Ask Our Experts 07/29/2018

Q: What collaboration trends and challenges do you foresee between cannabis product suppliers and their logistics partners?

A:
Among the industry’s greatest challenges thus far is streamlining the supply chain. For example, relying on growers’ alerting buyers about which products they have via text message or email is inefficient and makes it impossible to establish an open market with full transparency between buyers and sellers. To address this inefficiency, we will ultimately seesuppliers, distributors, and retailers all connected via a user interface or automated ordering system — software is already under development for it. Inventory-monitoring systems will show where retailers are, and suppliers will coordinate with them for reordering stock and automatically generating fulfillment orders based on their Min/Max models for inventory management.

Companies with strong logistics networks will stand to benefit the most, especially in states like California which allow for delivery and require separate licenses for product transportation. That said, hiccups commonly occur in regulatory rollouts: For example, supply chains in California could be easily disrupted if distributor licenses are not issued in a sufficiently timely manner to ensure that the rapidly increasing number of growers are able to get their product to market in a timely way.

A distributor’s most important value-add is the number of retailers to which it has access, but the challenge for retailers will be how to identify the right distributor with access to the right channels at the right price. Without the tools to assess the market, opacity between retailers and distributors will continue to drive inefficiency. Other issues might include changing regulatory rules which render one’s current inventory as obsolete or unsellable, which is not uncommon in regard to establishing packaging and labeling standards. Such changes require clear and transparent communications between retailers and their suppliers to ensure that the market can respond quickly to such changes without causing product shortages or generating large volumes for product that cannot be sold.