When it comes to logistics, there are no shortage of regulations that wholesale cannabis business’ need to navigate in order to get product 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. At least you can via 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 through a state where it’s still illegal, on the federal level, this is still considered drug trafficking by 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 like California.
To have a sustainable and scalable business, 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.
Making a plan.
How do you even start to put all this together? Start by listing out your products, their type (Hemp/CBD or THC, medical or recreational), and list out the territories you want to target. Then you can begin to hone in on which distributors it makes sense to connect with. It helps to be able to look at everything in one place. If you have a platform tool you use for selling your products, this is a great place to vizualize everything while you make your plans.
Again, that platform will come in handy here. Any distributor will require a manifest, a logistics document that plans out the timing and locations of each delivery. Ideally, your platform has a tool that automatically generates manifest based on orders from your customers. Many 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
This is a very tricky maneuver. As I mentioned earlier, you can’t transport cannabis across state lines (unless you’re willing to risk five to 40 years in jail). So, how do all these MSOs do it? How do SSOs grow into MSOs? There’s a couple of options here.
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 — form 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 white 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.
Distribution and shipping logistics is 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 conquer 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.Schedule a demo today to see how Leaf Trade can meet all your operational needs in one, easy-to-use platform.