As cannabis demand increases and niche markets like minor cannabinoids develop, pressure is mounting on companies to generate profits by scaling. But in cannabis, “scaling” means more than just producing as much product as possible, it means thinking about the various cannabis logistical problems that are going to limit growth. Cannabis logistical issues will only continue to develop, from state-specific regulation of different products to products that are fragile or the absence of meaningful infrastructure will elevate the cost of logistics and be the biggest obstacles to overcome.
How to navigate cannabis logistics today
The supply chain in cannabis is complex and unique in the industry, particularly for wholesale distributors dealing with multiple types of products.
Regulatory Fragmentation by State
One of the biggest cannabis logistical issues is the dubious nature of federal regulation in cannabis. Each state operates on its own rules and guidelines and is hindering the cannabis industry more than helping. Factors include:
- No interstate transport essentially means companies have to re-establish their operations in each state (duplication of effort)
- Different vehicle, route, manifest rules for each region
- Different compliance frameworks – More administrative and legal costs
These problems result in companies unable to leverage traditional logistics efficiencies associated with scale.
High Security Risks in Cannabis Shipping
Cannabis is a high-value product that attracts theft and should be moved with care. Key risks include:
Theft and diversion risk at every touchpoint of transport and storage
Cash payments, with risk increasing during delivery or banking
Expensive insurance with few options wanting to insure cannabis
Maintaining full visibility and control of your inventory is critical to your product being safe.
Perishability and Quality Control
- Many cannabis products must be transported in controlled conditions. If you don’t control the conditions, product quality and subsequently your brand suffers.
- Temperature and humidity sensitive goods, such as flower and extracts
- Limited shelf life for certain edible and packaged items
- Fragile packaging that requires protection, and potential for damage
- If damaged and returned, your shelf value deteriorates and your product page is ruined on retail platforms.
Limited Access to Infrastructure
The cannabis industry is still working towards the infrastructure of other established industries. Challenges include:
- Limited licensed carriers dealing with cannabis resulting in slower delivery and/or limitations in how far you can deliver and how many items you can send at a time
- Limited secure warehouses especially new markets and rural areas
- Limited competition amongst vendors resulting in higher operational costs
- All of these limitations impact your ability to grow and fulfill inventory for an e-commerce and wholesale business.
Strategies for Overcoming Cannabis Logistical Issues
No one has all the answers to address these situations, but enhancing logistics strategy can dramatically improve business growth pathways and compliance.
Leverage Technology for Improved Visibility
Use digital solutions to cut down manual work and increase accuracy. Think about:
- Seed to sell tracking systems so you can account for everything from seed to sale.
- Delivery and route planning software so you can potentially make your local distribution more environmentally friendly.
- Warehouse management systems (WMS) so you can improve continuous packing and order fulfillment.
These solutions also allow for more continuity at the customer level when it comes to product detail pages and booking flows.
Develop In-House Logistics Capabilities
Providing internal systems where third-party service providers aren’t viable provides stability:
- Develop a trained and compliant delivery fleet.
- Hire security to guard transit and care points.
- Enhance local knowledge around regulatory expectations so you’re audit ready.
When you utilize an in-house team you maintain direct control over your delivery timelines and product handling.
Collaborate Within the Cannabis Ecosystem
Strategic relationships allow you to share and reduce resources:
- Partner with cannabis specific 3PLs who know the state laws
- Utilize shared warehousing models with other licensed operators
- Develop a strong network with cultivators and manufacturers to close supply chain shortages
Collaboration establishes better consistency in supply, and improved turnaround time for wholesalers and retailers.
Use Data to Drive Efficiency
Use data to track and identify performance metrics and identify inefficiencies:
- Delivery time and costs per unit
- Inventory turnover rates and spoilage rates
- Compliance audits and transport incidents
The continuous process of optimization will aid in establishing more consistent operations and improved service when it comes to product category pages and book online pages.
Are you ready to level up your cannabis logistics?
Solving cannabis logistical challenges is vital to scaling successfully in a competitive marketplace. Whether you are increasing product offerings, managing orders across states, or managing the experience of various product detail pages on a book online page, it is imperative to have a solid foundation in logistics.
Contact us today to explore scalable and secure cannabis logistics strategies and solutions that support your business objectives.
