A new niche sector within the marijuana distribution procedures is developing in California: independent distribution firms that don’t produce their own cannabis products. Such companies – which frequently work 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 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 in the works because the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light continued for entrepreneurs after lawmakers approved the first MMJ regulations in 2015, Fraser said.
“Distribution was such a big part of the language which had been used – plus they actually experienced a license type established for it – so after that, businesses began to come out and say, ‘This is definitely the business I’m planning to pursue in this industry,’” she added.
We already have dozens 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, as an example, now represents about 50 distribution companies, Fraser said.
“In every 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 critical.
With business models centered on serving the existing market, many distributors simply act 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 an array of products and can be a one-stop shop for retailers looking vcgtbq fill their shelves.
Plus some companies, with an eye on the future, have started diversifying their services and work simply with brands they’re certain should be able to obtain state licenses when California’s fully regulated MJ market launches in January.
Under the state’s impending system, plant-touching companies will be allowed to obtain distribution licenses and, thus, be spared the expense of hiring some other party.
But some industry experts don’t believe that will lessen the need for third-party distributors, if perhaps because some companies won’t want to deal with the work.
“If you had been to map the complexity of all different types of companies inside the supply chain, distribution sits at the center,” said Azam Khan, co-founder of California tech company Distru. “Because to ensure flower to move from cultivators to manufacturers … you must go through a (licensed) distributor once 2018 comes.
“These distributors are generally gonna be a sales and marketing engine – particularly the bigger guys – and in addition there are gonna be distributors that do solely transportation,” Khan continued. “What’s planning to give distributors an advantage is also the other services they could do.
“We see many people which are distributing which also 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 and then sell it for you.”