To succeed in the fast-growing cannabis industry, entrepreneurs need the right tools, like a cutting edge point of sale. But what exactly is dispensary POS software?

Cannabis dispensaries are one of the fastest growing new industries in the country. With more states moving towards marijuana legalization seemingly every year, it’s attracting a new wave of retail entrepreneurs. Many of which are not familiar with traditional retail operations and tools.

As a result, we’ve put together this article to guide would-be entrepreneurs on their journey to understand dispensary POS software. We’ll explain what this valuable tool is and key features to look out for so that you can choose the right solution for your business.

Dispensary POS System Overview

While the legal cannabis business is a relatively new one, with its own unique challenges, many standard retail POS systems meet the requirements of your typical cannabis dispensary. So to begin our dive into dispensary POS software, let’s start with an overview of POS software as it relates to retail.

To start, it’s important to note that POS software forms one half of a full POS system. The other half is formed by POS hardware. This hardware includes the computing device that runs the software (typically a tablet or PC), as well as other devices like a credit card terminal and barcode scanner. We’re mentioning this now because when comparing POS software vendors, it’s important to consider the hardware side also. We’ll get into more detail there later.

Retail POS Software: What You Need to Know

In a retail setting, POS software is a critical tool that enables merchants to process sales. It can be helpful to view it as a cash register replacement, but in reality, POS software can do far more than a traditional electronic cash register.

For example, most POS systems will include additional business management features like:

  • Inventory management tools
  • Reporting and analytics
  • Employee management tools
  • Basic marketing and customer relationship management capabilities
  • Integrations with other business software for accounting, payroll systems, ecommerce, and marketing

Because a modern POS system can do so much, it’s more accurate to view it as a complete business management tool instead of a simple cash register replacement.

One other big distinction to note is whether the POS software is cloud-based or locally installed. These two types are radically different and have major implications on the day-to-day operation of your POS system.

SEE ALSO: How to Choose a Small Business Retail POS System

Locally Installed vs. Cloud-Based

“Locally installed” means that your POS is installed on a server or computer that’s physically in your place of business. It’s similar to installing a piece of software on your personal computer like Microsoft Office or Adobe Photoshop. This way of distributing and using software is very traditional and there are some issues with it:

  • Expensive – Expect to pay hundreds or thousands of dollars per software license.
  • Complex – Managing and updating this software often requires advanced technical skills.
  • Outdated – Locally installed software often features an outdated user interface that’s challenging to use.
  • Proprietary Hardware – This type of software runs on either a desktop computer or a piece of proprietary hardware, which is typically more expensive than off-the-shelf hardware.

Cloud-based software is the way that modern software is delivered to the end user. With this model, you access your software simply by logging into it via a web browser. It’s the approach used by major business software brands like QuickBooks, MailChimp, Constant Contact, and Salesforce.

It has many benefits:

  • Affordable – Expect to pay for this software with a low monthly subscription fee.
  • Convenient – Complex aspects of managing software like installing updates and dealing with security are handled on your behalf by the POS vendor.
  • Easy – Cloud-based software is modern and as such tends to be easy to use, even for new merchants.
  • Standard Hardware – For POS systems this typically means the software will run on iPads or Android tablets, which are affordable and easy to replace if needed.
  • Availability – You’ll be able to access your software anywhere you have access to the internet.

For small business owners, regardless of vertical, the cannabis industry included, we recommend choosing a cloud-based POS system. The cost savings, usability, availability improvements are just too good to turn down for any reason.

Dispensary POS Software: Key Features to Look For

Now that you have a basic understanding of retail POS software, as well as the distinction between locally installed and cloud-based software. Next, we’re going to jump into the specific features you’ll want to ensure are included in your dispensary POS software. Because we recommend that small businesses choose a cloud-based system, that’s what our recommendations will focus on.


The ability to process transactions in an efficient manner is a key component of an effective POS system. No one likes waiting, so the faster you can serve your customers, the happier they are. To facilitate this, choose a system that has a clear uncluttered interface that makes it easy for cashiers to create orders and ring up customers.

