The Cannabis Supply Chain and Logistics Map!

Cannabis Supply Chain

Do you find yourself thinking about starting a business in the marijuana industry? Perhaps you are thinking about taking your hobby as a gardener into a full-time cannabis farming and cannabis Supply Chain. Maybe you have a new innovative type of a cannabis-based product that you want to sell out into the world.

If you are ready to step to the next level and enter the industry which you have been passionate about, this is the best time for you to learn the supply chain of cannabis industry.

Marijuana is seeing a huge leap in market demand. The industry is growing at an exponential level. The demand for various products made from cannabis is now being invented and sold here and there.

Different strains of cannabis are being reviewed by connoisseurs and are being compared from one another. Consumers now are exploring different products and different strains of cannabis to try. Many even check out and review this list provided by Weekend Gardener for the hottest strains of cannabis in the market today. There are even blogs and vlogs dedicated to marijuana products. The market for marijuana is vibrant and very promising. It would be foolish not to try your hands in this industry.

Before you start your business in the marijuana industry, you need to learn a few basic things about the supply chain of this industry. 

Cannabis

The supply chain of this industry is made up of five stages in the processing of marijuana. The first stage is cultivation of the herbs. This is followed by extraction of cannabinoids. From there, the next stage is testing.

Distribution and retail are the fourth and last stages respectively. The supply chain itself may sound simple, but it actually can be quite complex. This is especially true if you will try to learn the inner workings of each stage.

This article could be the best way to introduce you to the concept of supply chain of the marijuana industry. We will try to provide you with a deeper yet more simpler discussions on each stage of the supply chain of the marijuana industry. Through this article, we hope we can inspire and help you start your business in marijuana.

STAGE 1: CULTIVATION

First of all, cultivation and extraction of leaves are both considered to be part of “plant-touching” stages of the supply chain. This is due to the fact that these two stages have activities that directly work with the marijuana plants. These two stages are often governed with strictest and most intense regulations as such technical knowledge is required in the part of the growers in this part. 

As for the Cultivation Stage, this is the stage in the supply chain which is at the moment most saturated. Everybody wants to be growers. Everyone wants to produce a new hybrid strain. Thus, this is the stage in the supply chain where a businessperson will compete with huge farms and backyard growers. 

In mature markets, companies and farms that have matured are observed to continuously try to expand their business.  This is a direct reaction to the steep competition. At this stage, even seedlings and seeds are being used as commodities.

Although a bigger portion of the crops are still being maintained for harvesting. Smaller and independent players are observed to change their farming method from indoor farming to outdoor. This is due to the fact that outdoor cultivation is much cheaper to operationalize. 

In the future, many experts predict that future cultivation may be outsourced to countries that offer cheaper labor, with more suited weather for cannabis growth, and more relaxed regulations.

Countries that may capitalize on growing marijuana may include Colombia, Thailand and other tropical countries that have more legalized marijuana cultivation. These countries are also capable to build the infrastructure necessary to support industry size operations for cultivation marijuana.

STAGE 2: EXTRACTION

The products that can be extracted will soon diversify as people understand and discover the molecular compositions of active compounds in marijuana. 

One of the best things that is happening right now due to the legalization of marijuana is the rowing interest of scientific and academic institutions in research on drug discovery and development from marijuana.

When we talk about cannabis, we are not talking about the flowers and the buds anymore. People are now looking at the chemicals found in marijuana and what uses can be harness from these compounds. With the legalization of marijuana, many research centers have begun studying the specific compounds found in marijuana plant, testing these for potency, toxicity, and medicinal values.

Alternative products will soon be created from these active compounds. This stage is highly technical and requires entrepreneur with background in chemical engineering, chemistry, biochemistry, and synthetic biology. The results of these research will soon bring to the fore enhancement of old and development of new products. 

STAGE 3: TESTING

After extraction, the next stage in the supply chain is testing. Before products made from marijuana can reach the public, they must go through a series of rigorous tests and examinations to ensure that the quality and safety are at par with the standards set by government.

The Government may be able to run a huge portion of the laboratories and testing centers during the initial years of legalization of marijuana. However, as the market mature and grow, the government will soon give license to independent and private laboratories to handle such examinations and quality control. In fact, this has been what is happening in industries where the government has completely given private third-party testing centers licenses to test for quality standard and safety. 

For anyone not interested with actually producing or distributing marijuana products, testing is a great option to start a business within the marijuana industry. 

STAGE 4: DISTRIBUTION

Distribution is part of many industries’ supply chains. The marijuana industry is the same. Oftentimes, distribution is being conducted by the entrepreneur themselves. But if you have noticed, many of the products you see in the market today are being distributed worldwide via third-party distribution channels.

There are freight trucks that travel and deliver goods across states. There are shipping and air cargo lines that specialize in distribution of goods worldwide. As the market for marijuana grows, it is inevitable for opportunities for distribution companies to open.

The distribution may be dominated by pre-existing third-party distribution companies worldwide. However, it does not mean that a marijuana enthusiast can enter this business. Marijuana is governed by strict quality and safety standard. As such, the distribution of products made from cannabis will require a specialized distribution channel.

This is where a marijuana enthusiast can come in. The knowledge in logistics of marijuana distribution is very important in this kind of work. Thus, a company with strong ties to marijuana industry will be a better choice for many marijuana companies. 

STAGE 5: RETAIL

Of all the stages of the supply chain, retail is the most visible industry. There are three primary ways by which marijuana and marijuana-based products are being retailed across the consumers. The first one is through brick-and-mortar stores that sell to a community through a literal store or dispensary. The second one is through online sellers.

With the huge influence of internet and social media in contemporary market, there are stores right now that are exclusively found online. Third are the stores that have both literal and online stores. These types of retailers take advantage of literal stores and the internet to sell their products.

Brick and mortar stores are great for communities with more open acceptance to marijuana. They may be being ran by independent growers or hobbyists.

Online stores may vary in size. There are huge companies that solely rely on online retail. Other independent and smaller retailers may use other online platforms such as Amazon, Facebook and other websites.

Mixed stores can take advantage of the benefits of having a mortar and brick stores and online stores.

Depending on the type of products, retailers may be governed with strict or loose regulations. Medical dispensaries of medical marijuana follow very strict ethical and industry standards. They are usually required to be ran by a pharmacist like with pharmacies.

On the other hand, there are retailers that sell edibles that are loosely covered by certain food and drug regulations for safety and hygiene. Bakeries that produce brownies with cannabis infusion are a good example of this. There are also coffee shops that sell marijuana-infused coffee and drinks.

At the moment, many of the retail stores for cannabis are run by small and independent players. There is still no significant huge company that dominate this industry. 

The Cannabis Supply Chain

Hopefully, you have learned a lot from this discussion of the Cannabis supply chain in the marijuana industry. This is the best time to start a business in cannabis industry. If you are thinking about opening a business in marijuana, you may try to enter at any of the stages of the Cannabis supply chain mentioned above.  

Cannabis Supply Chain article and permission to publish here provided by Alan Wood at weekendgardener.net. Originally written for Supply Chain Game Changer and published on January 9, 2020.

One thought on “The Cannabis Supply Chain and Logistics Map!”

  1. “In my opinion, from a consumer point of view, it doesn’t matter if you’re growing it indoors or you’re growing it outdoors, as far as you’re growing and making use out of it or say a medical use out of it to help the needy it’s okay.

    Although after reading the post, I feel like it depends on the farmers. Whatever is convenient for them should be just all right, and the decision should be left to them whether to grow it inside or outside.”

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