Understanding Cannabis Logistics: What It Is and Why It’s Necessary
In 2022, cannabis sales nationwide reached an astounding $26 billion—a three percent rise from 2021. Undeniably, the cannabis industry is one of the fastest-growing industries in the country. While cultivators, processors, and retail dispensaries make all these sales possible, these establishments are only the tip of the iceberg. These businesses in the industry wouldn’t be functional without cannabis logistics.
Cannabis logistics is the management of cannabis and related products as it travels between parts of the cannabis supply chain. Therefore, cannabis logistics may involve warehousing, distribution, transport, and even transporting cash to and from dispensaries. Therefore, cannabis logistics solutions are an important part of a well-made business plan for many in the industry. Further, with the massive growth of the cannabis industry as a whole, the need for logistics solutions is ever-growing.
What Is Cannabis Logistics? – A Closer Look
Logistics is a term used to describe the full process of managing how a product is sourced, warehoused, and transported before it gets to the end customer. Cannabis logistics, then, is used to describe the process of managing cannabis product, storage, and transport between all the touchpoints in the cannabis supply chain before it is purchased by a customer.
If you were to track all the paths that cannabis travels before it lands in the hands of the final consumer, you may be surprised by just how much a single harvested plant travels. What starts out at a cultivator after harvest and curing can:
- Head to a warehousing facility for secure storage
- Be picked by a distribution team and prepared for shipping
- Get shipped to a product manufacturing facility for extraction or product conversion
- Go back to a warehousing center post-manufacture
- Make it to a dispensary as store inventory
- At last, make it to the end consumer via in-store purchase or delivery
Making it through all the touchpoints can be a bit more complicated because cannabis is a highly regulated product. Cannabis logistics can be a bit more complex for that reason, but the fundamentals are still the same.
The Growing Need for Cannabis Logistics Solutions
You only have to look at the large number of cannabis logistics jobs to see just how vital this aspect of the industry truly is. By the end of 2022, the cannabis industry boasted over 417,000 “full-time equivalent” employment positions. This means there were more workers employed by cannabis than in auto repair, pharmaceutical manufacturing, and even bars.
While 91 percent of jobs in cannabis are in retail, manufacturing, cultivation, and ancillary jobs like marketing and controllers, the 2023 Jobs Report published by Vangst says 9 percent were in distribution and wholesaling. This represents over 37,000 cannabis logistics jobs, and, as more states go medically or recreationally legal, that number is only going to grow.
Cannabis Logistics Companies Are in Limited Supply and High Demand
While cannabis logistics is a vital part of the cannabis supply chain, cannabis logistics companies are in short supply in some areas. Obtaining licensure, adhering to regulations, and investing in fleet vehicles, warehouses, and tracking equipment doesn’t come easy in most states. This is why large-scale companies like Plymouth Armor Group often end up serving a substantial part of one state. For example, PAG has partnered with around 90 percent of the cannabis market in Massachusetts, which has one of the most robust cannabis markets on the East Coast.
In many areas, the cannabis supply chain faces a similar issue: product is available, but it doesn’t always get transported quickly enough to serve the high demand. Unfortunately, this has many detrimental impacts on businesses, the customer, and the industry as a whole.
The Negative Impact of Lacking Logistics Solutions in Cannabis
In states where cannabis is just getting started, many retailers, cultivators, and processors are forced to rely on small cannabis logistics companies. While effective, it is not uncommon for different businesses in the supply chain to face challenges with things like:
- Securing product transport between a supplier and retailer in a timely manner
- Finding a warehousing solution for an abundance of raw flower or manufactured products
- Obtaining cash transport from dispensaries as needed to prevent having to keep an abundance of cash in-store
The fact is, without effective logistics in place, the supply chain faces issues in a number of ways. Cultivators producing large volumes of biomass face substantial losses if biomass is not transported quickly, for example. Likewise, processors face raw material shortages that impede product production. Retailers face product shortages in stores. All these issues combined mean logistics shortages always negatively affect the end customer. Customers don’t just see a shortage of cannabis products; they may also face higher costs due to challenges with supply and demand.
The Different Parts of Marijuana Logistics
There are several aspects of cannabis logistics. Some companies do a good job of offering a robust service model, while others may only offer select services to their clients. Take a look at a few areas of service that may be offered by a cannabis logistics company.
Cannabis logistics usually involves some level of warehousing. However, not all cannabis logistics companies offer to warehouse and focus primarily on transport. Warehousing access can be highly advantageous because it allows for raw flower or bulk products to be stored off-site in a secure location. When the products or raw flower are needed, they can be distributed to their next point in the supply chain.
Cannabis distribution is focused on distributing product between cannabis businesses. For example, a distributor may handle incoming orders for bulk flower from a manufacturer. The flower is stored on or off-site, but the distributor handles the process of gathering the order, preparing it for shipment, and then transporting that shipment to the manufacturer.
Cannabis transport is one of the most critical components of cannabis logistics. Cannabis transporters get product from one point to the next in the supply chain, whether that is from the cultivator to the manufacturer or from the extraction center to the dispensary. Transport in the marijuana industry must be handled with absolute dedication to complying with state regulations and security protocols. And, not all companies offer the same level of security. Therefore, it is important to evaluate a service provider thoroughly before choosing to partner with them.
Due to the fact that banking restrictions can mean a lot more cash transactions in the cannabis industry, several in the supply chain can face a need for cash transport. For example, a single dispensary could take in thousands of dollars in cash per day due to a high volume of cash transactions. Working with a cash transporter ensures the large sums of money that leave the dispensary for bank deposit are well-protected along the way in armored vehicles designed for the purpose.
The Difference Between Cannabis Logistics and Supply Chain Management
Supply chain management (often shortened to SCM) is an umbrella phrase used to describe the upper-level tasks in the cannabis industry of sourcing materials, managing product distribution, and ensuring stable inventory for the end customer. However, cannabis logistics is more focused on the physical aspect of achieving these necessary tasks, such as transporting and storing the materials or products.
What to Look for in the Best Marijuana Logistics Company
Finding an experienced cannabis logistics company may be a challenge in some parts of the country where the cannabis industry is not well-established. Therefore, it is always important to know what to look for when looking for a logistics company to partner with in the business. A few important things to ask or consider when assessing your options include:
- How many aspects of cannabis logistics can the provider reasonably handle?
- How much experience does the service provider have in the cannabis industry?
- Does the logistics company offer valuable services like wholesale warehousing or cash transport?
- What kind of vehicles does the company use for cannabis transport?
- What steps does the company take to remain compliant with federal and state regulations?
- Does the company have a good track record with other clients?
Why Trust Plymouth Armor Group for Cannabis Logistics in New England
From distribution and fulfillment solutions to cash transport, Plymouth Armor Group offers a spectrum of cannabis logistics solutions. As one of New England’s leading cannabis logistics companies, we work hard to keep the cannabis industry moving in the simplest way possible. If you are interested in our services, reach out to us to discuss your needs. Interested in cannabis logistics jobs? Be sure to check out our career opportunities at PAG.
Ready to discuss how we can help your business flourish? Reach out to the team to schedule a meeting.