A new niche sector in the marijuana transportation plan is developing in California: independent distribution businesses that don’t produce their very own cannabis products. Such companies – which often act as inventory clearinghouses for existing dispensaries as well as 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 in the California Growers Association.
The distribution sector has emerged as a result of changes towards the state’s cannabis market that have been inside the works considering that 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 such a big part of the language which was used – plus they actually experienced a license type established because of it – so following that, businesses begun to appear and say, ‘This is the business I’m going to pursue in this particular industry,’” she added.
We already have a large number of distribution businesses specializing in shipping, marketing for your brands they carry and – depending on the company – even the drying, curing and packaging of flower. The CDA, for example, now represents about 50 distribution companies, Fraser said.
“In some 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 essential.
With business models dedicated to serving the existing market, many distributors simply serve as third-party shippers for growers, edibles makers, concentrate producers and so on.
Some distributors specialize in raw flower, selling to both dispensaries and manufacturers including concentrate producers. Others carry a wide range of products and could be a one-stop go shopping for retailers looking vcgtbq fill their shelves.
And some companies, with an eye on the future, have begun 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.
Underneath the state’s impending system, plant-touching companies is going to be able 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 requirement for third-party distributors, only if because some companies won’t want to handle the extra work.
“If you were to map the complexity of all the various kinds of companies inside the supply chain, distribution sits at the center,” said Azam Khan, co-founding father of California tech company Distru. “Because in order for flower to maneuver from cultivators to manufacturers … you must go through a (licensed) distributor once 2018 comes.
“These distributors are generally going to be a sales and marketing engine – specially the bigger guys – and in addition there are likely to be distributors that do solely transportation,” Khan continued. “What’s planning to give distributors an edge can also be what other services they are able to do.
“We see lots of people which can be distributing which have processing facilities. Not only can they pick up your entire plant … but they’ll dry it and cure it at their facility, along with bottle it up then sell it to suit your needs.”