Common Cannabis Distribution Challenges and How to Avoid Them

As the owner of a vertically integrated cannabis company, your livelihood depends on your ability to navigate the complexities of a highly regulated industry successfully. You've got a lot on your plate. You're crunching numbers and placing orders one minute, tracking your inventory, and reviewing various aspects of state-specific compliance the next. In today's ultra-competitive market, there's no room for complacency. There's also little margin for error. The hours you devote to your business today help ensure the future success of your company as the landscape evolves.

Whether you established your seed-to-sale business years ago or are relatively new to the industry, you've likely run into more than your fair share of challenges along the way. With regulatory compliance requiring painstaking documentation through every phase of production, even seemingly minor miscalculations or misinterpretations can lead to frustrating shortages, unnecessary delays, and avoidable supply chain disruptions. What can you do to minimize the risk of potentially costly mistakes? If you rely on a single-source distribution channel, whiteboards, and spreadsheets to manage your business, consider upgrading to cannabis-specific seed-to-sale software.  

The Complexities of Vertical Integration: An Overview

Some states require vertical integration to ensure full regulatory compliance at each production stage. Even when vertical integration is not state-mandated, many owners choose the business model to help reduce overhead costs, enhance overall efficiency, and ensure consistent quality. Of course, that level of involvement requires an incredible commitment to every aspect of production and the willingness to take on (or oversee) several important roles. 

As a cultivator, you understand the importance of having reliable, actionable data that ensures the consistent flavor, aroma, and cannabinoid profiles cannabis consumers expect from your brand. As a product manufacturer, your focus likely shifts to processes intended to help manage your inventory, streamline your workflow, and stay at least one step ahead of the competition.

With vertical integration, your responsibilities also require the skill and knowledge of an experienced cannabis wholesaler or distributor. Wholesalers and distributors are responsible for purchasing, testing, and packaging products. They also get your finished products to where they need to be. But logistics are just a small part of the equation. Wholesalers and distributors are also tasked with ensuring regulatory compliance throughout the supply chain and overcoming the challenges of intrastate distribution.

3 Common Distribution Challenges

Cannabis procurement teams spend most of their time sourcing supplies. Wholesalers purchase finished cannabis products in bulk and sell those products to licensed dispensaries, taking on the role of a third-party distributor. Whether you're selling your cannabis to a wholesaler or directly to a dispensary, the challenges you could encounter are essentially the same. While the rules and regulations can vary by state, the following three distribution challenges top the list.

Increasing Consumer Demand

Although the legal cannabis market is still in its infancy, current studies suggest 74% of adults in our country now have access to medicinal or recreational cannabis. An impressive 67% of physicians support federal legalization, and market analysts predict more than 50 million Americans will have tried at least one cannabis product by the end of this year. As public perception evolves and consumer demand increases, distributors are feeling the strain of small-batch processing, shipping shortages, and having to overcome logistical delays.

Department of Transportation Regulations

Vehicles regulated by the US Department of Transportation are currently barred from delivering marijuana, including freight trucks. That ban can create serious supply chain hurdles. To get around federal shipping and transportation restrictions while remaining compliant with state regulations, cannabis products tend to be transported by vans or armored trucks, vehicles with limited space. To compensate for the lack of space, high-volume wholesale suppliers and product distributors are tasked with arranging, tracking, and tracing a large number of shipments.

Outdated Processes

Mandatory track and trace platforms give state regulatory offices real-time access to the cannabis supply chain. But the system is incapable of alerting distributors to discrepancies in their submissions. A single misstep can lead to extensive audits, hefty fines, and worse. Although a surprising number of companies still use single-source distribution channels, spreadsheets, and whiteboards to document their processes, these increasingly outdated practices are unlikely to provide the type of information distributors need to track individual plants, identify market trends, or manage their supply chains effectively.  

Overcoming Distribution Challenges with User-Friendly Technology

You have little control over rapidly changing regulatory requirements. But you can take steps to overcome some of the many challenges of product distribution. Once you realize most distribution errors are largely driven by ineffective data collection, inventory oversights, and a limited ability to connect the dots between some of the many metrics you already track, it's easy to see why so many of today's most reputable brands invest in seed-to-sale software. With the right platform, every member of your team has access to the data they need to make course corrections as needed and help keep your business profitable. Now that we've got your attention, consider how the following three features could help you overcome some of the many distribution challenges you'll likely encounter.   

Seamless Integration

Cannabis-specific seed-to-sale platforms help you make the best use of the data you have at hand to optimize operational efficiency across every aspect of production. Using digital tools with integrated capabilities minimizes the risk of manual tracking errors while also passing key metrics between various applications, including state-implemented traceability platforms like METRC, back-office applications, and everything in between. In addition to having the ability to identify costly inefficiencies, you'll also appreciate the automated regulatory compliance features. 

Inventory Management

When you have a cannabis-specific inventory system, you'll know at a glance which products are exceeding your expectations so you can plan accordingly. You'll also have the information you need to help ensure maximum yields and keep your prices in line with your overhead costs. With your new-found ability to access inventory-generated data from just about anywhere, you can utilize that valuable information to reallocate your resources as needed, forecast demand, and reduce the risk of running low on the products your retail partners rely on.

Operational Efficiency

With data analytics technology, your entire staff will have immediate access to the ideal growing conditions that ensure predictable harvests, the ideal humidity levels, CO2 concentrations, temperatures, and lighting conditions for every strain in your inventory. Over time, you'll also have valuable information that helps you work towards peak operational efficiency as you scale production and track the movement of each plant through your facility, cut excess spending, and mitigate risk.  

Could Data Analytics Help Your Company Overcome the Challenges of Cannabis Distribution?

With the right software, you'll have a full suite of business management tools designed to help track materials, improve the accuracy of your inventory, reduce waste, ensure regulatory compliance, and automate your workflow. You'll also have a robust notification and alert system that ensures essential processes are on time and on task. Although you're sure to find numerous companies claiming their services can be modified to meet the needs of nearly any industry, cannabis cultivators have very specific distribution-related issues most platform providers won't know how to solve.

At Rockton Connect Cannabis, we understand the complexities of cannabis cultivation and have the tools you need to help manage your inventory, optimize grow cycles, streamline production, reduce labor costs, and overcome some of the many challenges of cannabis distribution. But we bring more than technology to the table. Our transparent onboarding process ensures you choose the right path for your business, even if that path isn't with us. To learn more, schedule an assessment.