A new niche sector in the marijuana distribution plan is developing in California: independent distribution firms that don’t produce their very 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 in the Cannabis Distribution Association (CDA), that was established in 2016 being a wing of the California Growers Association.
The distribution sector has emerged as a result of changes to the state’s cannabis market which have been within the works since the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light proceeded for entrepreneurs after lawmakers approved the first MMJ regulations in 2015, Fraser said.
“Distribution was such a big part of the language which was used – and they actually enjoyed a license type established for this – so next, businesses started to come out and say, ‘This is definitely the business I’m likely to pursue within this 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 drying, curing and packaging of flower. The CDA, for instance, 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 crucial.
With business models centered on serving the existing market, many distributors simply act as third-party shippers for growers, edibles makers, concentrate producers and the like.
Some distributors focus on raw flower, selling to both dispensaries and manufacturers including concentrate producers. Others carry an array of products and could be a one-stop shop for retailers looking vcgtbq fill their shelves.
And a few 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.
Underneath the state’s impending system, plant-touching companies will likely be allowed to obtain distribution licenses and, thus, be spared the fee for hiring an outside party.
However, many industry experts don’t think that will lessen the requirement for third-party distributors, if perhaps because some companies won’t want to handle the extra work.
“If that you were to map the complexity of all the several types of companies within the supply chain, distribution sits in the center,” said Azam Khan, co-founding father of California tech company Distru. “Because to ensure that flower to maneuver from cultivators to manufacturers … you need to go through a (licensed) distributor once 2018 comes.
“These distributors are both going to be a sales and marketing engine – particularly 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 advantage can also be how many other services they could do.
“We see a lot of people which can be distributing that also have processing facilities. Not only can they pick-up your whole plant … but they’ll dry it and cure it at their facility, as well as bottle it up and then sell it to suit your needs.”