It should be obvious, but cannabis sales are highly regulated. Staying compliant can be complex, but many POS systems have tools that can help:

  • Age Verification – Tools that can help you verify the age of your customers.
  • Purchase Limits – Built-in controls that ensure a transaction never exceeds the quantity a customer is permitted to purchase by law.
  • Seed-to-Sale Tracking – Integration with state-specific systems to track the sale of specific cannabis strains.



Access to reporting and analytics is one of the major reasons to choose a POS system over something simpler like a cash register. To get the most value from your POS, you’ll want to make sure its reporting capabilities are up to standard. Some key reports you’ll want have include:

  • Sales Reports – These should help you track revenue by product, department, between locations, and across different date ranges.
  • Employee Reports – You should be able to track the basics like the hours each employee works, as well as their sales performance (if applicable), and their labor cost.
  • Inventory Reports – Stay on top of inventory quantity, trends related to item popularity, as well as profit margins for each of your cannabis products or even on a department-by-department basis.
  • Marketing Reports – Track customer behavior like purchase history and visit frequency to identify your best customers so you can create an optimal customer experience.
  • Compliance Reports – Whether you sell in Canada or the US, every government has requirements to report on inventory reconciliation as well as tax. Your POS should be able to automate much of this process for you.

what is dispensary POS software retail analytics

Marketing and Customer Relationship Management

Marketing is key to the success of any cannabis business, whether you run a standard dispensary or a medical marijuana dispensary. While a POS solution will never replace a dedicated marketing platform, the right one can certainly help with your customer acquisition and retention efforts.

Here are some key features too look out for:

  • The ability to collect customer email addresses during the checkout process so that you can build your subscriber list for marketing emails.
  • Functionality for sending email receipts as a way to generate brand awareness and stay top of mind, especially in the highly competitive marijuana business.
  • A customizable customer loyalty program that allows you to set up rewards for frequent shoppers.
  • Local SEO and customer reviews management tools like ShopKeep Spotlight.
  • Integrations with more advanced marketing platforms like MailChimp or Constant Contact.

As with other regulated industries like alcohol and tobacco, you’ll want to have a solid understanding of any restrictions on where and how you can market your business.

SEE ALSO: How to Increase Sales in Retail — The Ultimate Guide


As we’ve attempted to illustrate throughout this article, a dispensary POS system can help you better manage many areas of your business. However, it can’t do everything, and many times purpose-built software is the better choice.

Below are a few examples of where this is the case:

  • Accounting – Tools like QuickBooks and Xero are built to handle the complexities of business accounting.
  • Ecommerce – While you can’t sell every product online, ecommerce can be a way to move some of your merchandise to a wider audience.
  • Marketing – As we mentioned above, there are a variety of dedicated marketing platforms that can enable you to launch highly sophisticated marketing campaigns.


Payment Processing

It’s hard to talk about a POS system without bringing up payment processing. Because cannabis is still illegal at the federal level in the US, many banks and financial institutions will not process payments from dispensaries. As a result, you will need to spend time looking for a payment processor that’s comfortable working with the industry. Otherwise, your POS is pretty much inoperable.

POS Hardware

The last big category you’ll want to account for is POS hardware. Dispensaries are squarely in the retail space, so you can use many of the same devices as retailers that run clothing boutiques, hotel gift shops, or book stores.

Typically this includes:

  • Barcode Scanner – this can speed up transactions and adding products to an order. It also helps to prevent data entry errors. Plus it can make organizing and tracking your inventory easier.
  • Card Reader – You’ll want a terminal that allows you to accept all major payment methods like credit (including EMV), debit, NFC/contactless payments, and even gift cards.
  • Tablet Stand – If you use an iPad POS, a stand or enclosure is a nice way to position your POS on your checkout counter.
  • Cash Drawer – As you can guess, this is a place to store cash, as well as checks and any other important documents you want available during the day.

At the end of the day choosing a dispensary POS system doesn’t have to be difficult. In fact, with the exception of a few specialized features, it’s pretty similar to choosing a retail POS system. That means the key to your success is understanding the specific needs of your unique business and finding a system that can deliver on them at a price that fits within your budget.

Ryan Gilmore is a writer at ShopKeep.

Ryan Gilmore

As Inbound Content Marketing Manager at ShopKeep, a leading iPad Point of Sale System, Ryan Gilmore uses his extensive experience in small business technology to create educational content that helps merchants run and grow their businesses more effectively.