11 Ways the Blue Wave will Affect Cannabis Supply Chains

Cannabis will change, and the supply chain will evolve with federal legalization. We can only hope that legislation is thoughtful and creates the sort of supply chain that businesses can thrive in while staying compliant.

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Iarygin Andrii - stock.adobe.com

Federal legalization has been a topic in the cannabis industry since Colorado came online as the first adult use open-market state in 2014. Many have shared opinions about when and how legalization will happen. With the election results from Georgia, it could happen sooner rather than later.

Politics

1.    Newly elected candidates like Jon Ossoff, who just won one of the Georgia Senate seats to flip control to the Democrats are calling for federal legalization and campaigning on the promise to help move the law forward. Voters will hold these newly elected legislators accountable on this topic.

2.     The work has been done. Legalization is drafted and ready to be put to a vote. While President Joe Biden has had a mixed history with cannabis in the past, Vice President Kamala Harris and the younger generation of the Democratic Party will lead the charge and make legalization a reality.

Current landscape

3.     To date, there are 30-plus thriving medical and recreational state markets in the United States. No operator in these markets can ship product across state lines. When legalization does happen, cannabis will have a lot to learn from the hemp and CBD industry, which is a national and international market.

4.     While there are notable multi-state operators out there, they are mostly working siloed on a state-by-state basis. This means they are running with disconnect software systems, procurement teams, sales strategies and operational workflows, often duplicating capabilities in each market. This is incredibly inefficient and ripe for disruption.

Learn from the pros

5.     Cannabis is this generation’s prohibition in our very own roaring 20s. Since cannabis is already flourishing at state level, there are a lot of things that can go wrong with blanket legalization. Authorization to ship over state lines should come with careful considerations and planning based on each state’s current regulations.

6.     As with alcohol prohibition, each state can make decisions, and in many states, each county gets to decide whether to be “dry” or to approve licenses to sell cannabis. Take California for instance, where there are significant areas of the state in which consumers must drive 60 miles or more to purchase cannabis. These “pot deserts” show how loopholes can harm businessowners and limit access to patients who need plant medicines. The industry should expect to navigate a myriad of laws similar to how alcohol brands and distributors operate today.

Supply chain

7.     Distribution is going to change immediately upon legalization. There will be companies ready to go Day 1. These are the companies that use enterprise resource planning (ERP), make data-driven decisions, know their cost of goods sold and have the foundations of a brand. Craft operators should begin weaning themselves off spreadsheets and learning to adopt tools and practices to remain competitive.

8.     Traditionally, the industry lacked talented supply chain professionals, who were often hesitant to touch a taboo industry. Public opinion and the law are changing, and as dispensary, manufacturing and distribution operations become more complex, they need the talent to execute.

9.     Hiring in general is going to see an uptick. Companies will need growers, trimmers, manufacturers, delivery drivers and more. Brands will need marketing staff that can create effective nationwide campaigns.

10.  The downside is since this is a new industry, investors are gun shy to float cash to plant-touching businesses. So, this means operators will potentially have a find a way to expand all these needs on their own.

Immediate challenges

11.  Banking. This is the one on everyone’s mind. Getting some sort of legislation for banking, such as the SAFE banking act is imperative to success of federal legalization.

Cannabis will change, and the supply chain will evolve with federal legalization. We can only hope that legislation is thoughtful and creates the sort of supply chain that businesses can thrive in while staying compliant.

 

 

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