Wholesale Cannabis Distribution – A Quick Guide for a Complex Subject

It wasn’t that long ago that wholesale cannabis distribution meant a brave soul in an unassuming truck doing box runs in the wee hours of the night. Today, distribution in the cannabis industry has matured into sophisticated business processes that help large and small producers across the country get their products to storefronts and, ultimately, to end-consumers.

Much like Apex Trading, distribution supply chain partners assist retailers and producers with the ability to connect. Distributors often take on the legwork of brand exposure and delivery so cannabis brands can focus on doing what they do best – crafting amazing products.

In turn, Apex Trading helps distributors manage their stable of brands with greater ease. We designed our platform to support companies with multiple cannabis brands. Cannabis distributors or cannabis companies with more than one label can view robust reporting and analytics for each brand. They can assign roles and tasks separately, keep licensing and compliance in their proper buckets, and so much more.

What Cannabis Distributors Can Do for to Brands
In each legal state market, you’ll find a host of wholesale cannabis distributors, each offering an array of services to suit general and specific needs of producers and retailers in the market. Some distributors provide full-service, statewide distribution. Others go so far as to provide manufacturing, management services, compliance education, auditing, marketing and branding services, licensing and permitting help, consulting and more. Distributors often try to distinguish themselves from the competition by featuring next-day order fulfillment or offering the newest or hottest brands in the market.   

Is It Easy to Become a Wholesale Cannabis Distributor?
From state to state, the rules and guidelines for distribution differ greatly. Compared to other types of cannabis businesses, and depending on the state, creating a distribution company may require a lot less effort, have lower overhead, and have licenses that are easier to acquire than those for dispensaries, cultivations or extraction facilities. However, in some states, acquiring a distributor’s license can be a highly complex and involved process that may require external assistance to help you navigate all of the state and local laws and regulations.

Finding the right location can also be a challenge for would-be distributors. Considering how much commercial real estate inventory is available these days, one would think that finding space might be the least of their problems. However, most local jurisdictions have strict measures and guidelines with a labyrinth of zoning restrictions, and securing a property without the proper zoning could be an expensive, time-consuming mistake. What’s more, with the cannabis industry and regulatory landscape around it still in relative flux, zoning and laws can change on a moment’s notice and that building that was good to go last week may no longer be an option today. Further, areas that are zoned properly, may or may not meet expectations for the most efficient access to the brands it supports or the distance of employee commutes. On the brighter side and unlike retail locations, considerations such as foot traffic or visibility do not come into play when trying to find the right area for a distribution warehouse.   

Three Main Types of Cannabis Distributors
Though there are numerous variations, you can usually bucket distributors into three primary categories – simple couriers, niche distributors and vertically-integrated distributors.

Simple couriers are distributors that deliver products from point A to point B. These types of cannabis distributors may be a great fit for established brands who are consistently selling through products to retailers with whom they already have established relationships. However, for brands looking for exposure and distribution who can open doors for them, a simple courier may not be the best choice.

Niche distributors have focused on a curated assortment of products such as organic or natural, high-end, or value/budget. Depending on a wholesale cannabis producer’s product mix, a niche distributor can be a great way to get into stores when the store services a certain clientele and are after a specific product set. Of course, if a company’s product falls outside of the niche of a distribution company, the business may want to look elsewhere.

Vertically-integrate distributors are typically part of a larger production and retail company. Sometimes these companies will distribute products from other companies to help expand their product mix and generate additional revenue for their business. On the other hand, it may not be in a vertically-integrated distributor’s best interest to transport competing products on the same trucks that are carrying their company’s goods.

Distributors Can Deliver More than Just Cannabis Consumables
It’s great to know your flower, extracts, edibles, topicals and tinctures have a way to get to stores via a distribution company, but distributors can do more than just that. Branded merchandise – think hats, lighters, clothing, rolling trays, batteries, etc. – can also go on the truck to dispensaries. There can be limitations and requirements around this type of merch depending on the market, but it is certainly something to consider when choosing the right distributor or choosing to become a distributor.

Thanks to a low barrier to entry in most states, there are quite a few distributor options out there to meet the full spectrum of needs a cannabis brand may have. And, for someone thinking of becoming a distributor, understand that there will be a need to differentiate your company from the rest with enticements such as fast delivery, exceptional customer service, niche products, curated product sets and competitive delivery rates.

Apex Trading works with a number of distributors as well as cannabis producers in states across the US. If you’re interested in learning more about our inventory, order and sales management software and how it can help you create efficiencies, streamline your ops, and save you on your bottom line, we encourage you to sign up for a quick demo

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