Top Challenges of the Cannabis Supply Chain

The cannabis industry is booming and, according to some estimates, is expected to reach $41.5 billion by 2025. To meet demand, companies are trying to catch up to create the most optimal supply chain possible. But because this is still a fairly new industry, and because demand is so high, there are still obstacles to overcome. From cultivators to distributors to retailers, cannabis must touch many hands that need to work together to provide the best products in the most efficient ways.

Let’s walk through a few key challenges of the cannabis supply chain.

The COVID-19 Pandemic‌

No matter the industry, supply chains have been completely disrupted over the last year by the COVID-19 pandemic. The initial shutdowns kept many workers at home and businesses closed, at least temporarily. Cannabis companies have seen delays in shipments, lack of supplies necessary to create and send the products, and lack of workers to grow and harvest the crops.

These delays and shortages have been especially challenging since many Americans who have been stuck at home wanted to stock up on cannabis products. The cannabis industry will need to continue to find new resources and get creative to ensure the supply chain keeps strengthening to meet demand.

Licensing Regulations 

States have their own methods for cannabis licensing. Some states, like Florida and New Jersey, require that a company have its own supply chain from growing to selling the plants. Washington State allows for different types of licensing, including licenses for producers who grow the cannabis, processors that create the products, and retailers that sell them. Producers can’t have a retail license but they can have a processor license.

If a state allows different companies to cultivate and manufacture, it can also take longer for the plants to move through the process. Many states have restrictions about where manufacturing facilities can set up shop because cannabis extraction processes have to use certain chemicals, creating more barriers.

These licensing regulations can create confusion for cannabis industry professionals, especially when they vary so much from state to state.

Legislation 

The sale of recreational cannabis is still not legal on the federal level, which can create issues for states with newly passed legislation. For example, it’s not always clear where cultivators can get their initial legal plants, since interstate commerce is not permitted until the federal government declares it legal. This can quickly create a significant challenge for growers when they’re finally able to grow legal cannabis plants.

Currently, 36 U.S. states and the District of Columbia allow medical cannabis use, recreational use, or both.

As more states move forward with legislation that will legalize medical and recreational cannabis commerce and use, some of these supply chain challenges will minimize. If the federal government takes steps to legalize, it will make it a lot easier on cannabis distributors and other cannabis professionals across the country. 

Get Help from Bespoke Financial‌

If you are a cannabis distributor, grower, retailer, or other entity involved in the supply chain, you may need additional assistance to address these supply chain challenges. Contact Bespoke Financial to learn more about dispensary loans, lines of credit, or other financial services that will help keep you moving toward growth as the cannabis supply chain responds to the current climate.

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