Cannabis Inventory Management: Scaling a Marijuana EmpireJuly 13, 2018
The end of the cannabis prohibition is imminent and indeed has already arrived in certain states. Cowen, an investment firm, predicts that the cannabis industry could generate as much as $75 billion annually by 2030. As with all retail, we can expect the ecommerce sector to control a significant percentage of the market. Apps and Websites selling and delivering cannabis products are on the rise, but cannabis is a unique industry. Cannabis inventory management and distribution is more complicated than fulfilling for electronics or supplements. Cannabis regulations create problems for storing cannabis, fulfilling orders, and transporting cannabis products. To comply with cannabis regulations, you need a specialized cannabis inventory management system.
Current Marijuana Distribution Issues
Cannabis inventory management makes a lot more sense when you start thinking about the current cannabis climate. You probably know that a government is a slow moving machine. Perhaps you’ve seen one of these lists about antiquated laws across the United States. The government will pass a big law, but doesn’t bother with small laws. The perfect example is prohibition.
When the US repealed prohibition, it only repealed one act. It didn’t repeal all of the laws supporting prohibition. In some states you can’t buy a bottle of whiskey directly from a distillery. Taxation and regulations are partially to blame for this. Another reason is that the state government never took the time to repeal parts of the law. How does this relate to cannabis distribution and cannabis inventory management? Well the same thing is happening in the cannabis industry today.
You Can’t “Just Ship” Cannabis
I want to start with the obvious – you cannot ship marijuana from a state where it is legal to a state where it is illegal. That is against the law. We are talking about cannabis distribution within states where cannabis is legal.
Let’s say you’re shipping socks. You’d use FedEx or UPS, right? Well, the Federal Government regulates those companies. You can’t use either for cannabis because marijuana is not legal at a federal level. It is only legal at a state level. Today, there are a growing number of cannabis delivery services.
These companies operate within a specific city or county. It works like ordering pizza. You call or order online and someone will drive to you and deliver the cannabis. The problem is kind of solved, right? Concierge cannabis distribution, except…
You Can’t Transport More Than One Ounce of Cannabis
So, it is not like delivering pizza. Cannabis regulations limit how much cannabis any one person can have at a time. You can’t really run a cannabis distribution business if your drivers can only carry an ounce. The economics just aren’t there. So, instead of legal cannabis distribution, we have not-so-legal delivery drivers.
Your Suppliers Are Hurting Too
Let’s take a step back from B2C cannabis distribution and look at the suppliers. The one-ounce cannabis law applies to your suppliers as well. You order a week’s worth of product from a grower. If your grower loads up his truck and gets pulled over on the federal highway, that’s a huge problem. Your supplier might lose everything. He is risking his product, his business, and his freedom. That’s a lot to ask.
Conversations about cannabis often include outcries of public safety and rightly so. Fair or unfair, this is a product with a sordid past and reputation. It needs to be heavily regulated because the US as a nation doesn’t fully understand it yet. Cannabis distribution services are a fantastic thing for public safety. They control the pipeline of products to consumers.
Taboos exist about cannabis. We all know that. These taboos put a dark cloud over an industry that is only starting to grow. Taboos keep potential users from consuming cannabis even upon a medical professional’s recommendation. This is especially true for baby boomers and older generations.
The Power of Cannabis Inventory Management
Today, you cannot ship cannabis. There are legal-ish delivery services. And there are safety issues and taboos to consider. Cannabis inventory management gives you something that you desperately need in the cannabiz. It gives you control and visibility. You want to be able to present any government entity with a full view of your operation. Think about what that does for you.
We know shipping is out, which forces the industry to the delivery service model. You are now required to get special licensing to transport cannabis. This saves distributors and delivery personal. Now you can bypass taboos and safety concerns with delivery. However, there are still a lot of requirements.
You Need Track and Trace Cannabis Distribution Software
To distribute cannabis, you need track and trace software. Metrc developed track and trace software specifically for (not by) the government entities overseeing the cannabis industry. The system itself tracks and records data from every point in the cannabis distribution chain. It monitors weight quantities and pricing from the grower to the consumer. As a distributor you will need to integrate with a service like Metrc, and you will need your warehouse and cannabis inventory management systems to integrate with it seamlessly.
You Need a Cannabis Inventory Management System
There are two reasons that you need a cannabis inventory management system. First, you need to comply with cannabis regulations and you need to prove it. Software let’s you do that all in one place. Second, inventory management is already complicated and only becomes more so with cannabis.
Cannabis is a unique product in that it is packed in weight quantities instead of modularly or piece by piece. When it comes to cannabis inventory management the packing process needs to integrate with the shipping process. Lot Control, expiration date control, and even serialized prescriptions are also necessary to maintain quality using a first-in-first-out marijuana model. Furthermore, it is a high price product with important value in every gram.
Marijuana is a plant and it falls apart. Cannabis inventory management enables you to create a new “shake” product from the displaced bud. You can also create bundles of products and accessories that run with your specials. Cannabis inventory management ensures you do not miss any opportunities to sell your entire stock.
The cannabis distribution industry is going to boom. To build a stable ecommerce cannabis company, you have to get around a lot of red tape. The best way to get around the red tape is to use Track and Trace Software and Cannabis Inventory Management Software.
If you would like to learn more about cannabis distribution, you can contact us here.