With the legalization of cannabis in many states the cannabis business has become a booming industry across the nation. In fact, over the past year, sales of cannabis have hit $17.5 billion in the United States, and it’s projected that that number will be $57 billion by 2027. It’s estimated that nearly 40 billion Americans consume cannabis products, but very few understand the cannabis supply chain and the complications that go along with it.

in simplest terms, there are five links in the cannabis distribution chain. The five parts of the process are cultivation, manufacturing, distribution, delivery, and retail. Throughout much of this process, however, our logistical concerns for the sake of compliance. For instance, products must be tested in a lab, and a third-party contractor must destroy products that don’t meet the standards required by law. Further, throughout the supply chain, movement of cannabis products must be tracked and traced in accordance with state laws. Let’s look at what’s involved in supply chain management in the cannabis industry.

  • Of course, cultivation is the first step in producing cannabis products. Cannabis is typically grown for one of three purposes. The fiber from harvesting cannabis stocks is used to create products like rope, textile, clothing, and insulation. The seeds are harvested from female hemp plants to produce oil and protein substance, usually for medicinal purposes. Finally, drug-type cultivars are grown for their psychoactive and therapeutic cannabinoids. Cultivation has six stages. The first stage is germination, in which the seed sprouts and the plant takes root, and this can take anywhere from 12 hours to 8 days. Next is seeding, which lasts 1 to 4 weeks and is the most vulnerable part of the cycle. The vegetative step follows, lasting a month or two, and then the pre-flowering stage begins, lasting for 10 to 14 days. Then comes flowering, which can range from 6 to 22 weeks, depending on the type of plant, and during this time, male and female plants must be separated to avoid pollination. Harvesting times vary based on the intended use of the plant, and after the harvest comes drying, curing, and trimming.
  • The next step is the manufacturing of products. Extraction is used to create natural by-products of the plants, using solvent or non-solvent extraction methods. Then these by-products are used in light manufacturing, packaging the different parts of the plants, or infusion, in which baked goods, beverages, or other consumable are infused with cannabis. Infusions are different from concentrates and extractions in that they are not created to be consumed on their own, but just to be used in cooking and baking.
  • Distribution of cannabis is complex because it’s heavily regulated. In fact, distributors often deal with more compliance issues than any other part of the supply chain. A cannabis distributor can ship or store products, sell for wholesalers, and collect money from retailers on behalf of wholesalers. The laws regulating the distribution of cannabis products are state-specific, but there are some federal restrictions as well. For instance, any freight truck regulated by the U.S. Department of transportation is prohibited from being part of a marijuana supply chain. Because of this, growers and manufacturers must work with small freight organizations, which can complicate transportation and negatively impact the cost for distributors and consumers. Additionally, interstate transport of cannabis is prohibited, so retailers cannot establish a nation-wide distribution system.
  • Transportation is complicated by legality. While interstate transport is illegal because cannabis is not legal in all states, even within the states legal restrictions can be tricky. In California, a distributor must hold a type 11 license to transport cannabis to retailers, and are responsible for collecting excise tax on delivery, as well as remitting taxes to the government in a certain timeframe. Those distributors who have a type 13 license can only deliver cannabis between licensees, but no retailers.
  • Retail is the last step in the supply chain process. Cannabis retailers are called dispensaries, and only licensed retailers can sell to consumers. There are delivery groups, or non-storefront retailers, who can dispense products to patients by vehicle delivery.

If you’re looking for a trusted distributor, trust RUKLI. Since 2017, RUKLI has been licensed and operating in California’s cannabis industry. Now that we’re experienced veterans, we have a vast distribution network that serves both Southern and Northern California, and we operate out of facilities in both regions. Coordinating product intake using a precise “Track & Trace” system, we manage inventory, make compliance testing arrangements, and take on picking and packing in time to ensure next-day deliveries. We handle invoicing and collection, as well as tax payments and filings. We service some of the top brands, but we do not have our own brands or compete against our customers. To learn more about how RUKLI can meet your distribution needs, call (909) 300-0000, contact us through the website, or schedule an appointment.