A new niche sector in the marijuana distribution procedures is developing in California: independent distribution businesses that don’t produce their own cannabis products. Such companies – which often work as inventory clearinghouses for existing dispensaries along with 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 of the Cannabis Distribution Association (CDA), which was established in 2016 as being a wing of the California Growers Association.
The distribution sector has emerged due to changes towards the state’s cannabis market that were within the works considering that 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 this kind of big element of the language that was used – plus they actually experienced a license type established because of it – so after that, businesses began to emerge and say, ‘This is the business I’m going to pursue in this particular industry,’” she added.
We already have dozens of distribution businesses specializing in shipping, marketing for that 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 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 current 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 a variety of products and can be quite a one-stop shop for retailers looking vcgtbq fill their shelves.
Plus some companies, with an eye on the future, have begun diversifying their services and work only 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 fee for hiring a third party party.
However, many skilled professionals don’t believe that will lessen the necessity for third-party distributors, if only because some companies won’t want to deal with the work.
“If you had been to map out the complexity of all the several types of companies within the supply chain, distribution sits in 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 likely to be a sales and marketing engine – especially the bigger guys – and in addition there are likely to be distributors which do solely transportation,” Khan continued. “What’s going to give distributors an edge can also be what other services they could do.
“We see many people which can be distributing which have processing facilities. Not only can they pick up your whole plant … but they’ll dry it and cure it at their facility, in addition to bottle it up and then sell it to suit your needs.”