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 frequently act 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 from the Cannabis Distribution Association (CDA), which had been established in 2016 being a wing in the California Growers Association.
The distribution sector has emerged due to changes towards the state’s cannabis market that were within the works because the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light went on for entrepreneurs after lawmakers approved the first MMJ regulations in 2015, Fraser said.
“Distribution was this kind of big component of the language which was used – and they actually had a license type established for it – so after that, businesses started to come out and say, ‘This will be the business I’m going to pursue in this particular industry,’” she added.
We already have dozens of distribution businesses focusing on shipping, marketing for your brands they carry and – depending on the company – even the drying, curing and packaging of flower. The CDA, as an example, now represents about 50 distribution companies, Fraser said.
“In any 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 current market, many distributors simply act 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 shop for retailers looking vcgtbq fill their shelves.
And a few companies, with the 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 will be allowed 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 perhaps because some companies won’t want to handle the extra work.
“If you had been to map out your complexity of all different types of companies in the supply chain, distribution sits on 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 proceed through a (licensed) distributor once 2018 comes.
“These distributors are generally likely to be a sales and marketing engine – specially the bigger guys – and there are also going to be distributors who do solely transportation,” Khan continued. “What’s going to give distributors an edge can also be how many other services they could do.
“We see lots of people which are distributing that also have processing facilities. Not only will they pick up all of your plant … but they’ll dry it and cure it at their facility, in addition to bottle it then sell it for you.”