A new niche sector in the marijuana distribution procedures is developing in California: independent distribution firms 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 from the Cannabis Distribution Association (CDA), which had been established in 2016 being a wing from the California Growers Association.
The distribution sector has emerged because of changes to the state’s cannabis market that were in the works since the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light proceeded for entrepreneurs after lawmakers approved the initial MMJ regulations in 2015, Fraser said.
“Distribution was this type of big component of the language which had been used – and they also actually had a license type established for this – so after that, businesses began to come out and say, ‘This is definitely the business I’m likely to pursue in this particular industry,’” she added.
We already have lots of distribution businesses that specialize in 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 a crucial 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 existing market, many distributors simply act as third-party shippers for growers, edibles makers, concentrate producers and the like.
Some distributors concentrate on raw flower, selling to both dispensaries and manufacturers like concentrate producers. Others carry a wide range of products and can be quite a one-stop look for retailers looking vcgtbq fill their shelves.
And a few companies, with the eye on the future, have begun diversifying their services and work just 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 is going to be permitted to obtain distribution licenses and, thus, be spared the expense of hiring an outside party.
But many skilled professionals don’t feel that will lessen the necessity for third-party distributors, if perhaps because some companies won’t want to deal with the extra work.
“If that you were to map the complexity of all of the various kinds 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 go from cultivators to manufacturers … you must proceed through a (licensed) distributor once 2018 comes.
“These distributors both are likely to be a sales and marketing engine – particularly 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 the other services they are able to do.
“We see many people which can be 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 up then sell it for you personally.”