The Current State of Cannabis Logistics
The phrase “building the plane while flying it,” gets used a lot in the cannabis industry. It rings particularly true, when it comes to cannabis logistics, because of the industry's fragmented state-by-state structure. Compounded by unreliable technology, changing regulations, and high operating costs, navigating logistics can feel like traversing uncharted territory… And sometimes it is… Literally!
The Current State of Cannabis Logistics
Cannabis logistics in the various markets manifests in various forms:
Vertically integrated markets that require companies to both grow and sell cannabis, eliminating the need for separate logistics
Retailers having to figure out their own way to pick up product after buying it from online menus – Sometimes resorting to using their personal vehicles
Brands responsible for delivery products, requiring them to manage all aspects of transportation and scheduling
Retailers and brands paying extra for technology platforms integrated with third-party logistics partners – Accruing additional fees along the supply chain
The current cannabis logistics infrastructure isn’t just ineffective, it’s expensive for all parts of the supply chain; from grower to consumer. Let’s dive into several pain points that require further discussion:
Technology
After Dutchie went down for many of their retail partners on 4/20, 240Logistics CTO Tim Schmitt CISSP highlighted the current state of cannabis technology, emphasizing the need for change:
This situation highlights a reality in our industry—we're often dependent on major software providers who were early to market. Consequently, brands and retailers must make do with the limited tools available in the cannabis sector. Addressing such inefficiencies was a primary motivation behind creating FlyWheel™ —our proprietary software at 240 Logistics, designed to equip you for any challenge the industry faces.
Because of the newness of the industry, the foundation for cannabis businesses is technology that was adopted because it was the only one available, not because it was the best option. While other industries get the benefit of operating with systems that have been refined over years, with competition weeding out any bad actors and inefficient systems, current day cannabis technology has come to market almost without competition.
While the inefficiencies of these systems continue to make front page news, it’s important to note that not all of these problems are of their own making, and many have done the best with what has been available to them.
Unique Market Regulations
Because cannabis is currently regulated on a state-by-state basis, local governments make the laws around buying, selling, and transporting (both B2B and B2C) cannabis. This means every state has a unique infrastructure surrounding their cannabis logistics, and this decentralized approach has resulted in a fragmented supply chain.
For larger businesses operating in multiple markets, this patchwork system poses significant challenges, contributing to a disjointed supply chain within the industry. For smaller businesses, this has resulted in a supply chain that requires significant oversight to manage high operational costs and frequent logistic inefficiencies.
Further, companies who take on their own logistics are required to acquire costly licenses, and maintain strict compliance practices, while simultaneously leveraging their operations on shaky technology. Often, the technology isn’t even built for market-independent transportation partners, with many having to rely on handshake agreements, and text message exchanges to facilitate business, adding further complexity to an already intricate process.
Supply Chain Inefficiencies
The current cannabis logistics systems aren't just inefficient; they're costly for everyone involved, from the growers to the consumers.
Consider this situation – Archie’s Edibles and Loli’s Vapes are producing products 1 block from one another. Both Archie’s Edibles, and Loli’s Vapes have their own delivery drivers that service their retail partners. These brands happen to service many of the same stores, and as a result their drivers often end up at the same gas stations, making consecutive deliveries, and even staying at the same motels for longer trips. Worse, each individual truck isn’t even filled to complete capacity.
Now let's consider the implications of this scenario – Both Archie’s Edibles and Loli’s Vapes have to pay for the delivery truck, for the truck’s insurance, fuel for the truck, and for all associated costs for each individual driver, including their salary, their meals, lodging, etc. These unintentional costs add up fast and are passed throughout the entire supply chain.
For the retailers, this translates to multiple deliveries, multiple invoices, and extra administrative work. It's a logistical nightmare that leads to inefficiencies in delivery and inventory management.
Discover FlyWheel
Now, imagine both Archie’s Edibles and Loli’s Vapes have entered into a partnership with 240Logistics. With this partnership, they can map out routes to view inefficiencies and gain complete transparency into inventory levels. Meanwhile, they can outsource the headaches associated with planning routes, managing logistics personnel, and keeping up the maintenance and upkeep of the delivery trucks. With this model, both Archie’s Edibles and Loli’s Vapes, and their customers can make smart decisions on everything from inventory management to staffing needs, while reducing unnecessary supply chain costs and harmful emissions.
In this future state, there aren’t just less days with multiple unexpected deliveries, but there are fewer deliveries overall. Because of intelligent and sustainable practices brands and retailers can save money along the supply chain; providing benefits to the brand and the retailer, which in-turn leads to savings for the end-consumer.
The good news is that the future is here with technology that puts the power of supply chain management back into the hands of the business leaders, and reduces the ambiguity that comes with operating in a market with a blind supply chain.
Interested in learning more? Email Brian Harlan > brian.harlan@240logistics.com
Written by: Annelise Orthey
