A new niche sector within the marijuana distribution procedures is developing in California: independent distribution firms that don’t produce their own cannabis products. Such companies – which frequently serve as inventory clearinghouses for existing dispensaries along with other plant-touching businesses – are a relatively new phenomenon in California.
“It has ramped up in a formal sense,” said Lauren Fraser, the founding director from the Cannabis Distribution Association (CDA), that was established in 2016 as a wing in the California Growers Association.
The distribution sector has emerged as a result of changes to the state’s cannabis market which have been in the works considering that the legislature approved a medical marijuana regulatory system in 2015.
A proverbial light proceeded for entrepreneurs after lawmakers approved the primary MMJ regulations in 2015, Fraser said.
“Distribution was this kind of big element of the language that was used – and they also actually had a license type established for it – so following that, businesses started to appear and say, ‘This is the business I’m going to pursue in this industry,’” she added.
We already have lots of distribution businesses specializing in shipping, marketing for that brands they carry and – depending on the company – even the drying, curing and packaging of flower. The CDA, for instance, now represents about 50 distribution companies, Fraser said.
“In every other industry, distribution is a vital 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 critical.
With business models focused on serving the current market, many distributors simply serve as third-party shippers for growers, edibles makers, concentrate producers and so on.
Some distributors specialize in raw flower, selling to both dispensaries and manufacturers including concentrate producers. Others carry an array of products and can be quite a one-stop go shopping for retailers looking vcgtbq fill their shelves.
And some companies, having an eye on the future, have started diversifying their services and work only with brands they’re certain should be able to obtain state licenses when California’s fully regulated MJ market launches in January.
Under the state’s impending system, plant-touching companies will likely be able to obtain distribution licenses and, thus, be spared the fee for hiring some other party.
But some industry experts don’t believe that will lessen the necessity for third-party distributors, only if because some companies won’t want to deal with the extra work.
“If that you were to map out the complexity of all of the various kinds of companies within the supply chain, distribution sits at the center,” said Azam Khan, co-founder of California tech company Distru. “Because to ensure flower to go from cultivators to manufacturers … you have to proceed through a (licensed) distributor once 2018 comes.
“These distributors are both going to be a sales and marketing engine – specially the bigger guys – and additionally, there are gonna be distributors which do solely transportation,” Khan continued. “What’s likely to give distributors an advantage is additionally what other services they can do.
“We see lots of people that are 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 and sell it for you personally.”