.


Social Equity License

Licensing frameworks that prioritize applicants from communities disproportionately impacted by prohibition.

Our city reserves licenses for social equity applicants; Partnering with a social equity brand supports our mission; Confirm ongoing eligibility requirements for equity licenses.


SOPs (Standard Operating Procedures)

Documented instructions for critical tasks (ID checks, intake, cash handling, vault access, open/close) ensuring consistency and compliance.

Staff must sign SOPs at onboarding; We updated SOPs after a compliance audit; SOPs define escalation steps for failed ID checks.


Terpenes

Aromatic compounds (e.g., myrcene, limonene, linalool) influencing aroma and perceived effects; used in merchandising.

Display terpene charts near the flower case; Customers ask for limonene-heavy sativas; We train staff to discuss terpene-driven effects.


THC (Tetrahydrocannabinol)

The primary intoxicating cannabinoid in cannabis; labeled by percent for flower and mg for packaged products.

This edible has 10 mg THC per serving; Customers often equate high THC with quality; We comply with state THC potency caps for beverages.


Tincture

A liquid cannabis extract (often oil- or alcohol-based) dosed sublingually or added to food/drink.

Show customers how to use the dropper for 5 mg; Tinctures appeal to discreet consumers; Note faster onset than traditional edibles.


Units Per Transaction (UPT)

The average number of items per order; a retail KPI linked to merchandising and associate behavior.

Train on add-ons to increase UPT; Track UPT by associate to tailor coaching; Bundles lifted UPT without heavy discounting.


Vape Cartridge

A concentrated cannabis oil cartridge (often 510-thread) for vaporization; subject to hardware quality and additive regulations.

Educate on proper storage to prevent leaks; Stock state-compliant additive-free carts; Warranties reduce returns on defective carts.


Vertical Integration

Ownership of multiple supply chain tiers (cultivation, manufacturing, distribution, retail) within legal limits.

Vertical integration improved margins on house brands; Some states mandate or ban vertical integration; Inventory is transferred intraco within Metrc.


White Label

Products manufactured by a third party but branded and sold under the retailer’s or brand partner’s name.

Launching a white-label pre-roll line boosted margins; Ensure QC and COAs for white-label SKUs; White label allows exclusive, differentiated offerings.


Zoning Compliance

Adherence to land-use rules governing store location, buffers from sensitive uses, signage, and hours.

The site passed zoning compliance for 600-foot buffers; Zoning restricts our exterior signage; We verified parking minimums during zoning review.


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