A new niche sector in the marijuana transportation plan is developing in California: independent distribution businesses that don’t produce their own cannabis products. Such companies – which often serve as inventory clearinghouses for existing dispensaries and other plant-touching businesses – are a relatively new phenomenon in California.
“It has ramped up in a formal sense,” said Lauren Fraser, the founding director from the Cannabis Distribution Association (CDA), which had been established in 2016 as a wing in the California Growers Association.
The distribution sector has emerged due to changes for the state’s cannabis market that have been inside the works since the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light went on for entrepreneurs after lawmakers approved the first MMJ regulations in 2015, Fraser said.
“Distribution was this kind of big element of the language which had been used – plus they actually experienced a license type established because of it – so following that, businesses started to appear and say, ‘This is definitely the business I’m likely to pursue within this industry,’” she added.
There are already dozens of distribution businesses that specialize in shipping, marketing for your brands they carry and – depending on the company – even the drying, curing and packaging of flower. The CDA, for instance, now represents about 50 distribution companies, Fraser said.
“In some other industry, distribution is an important component,” said Lucas Seymour, co-founding father of Old Kai, a California distributor that serves about 250 dispensaries. “Whether you’re selling neckties or beer, your distribution is crucial.
With business models dedicated to serving the existing market, many distributors simply work as third-party shippers for growers, edibles makers, concentrate producers and so forth.
Some distributors focus on raw flower, selling to both dispensaries and manufacturers like concentrate producers. Others carry a variety of products and could be a one-stop go shopping for retailers looking vcgtbq fill their shelves.
And a few companies, with the eye on the future, have started diversifying their services and work only with brands they’re certain will be able to obtain state licenses when California’s fully regulated MJ market launches in January.
Underneath the state’s impending system, plant-touching companies is going to be allowed to obtain distribution licenses and, thus, be spared the expense of hiring an outside party.
But some skilled professionals don’t think that will lessen the requirement for third-party distributors, if only because some companies won’t want to handle the extra work.
“If you were to map out the complexity of all several types of companies in the supply chain, distribution sits on the center,” said Azam Khan, co-founder of California tech company Distru. “Because to ensure that flower to maneuver from cultivators to manufacturers … you need to proceed through a (licensed) distributor once 2018 comes.
“These distributors are both gonna be a sales and marketing engine – particularly the bigger guys – and there are also likely to be distributors that do solely transportation,” Khan continued. “What’s going to give distributors a good edge can also be the other services they are able to do.
“We see lots of people which can be distributing which have processing facilities. Not only will they pick-up your entire plant … but they’ll dry it and cure it at their facility, in addition to bottle it up then sell it to suit your needs.”