A new niche sector within the cannabis distribution plan is developing in California: independent distribution businesses that don’t produce their own cannabis products. Such companies – which frequently act as inventory clearinghouses for existing dispensaries along with 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 in the Cannabis Distribution Association (CDA), which was established in 2016 as being a wing of the California Growers Association.
The distribution sector has emerged because of changes to the state’s cannabis market which have been within the works since the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light continued for entrepreneurs after lawmakers approved the initial MMJ regulations in 2015, Fraser said.
“Distribution was such a big element of the language which was used – and they actually had a license type established for this – so after that, businesses began to appear and say, ‘This is the business I’m planning to pursue within this industry,’” she added.
We already have dozens of distribution businesses that specialize in shipping, marketing for your brands they carry and – depending on the company – including the drying, curing and packaging of flower. The CDA, for instance, now represents about 50 distribution companies, Fraser said.
“In any other industry, distribution is a vital component,” said Lucas Seymour, co-founder of Old Kai, a California distributor that serves about 250 dispensaries. “Whether you’re selling neckties or beer, your distribution is critical.
With business models dedicated to serving the existing market, many distributors simply work as third-party shippers for growers, edibles makers, concentrate producers and the like.
Some distributors concentrate on raw flower, selling to both dispensaries and manufacturers such as concentrate producers. Others carry a wide range of products and can be a one-stop look for retailers looking vcgtbq fill their shelves.
Plus some companies, with the eye on the future, have started diversifying their services and work just with brands they’re certain can obtain state licenses when California’s fully regulated MJ market launches in January.
Underneath the state’s impending system, plant-touching companies will likely be permitted to obtain distribution licenses and, thus, be spared the expense of hiring some other party.
But many skilled professionals don’t feel that will lessen the necessity for third-party distributors, if perhaps because some companies won’t want to deal with the extra work.
“If that you were to map out the complexity of all of the several types of companies inside the supply chain, distribution sits in the center,” said Azam Khan, co-founder of California tech company Distru. “Because in order for flower to maneuver from cultivators to manufacturers … you have to go through a (licensed) distributor once 2018 comes.
“These distributors both are likely to be a sales and marketing engine – particularly the bigger guys – and there are also going to be distributors which do solely transportation,” Khan continued. “What’s planning to give distributors an edge is additionally the other services they are able to do.
“We see a lot of people which are distributing that also have processing facilities. Not only will they get your entire plant … but they’ll dry it and cure it at their facility, along with bottle it then sell it for you personally.”