Cannabis distributors work with the entire supply chain—from cultivators and manufacturers to dispensaries—and many of them have gained industry insight that can help dispensaries connect customers and patients with the products they want to buy.
In some states—like California—cannabis cultivators and manufacturers cannot sell directly to retailers unless they have a special license or permit, so they need distributors to legally bring their products to market. Reliable distributors are not only key for dispensaries to acquire products from brands, but also to ensure legal compliance. In California, for example, the three agencies that govern the regulated cannabis market rely on distributors to ensure that the brands they distribute are compliant with regulations for packaging, testing and more, according to Dakota Sullivan co-founder and CEO of California’s Calyx Brands. The third-party cannabis distributor was founded in 2016 and represents 18 different brands of finished goods and flower from several farms. Calyx distributes products to nearly 400 stores across the state through a network of sales representatives.
“We have to make sure that the products meet all the requirements, and when they don’t, we have to work with the brands to either modify their labels or sticker packages,” Sullivan tells Cannabis Dispensary. “Then, we’re responsible for working with laboratories to do what’s called CoA [Certificate of Analysis] testing.”
If products fail pesticide, herbicide or microbial testing, he adds, the distributor must then work with the cultivators or manufacturers to file remediation plans with the state.
“The wholesale distributor is really the gatekeeper, if you will, to the retail channel in terms of compliant product,” Sullivan says.
Distributors can only work with vendors and retailers that have been licensed by the state and permitted within their municipalities, he adds, so distribution companies also act as gatekeepers for permitting and licensing.
“It’s really just taking the friction out of the supply chain to make sure that customers and stores can always get what they need, when they need it, without delay, and [to] make sure that manufacturers are able to distribute their product broadly and build a huge company without having to take on all the cost of having their own sales team and dealing with all this government regulation stuff themselves,” Sullivan says.
Here, Sullivan offers his top advice for dispensaries, based on Calyx’s experience with connecting the dots of California’s supply chain.
1. Thoroughly vet distributors.
Retailers should look for reliability, dependability, transparency and honesty when deciding which distributors to buy from and work with regularly, Sullivan says.
“These are all the important things for the dispensaries,” he says. “The dispensaries need the products they need. They need them when they need them. And they don’t want hassles. They should be able to focus their time and attention on servicing their customer.”
Distributors should have a wide range of products—ideally more than one brand in every category—so the dispensary has options, Sullivan adds. They should also be able to have an objective and consultative conversation about the differences in the products so the retailer can make an educated decision about which one to carry.
Financial stability can be another factor, he says. “Retailers increasingly want payment terms. They want to pay on 15-day terms or one-week terms or even 30-day terms, and that means the distributor has to carry the load of that receivable, and not all distributors have the financial support to do that.”
2. Provide feedback to growers.
Customer feedback on products is important, Sullivan says, and it can be difficult for growers to receive this feedback once their products get packaged and sent to retailers.
“In our experience, retailers are in the best position because they typically see the same customers over and over again,” he says.
Budtenders can ask customers and patients how they liked the brand they tried previously, and gather valuable insight for cultivators and manufacturers, who can ultimately make changes to the products.
For example, if a customer tells a budtender that a particular brand of flower has too much leaf or too many stems, the dispensary staff can relay this back to the grower, who can then trim the flower tighter.
3. Host “patient days” to connect growers and patients.
To capture valuable insight and data from customers and patients, Sullivan encourages dispensaries to host “patient days” events, where cultivators can come to the stores and talk with customers and patients.
“Growers are on their little plot of land in Mendocino or Humboldt, and they have very little opportunity to stand in the lobby at CBCB … or Harvest Services Co. and actually talk to the people who are smoking their product and get feedback from them,” Sullivan says.
These kinds of events also allow cultivators to describe their growing practices, he adds. “Customers can talk to growers and hear them describe their growing practices and how they flush the plant and how was it cured and all the care and love that goes into growing an eighth of flower.”
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