Overcoming Cannabis Industry Distribution and Logistics Challenges

by | Jun 18, 2021

When it comes to logistics, there’s no shortage of regulations wholesale cannabis businesses need to navigate in order to get products to their customers. What you can and can’t do depends on the state you’re in, and on the THC content of your products. Thanks to the 2018 Farm Bill, CBD and Hemp products can be shipped across state lines legally now, provided you follow the rules. Most shipments will need to go through USPS, as some independent carriers like FedEx still list CBD and Hemp as prohibited substances.

Traditional, fully loaded, THC cannabis is another story. Shipping across state lines is still strictly prohibited. If cannabis passes from a legal state to a state where it’s illegal, this is considered drug trafficking under federal law. Not only is it illegal to ship across state lines, but it’s also illegal to ship within state lines, even if it’s a cannabis-friendly, recreational market.

To have a sustainable and scalable business in the cannabis industry, you need to play by the rules. Partnering with a distributor is a great option. While your cousin Steve with a flatbed truck is a nice guy and useful when delivering to the local area, eventually, you’ll need a distributor. Distributors are legally authorized to store, transport, and deliver cannabis, as well as handle cash payments. But as mentioned in a previous article, you may need to work with several distributors to handle several territories. It can get overwhelming, fast.

Make a Plan

How do you even start to put all this together?

Start by listing out your products, and their type (Hemp/CBD or THC, medical or recreational). Then list out the territories you want to target. You can then begin to hone in on which distributors it makes sense to connect with. It helps to look at everything in one place. If you have a platform similar to Leaf Trade you use for selling your products, this is a great place to visualize everything while you formulate your plans.

Managing Manifests  

Again, a platform like Leaf Trade will come in handy here. All distributors will require a manifest, and a logistics document that plans out the timing, and locations of each delivery. Ideally, your platform has a tool that automatically generates manifests based on orders from your customers. Most distributors manage their own manifests, but offering that tool in advance will make it easier for you to streamline and get on the same page fast.

Expanding to New Markets 

Expanding to new markets can be very tricky to maneuver. As mentioned earlier, you can’t transport cannabis across state lines (unless you’re willing to risk 5-40 years in jail). So, how do all these MSOs do it? How do SSOs grow into MSOs? There are a couple of options.

According to Weed Week, “For now, brands with national ambitions have two options, both of them fraught with risk: They can either reproduce their operations and apply for licensure in each new target state or they can partner with a company which is already established in the new market.”

For smaller operators, the latter option often makes more sense — forming partnerships with other smaller operators. You can partner with other brands, who might be willing to brand their own product as yours. But that’s tough. Trust has to be very high between all parties (horror stories abound with this approach). Another option is to work with a private label retailer, who will brand your products as their own.

Whatever option you choose, expanding to a new market is an expensive and turbulent process. Regulations in the new market might be wildly different from your current one. 

Defeating Wholesale Cannabis Distribution Issues

Distribution and shipping logistics are a challenge in any industry, but the word “cannabis” acts as a difficulty multiplier, stacking regulations and operational challenges on top of the normal worries. But with careful planning, using the proper tools, and choosing trusted partners, you can defeat the challenges and scale your wholesale cannabis business to new heights.

Click here to learn more about the complexities of scaling your wholesale cannabis operation.


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