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 often work as inventory clearinghouses for existing dispensaries as well as 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 from the Cannabis Distribution Association (CDA), which was established in 2016 being a wing from 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 continued for entrepreneurs after lawmakers approved the primary MMJ regulations in 2015, Fraser said.
“Distribution was this kind of big part of the language that was used – plus they actually had a license type established for it – so next, businesses began to come out and say, ‘This is the business I’m going to pursue in this particular industry,’” she added.
We already have lots of distribution businesses that specialize in shipping, marketing for that brands they carry and – depending on the company – even drying, curing and packaging of flower. The CDA, for 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 essential.
With business models centered on serving the current market, many distributors simply work as third-party shippers for growers, edibles makers, concentrate producers and so forth.
Some distributors concentrate on raw flower, selling to both dispensaries and manufacturers like concentrate producers. Others carry an array of products and can be a one-stop look 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 will be able to obtain state licenses when California’s fully regulated MJ market launches in January.
Beneath the state’s impending system, plant-touching companies will likely be permitted to obtain distribution licenses and, thus, be spared the expense of hiring an outside party.
However, many skilled professionals don’t feel that will lessen the requirement for third-party distributors, if only because some companies won’t want to handle the extra work.
“If that you were to map out your complexity of all the various kinds of companies in 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 must proceed through a (licensed) distributor once 2018 comes.
“These distributors both are gonna be a sales and marketing engine – especially the bigger guys – and additionally, there are going to be distributors who do solely transportation,” Khan continued. “What’s going to give distributors an edge can also be what other services they are able to do.
“We see lots of people that are distributing that also have processing facilities. Not only will they pick up your whole plant … but they’ll dry it and cure it at their facility, along with bottle it and then sell it for you personally.”