A new niche sector in the marijuana transportation plan is developing in California: independent distribution firms that don’t produce their very own cannabis products. Such companies – which often work as inventory clearinghouses for existing dispensaries and other plant-touching businesses – are a fairly 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 from the California Growers Association.
The distribution sector has emerged because of changes towards the state’s cannabis market that were within the works since the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light went on for entrepreneurs after lawmakers approved the initial MMJ regulations in 2015, Fraser said.
“Distribution was this kind of big component of the language that was used – and they also actually enjoyed a license type established for it – so following that, businesses begun to appear and say, ‘This will be the business I’m going to pursue in this particular industry,’” she added.
There are already a large number of distribution businesses that specialize in shipping, marketing for that brands they carry and – depending on the company – including the drying, curing and packaging of flower. The CDA, for example, now represents about 50 distribution companies, Fraser said.
“In any other industry, distribution is a crucial 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 focused on serving the present market, many distributors simply serve 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 such as concentrate producers. Others carry a wide range of products and can be quite a one-stop look for retailers looking vcgtbq fill their shelves.
And a few companies, with an eye on the future, have started diversifying their services and work simply with brands they’re certain can obtain state licenses when California’s fully regulated MJ market launches in January.
Beneath the state’s impending system, plant-touching companies is going to be permitted to obtain distribution licenses and, thus, be spared the fee for hiring a third party party.
However, many skilled professionals don’t believe that will lessen the necessity for third-party distributors, only if because some companies won’t want to deal with the extra work.
“If you were to map the complexity of all various kinds of companies in the supply chain, distribution sits in the center,” said Azam Khan, co-founding father of California tech company Distru. “Because to ensure that flower to move from cultivators to manufacturers … you have to proceed through a (licensed) distributor once 2018 comes.
“These distributors are both going to be a sales and marketing engine – especially the bigger guys – and there are also going to be distributors who do solely transportation,” Khan continued. “What’s going to give distributors a good edge is additionally the other services they can do.
“We see many people that are 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.”