Maximize Year-End Inventory Efficiency with FlyWheel: Tackle 280E with Smart Inventory Management
As the end of the year approaches, Cannabis Retailers have a key responsibility to optimize their inventory in preparation for tax season. Under Section 280E, inventory costs can’t be deducted from your taxes. Ensuring a well-balanced, consistently selling inventory is crucial for maximizing profitability. FlyWheel offers a range of tools to help identify slow-moving products, phase them out effectively, and keep your shelves stocked with items that will drive revenue. In this guide, we’ll discuss strategic steps to improve year-end inventory efficiency using FlyWheel’s insights and tools to mitigate tax liability and boost sales.
The Problem:
Identifying Slow-Moving Inventory to Prevent 280E Tax Burdens
A well-balanced inventory is critical for both profit and tax efficiency. Products that move slowly tie up valuable capital and may inflate your tax burden under Section 280E if they remain unsold.
The Solution:
FlyWheel
FlyWheel makes it easy to identify these slow-moving items, helping you create targeted strategies for clearing out underperforming stock before year-end.
To get started, follow these steps:
Analyze Sales Velocity: Use FlyWheel’s sales velocity insights to quickly identify items with low sales performance. Sorting products by their movement over the past few months highlights which ones are failing to meet sales targets. FlyWheel’s ‘Sales’ Report gives you the ability to filter specific product categories and view top performing, and lowest performing items.
Pinpoint Extended Shelf Time: Products with longer projected run-out times are likely candidates for phasing out. Reviewing these projections allows you to take early action and avoid inventory stagnation. FlyWheel’s ‘Stock Aging Report’ gives you visibility into the shelf-life of all of your products and allows you to develop a gameplan.
Once identified, you can create a plan to move these items effectively.
Gameplan:
Strategic Steps to Phase Out Slow-Moving Products
Rather than allowing slow-moving items to linger, FlyWheel’s tools help you devise strategies to clear them out effectively, such as loyalty promotions and in-store recommendations.
Here’s how to execute a few effective strategies:
Loyalty Program Promotions: Loyalty programs are an ideal way to incentivize customers to purchase slow-moving items. Consider offering loyalty points or exclusive discounts on underperforming products. This approach not only helps clear stock but also engages loyal customers by rewarding them for their repeat business.
Budtender Recommendations: Budtenders play a key role in guiding customer purchases. Educate your budtenders on slow-moving products and encourage them to recommend these items to customers. This personal touch can increase sales for items that might otherwise go unnoticed.
In-Store Promotions: Highlight slow-moving products with special in-store displays, promotional signage, or limited-time offers. FlyWheel’s insights can help you identify ideal price points to encourage faster turnover.
By proactively addressing slow movers with these tactics, you can make room for high-demand items and improve your tax position and year-end numbers.
Reducing Taxable Inventory with Proactive Management
For cannabis retailers, Section 280E poses a unique challenge by disallowing tax deductions on inventory costs. Having a high volume of unsold stock at year-end increases your tax burden, which is why proactively managing inventory is essential. By phasing out slow-moving products, you reduce the amount of taxable inventory on your books.
Key tax-related benefits of clearing slow-moving stock include:
Reducing Taxable Inventory: Selling slow-moving items prevents them from accumulating as taxable assets.
Enhance Cash Flow: Phasing out low-demand products frees up capital, allowing reinvestment in high-performing stock that drives revenue.
Minimizing Waste: Products with limited shelf life or seasonal relevance are less likely to go to waste, saving your business valuable resources.
The benefits collectively help you achieve a lean, efficient inventory that optimizes both tax exposure and cash flow.
Key Takeaways for Optimizing Year-End Inventory
For effective year-end inventory management, cannabis retailers should focus on these core strategies:
Identify Slow-Moving Stock: Use FlyWheel’s reports to locate low-demand items and prevent overstock.
Promote Wisely to Clear Stock: Leverage loyalty programs, budtender recommendations, and in-store promotions to encourage sales of slower-moving products.
Minimize Taxable Inventory Under Section 280E: Take proactive steps to clear excess stock and reduce your tax burden.
With a balanced approach, retailers can improve inventory efficiency, enhance profitability, and meet the unique tax requirements of the cannabis industry. FlyWheel equips retailers with the tools and insights to take action on their inventory, helping them turn data into impactful, year-end strategies that support long-term growth and profitability.
Ready to get started? Reach out to us today: 240logistics.com/contact
Schedule your FlyWheel Demo: 45min w/ Brian H. - VP of Sales
