As a part of our continuing series Buzzkillas, we joined with Perry Salzhauer of Green Light Law Group to answer questions that many cannabis business owners are faced with. In today's video, he discusses what you need to know about the cannabis supply chain before starting a cannabis business.
As cannabis becomes increasingly legalized, more and more people are considering entering the cannabis supply chain. For entrepreneurs and business owners looking to get into the industry, it's important to know the different elements of the cannabis supply chain. This includes understanding the regulations and laws that apply to the industry, as well as the potential risks associated with the industry. It's also essential to familiarize yourself with the different types of cannabis products and their respective supply chains, including medicinal and recreational cannabis products.
Understanding the supply chain also means understanding the roles of different players in the industry, such as growers, manufacturers, wholesalers, retailers, and consumers. With a thorough understanding of the cannabis supply chain and a sound business plan, you'll be well on your way to starting a successful cannabis business. So don't be intimidated by the cannabis supply chain - embrace it, and use it to your advantage.
So let's see what Perry had to say on the subject of the cannabis supply chain:
So, another fairly common question that I get from folks who have never been in the industry is where am I going to get my product from? To whom am I going to sell it to? And it depends on which side of the supply chain are you on. Are you on the production processing distribution side or the customer facing retail delivery consumption side? Alright, so, where am I buying it from?
And, you know, increasingly, as our East Coast practice grows, and we talked to folks who come from jurisdictions that don't have 15-20 years of medical marijuana markets, they are asking, "Do I have to get all of my marijuana from the state that I'm in?"
The answer there for now, until there's some measure for deschedulization, or the end of prohibition at the federal level, the answer definitively is yes. All of the marijuana needs to remain siloed in the state, tracked and traced, subject to the regulations of that individual state.
Now the deeper question is, from where within the state and the answer is only from other licensed adult use cannabis businesses. And so what that means, from a business perspective is one of the things that a potential industry participant can be doing now, before licenses are issued or when they're thinking about getting into the market is develop those supply chain relationships.
There are trade organizations that are already in existence and well built out in every adult use cannabis jurisdiction, regardless of whether licenses have been issued or not. You go to those meetings, you meet people, producers meet retailers, processors meet producers, distributors meet everybody, and you start developing contractual relationships, so that you can be ahead of the curve in terms of, you know, as a retailer, I want to stock the best products in my store so I can attract the best customers because retail still operates on the same three principles: number of baskets, size of basket, value of basket.
Right so you want to be able to utilize basic retail principles to develop that supply chain. And as a supplier, you want to be able to know that you have guaranteed offtake, whether that's to a processor or a distributor etc.
But you know the short answer to this question is always it has to come from within the state and it has to come from other licensees and you should begin developing those relationships now.