7 Tips for Scaling your Wholesale Cannabis Operation in 2021

by | Apr 15, 2021

We’re living through the Green Rush! Eighteen states have now fully legalized or decriminalized cannabis, with New York and New Mexico becoming the latest to ratify recreational use. According to Politico, nearly two-thirds of Americans now support legal cannabis. Within the past weeks, Senate Majority Leader Chuck Schumer has stated his support several times, saying that a federal bill is “headed in [the] direction” of legalization as opposed to just decriminalization.

It’s a great time to be in Cannabis. But if you’re in the industry, you know things aren’t as easy as hanging a shingle and waiting for the sales to roll in. Compliance regulations vary greatly from state to state, making an expansion into new markets a challenging venture. Cultivators and sellers of Cannabis face a unique set of issues when pondering an expansion.

Fortunately, at Leaf Trade, we’ve been through the process of guiding our clients through moving into new markets many times. Here are 7 tips we’ve picked up over the years for those looking to take advantage of the boom and expand operations into new states.

1. Real-time data is real-time supply-chain protection

Retailers might want to purchase a lot of your product, but that doesn’t always meant they have the ability to store large quantities of it. In fact, most cannabis dispensaries have limited storage capacity, so it’s important that sellers and buyer readily understand the availability of a cannabis product up to the minute in order to have predictive sales capabilities and operational consistency. In the newly opened East Coast Markets, these constraints are further exacerbated by severely limited licensing.

But, the real story isn’t about storage, it’s about real-time inventory syncing and automation so you don’t have to spend time manually entering data. Whatever solution you choose should include robust tech and integration capabilities to prevent you from having to re-do your work.

2. You need to spend time forging relationships

There’s no getting around the fact that cannabis sellers can spend a lot of time working with order processes and ensuring fulfillment needs (manually inputting data in many cases). But in today’s fast-moving cannabis industry, the need to streamline and automate these operations is vital if companies want to establish business relationships that go beyond simple orders and shipments. It’s these business relationships that can be lifesaving during wholesale supply-and-demand issues affecting shortages or an overabundance of product.

That’s why it’s vital to have a good CRM solution. It is incredibly important for negotiation and relationship building as well as introducing more customers to your brands. You can also build brand loyalty with your customers by giving them access to bulk pricing discounts.

The closer your CRM is to the point of sale, the easier it will be to track interactions.

3. You have to overcome operational inefficiencies

In today’s cannabis environment, operational inefficiencies put companies at a distinct disadvantage, and especially at the wholesale cannabis level. Your customers are going to keep returning only if you can enhance your product inventory management, streamline your order and fulfillment tasks, and make timely payment transactions. Because if you don’t, your competition will.

4. Be prepared for price fluctuations

Wholesale flower prices can rise and fall wildly, especially when new markets open. And state-by-state inventory and distribution costs have a direct effect on pricing concerns, too. Sellers need to be able to analyze these pricing changes easily and in real-time if they want to be able to leverage what they have to offer at the greatest profit margin available.

5. Know the marketing regulations in the new market

In Arizona, there are currently no marketing regulations for medical cannabis providers. Contrast that with Illinois, where it’s illegal to advertise cannabis within a thousand feet of a school or public park. The point is, you need to do your homework before you plan out a marketing campaign. The last thing you need is a hefty fine or to incur the wrath of the FCC. 

6. Don’t neglect your distributors

Even if your cultivation farm or processing company has an in-house sales staff, some US markets require by law that distributors be used to move products to store shelves. For example, California, one of the largest markets in the U.S. – doesn’t allow cultivators to sell directly to retailers. All finished product must be transported from manufacturers to retailers by licensed distributors and all cash payments must be picked up by licensed distributors.  In all markets, distributors have to be in the same state as the operator as nothing is allowed to cross state lines.

7. Disregard shipping logistics at your own peril

You might understand that cannabis products can only be shipped within state lines. But are you aware that product-delivery validation only occurs at set points along the supply chain route? That’s an important concern if product damages or losses happen, and it’s one that should be addressed contractually at the point of sale unless you want to take on additional risks.

Putting it all together

Undeniably, the U.S. cannabis industry is in a position of robust growth and heady profit-making, despite risks that remain. At Leaf Trade we’ve worked hard to create a single solution that addresses all of these common obstacles facing your wholesale operation.

Want to learn more? Schedule a demo today.