Cannabis Distribution: The Role of Distribution in the Growing Cannabis Industry

Posted on February 8th, 2023 to Education by

The cannabis industry throughout New England is growing at an impressive rate. The adult-use cannabis market in Massachusetts alone hit nearly $4 Billion in sales between 2018 and 2022. Not only is the market growing, competition is getting stronger and profitability forecasts are growing more stable as the supply chain continues to become more competent. One major aspect of the modern cannabis market is cannabis distribution.

A Closer Look at Cannabis Distribution

Cannabis distribution is a sect of the cannabis supply chain focused on distributing product from cultivators and manufacturers to retail dispensaries. In a sense, a distribution center is a mid-way entity that connects the supplier to the retailer. 

Cannabis distributors or distribution centers physically warehouse cannabis and cannabis products at a secure location designed specifically for the purpose. Distribution can be complex and heavily regulated but can be a critical component in larger-scale cannabis sales operations. The full definition of cannabis distributor may be slightly different from state to state. However, in New England states and most of the country, a distributor is allowed to offer business-to-business (B2B) transactions only and does not deliver products directly to consumers or work with end consumers at all. Distributors can be tasked with a number of different roles in the supply chain, such as:

  • Store, picking & packing products for shipment to cannabis license types
  • Storing product for retail locations with sparse vault storage. Allowing them to buy in bulk
  • Managing sales and inventory for licensees

A marijuana distribution center offers a facility where cannabis products can be housed on behalf of brands, cultivators, and product manufacturers. When orders come in from dispensaries for particular products, the orders can be picked, properly packed for transport, and then shipped. This can work in several ways. For example, a retail buyer orders several ounces of flower from a specific wholesaler by placing an order for product held at the distribution center. The distribution center picks the product the retailer ordered, prepares it for shipment, and then transports the product to the retailer.

This distribution process makes it much easier for large-scale manufacturers and growers to handle incoming orders from a large network of buyers. That wholesaler only has to secure the transport of product to the distribution center, and the distributor essentially handles the rest of the process of getting those products to end retail buyers.

Who Should Partner with a Cannabis Distribution Company?

As noted above, many license-holders and businesses in the cannabis industry can benefit from partnering with a marijuana distribution company. Take a closer look at who should partner with a distribution partner and why.

Cultivators

Cultivators prefer to get their cured cannabis off-site as quickly as possible to make room for the next harvest. Partnering with a distribution center allows for cannabis to be stored in a secure location until it is needed by an extraction company, manufacturer, or packaging facility.

Manufacturers

Cannabis product manufacturers have a need to purchase flower in bulk for product manufacturing. Access to a distribution center gives a manufacturer scalable storage, on-demand fulfillment, and fast shipping. Further, manufacturers can use cannabis distribution for off-site housing of white labeled products, freeing up internal vault space.

Dispensaries

Dispensaries can partner with distribution centers to house inventory off-site, allowing them to restock inventory on the fly. The best cannabis distribution companies have systems that integrate with existing inventory management systems to make sure products are picked, packed, and shipped before the dispensary shelves are empty.

CBD Focused Cannabis Companies

For cannabis companies focused on CBD or hemp-derived products, distribution centers currently serve a much larger role in the supply chain. Since hemp-derived products are federally legal, distributors can act as the middle-man between a retailer/product manufacturer and the average consumer. Basically, CBD inventory is held at the facility, customers place orders online through the brand’s website, and the distribution center picks, packs, and ships that order to the customer through the preferred means of shipment. In this process, some cannabis product retailers are using distribution centers as a means of drop-shipping products. 

The Benefits of Working with a Marijuana Distribution Center

Regardless of the type of business that partners with a cannabis distribution company, there are a number of noteworthy advantages to mention. Distribution practices have been a longstanding component in many supply chain types for many years, and many of those same reasons for standard consumer product distribution apply to the cannabis industry. Take a look at the benefits of working with a marijuana distribution partner.

Buying Power

Cannabis markets may be stabilizing, but pricing can be a bit volatile depending on supply and demand. By working with a distributor, dispensaries and manufacturers have the liberty to buy flower and products in bulk when prices are low. The products or materials can be warehoused by the distributor until they are needed or most profitable. For example, an extractor without a lot of on-site storage capacity can purchase more bulk biomass at a low price point instead of buying as needed for extraction and save a substantial amount of money over the long term.

Fewer Disruptions Due to Supply Chain Issues

The distribution center acts as a middleman in the cannabis supply chain, but having this extra middleman can soften some of the blows when there are supply chain disruptions. Working with a partner like Plymouth Armor Group, wholesalers and dispensaries can rely on a team of experienced transporters to make sure the product is fulfilled and delivered on-time, with an accurate METRC manifest to match. These types of distributions solutions allow wholesalers and dispensaries to focus on what they’re best at: creating a fantastic product & supplying end users with the products they want or need.  

Secure Cannabis Transport with Little Effort on Your Part

Cannabis distribution companies handle the aspects of cannabis transport on their own. Cannabis transport on its own can be a complicated process if you are not working with a qualified company for the job. When you work with a third-party distributor, they can arrange for the transport of product from you to the distribution center and from the distribution center to the end buyer (manufacturer or dispensary, for example). This frees up time for cultivators and manufacturers to focus on bringing products to life and not have to worry about arranging for transport.

Trust Your Inventory to an Experienced Cannabis Distribution Company in New England

Without question, experience when searching for a cannabis distribution partner is critical. Due to the relative newness of the cannabis industry in New England, the experience can be difficult to find.

Plymouth Armor Group has grown to be one of the most trusted names in cannabis logistics in New England—from secure cash transport to warehousing, distribution, and cannabis transport, we have partnered with 90 percent of the cannabis market in Massachusetts. Could a partnership with us be the catalyst to growing the efficiency and profitability of your cannabis business? Book a meeting with our team to find out.

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