A new niche sector in the marijuana distribution procedures is developing in California: independent distribution firms that don’t produce their own cannabis products. Such companies – which often serve as inventory clearinghouses for existing dispensaries and 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 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 that have been in the works because 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 this kind of big element of the language which had been used – and they also actually had a license type established for this – so next, businesses started to emerge and say, ‘This is the business I’m likely to pursue within this industry,’” she added.
There are already dozens of distribution businesses focusing on shipping, marketing for the brands they carry and – depending on the company – even drying, curing and packaging of flower. The CDA, for example, now represents about 50 distribution companies, Fraser said.
“In every other industry, distribution is a vital component,” said Lucas Seymour, co-founder 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 focused on serving the existing market, many distributors simply serve as third-party shippers for growers, edibles makers, concentrate producers and so forth.
Some distributors specialize in raw flower, selling to both dispensaries and manufacturers including concentrate producers. Others carry a wide range of products and can be 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 simply with brands they’re certain can 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 able to obtain distribution licenses and, thus, be spared the cost of hiring some other party.
However, many skilled professionals don’t think that will lessen the necessity for third-party distributors, only if because some companies won’t want to deal with the work.
“If you were to map out your complexity of all the different types of companies inside the supply chain, distribution sits in the center,” said Azam Khan, co-founder of California tech company Distru. “Because to ensure that flower to maneuver from cultivators to manufacturers … you must go through a (licensed) distributor once 2018 comes.
“These distributors both are gonna 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 likely to give distributors an edge is additionally what other services they can do.
“We see a lot of people that are distributing which also have processing facilities. Not only can they pick up your whole plant … but they’ll dry it and cure it at their facility, along with bottle it then sell it to suit your needs.”