Transporters, also known as wholesale transporters, distributors, couriers, and more, are responsible for transporting cannabis and cannabis products between licensees. Not to be confused with delivery services, which deliver product from licensees to end consumers in a limited number of states, transporters, whether independently licensed or part of a vertically integrated enterprise, serve an essential role in ensuring the secure transportation of cannabis and cannabis products from business to business in virtually all markets.
Transporting Keys to Success
1. Reliable, high-frequency, transport
Though less common than quality holds, bottlenecks at the transportation level can have serious effects on operational and financial performance. As such, reliable high frequency transport is the key to developing and maintaining vendor relationships in often one of the most competitive segments in the industry. A consistent and transparent delivery schedule is a minimum. However, same-day pickups and drop offs are highly attractive to customers so having the fleet and logistical capabilities to handle transportation-on-demand can be a key differentiator. Going further, selecting a central location capable of servicing both manufacturing and retail centers, or going further, a hub-based transportation model, will allow a transporter to use these resources efficiently.
2. Compliance
Regardless of which party bears the contractual risk of loss, handing thousands of dollars’ worth of product over to a transporter is a nerve-wracking experience. Like other cannabis business, compliance is paramount for a transporter. Fortunately, though every state differs somewhat in their regulatory approach, all states share your goal of ensuring your cargo makes it to the destination safely and securely.
State transportation requirements for cannabis are often quite different from those in other industries, and introduce new considerations that transporters expanding into the cannabis industry may not be familiar with. To start, states have stringent physical and digital security requirements for cannabis transportation; ranging from qualifications of drivers, to specific locking and alarm devices, to digital surveillance of vehicle and crew. Even where not required, investing in these systems can help ensure reliable and high frequency transport. Additionally, transporters must be familiar with state seed to sale tracking requirements. Even for transporters with experience in other highly regulated industries, cannabis, as a diverse group of perishable consumer products, presents unique challenges. Successful transporters must be able to move multiple product types with different storage and handling requirements. High terpene concentrates often have very specific temperature requirements to maintain freshness, while transportations of bulk flower may require humidity controlled environments. Often different environments are required for different products within the same transport.
3. In-House vs 3rd Party Transportation
In-house transportation is widespread in the cannabis industry, with many license types in many states authorizing transportation. This makes 3rd party transportation a very competitive arena. As such, it is important that 3rd party transporters understand their place in the supply chain and maximize their value accordingly.
Producers that offer in-house transportation must expend significant startup capital to do so, but often see significant ongoing savings compared to those that rely solely on 3rd party transportation. Maybe more important to many operators is the personal touch that comes with having highly trained staff driving consistent routes.
So, in states that allow both 3rd party and in-house transportation, why would a business choose to work with a transporter? There are 2 fundamental reasons: 1. They do not have the capital or resources to operate transportation services. They want to focus on their core business of producing and selling cannabis products; 2. They offer in-house transportation, but because of either order volume, or distance, they cannot handle all transportation in-house.
If the first case sounds like your customer, transporters in many jurisdictions can maximize value by providing value-add services, such as warehousing, distribution, and fulfilment. Transporters that can seamlessly integrate with statewide seed to sale tracking systems, ERPs, and accounting software can also help ease the administrative burden of transporting cannabis products.
If the second group sounds more like your customer, transporters should focus on adaptability, seamlessly integrating with the existing policies and procedures of their partners.
Regardless of who your primary clients are, all transporters should take their role as representatives of their clients. Training of transportation employees in customer service, product knowledge, and more, is, unfortunately, often overlooked.
Conclusion
In the next installment in our “Business Overview” series: The Dispensary, we will be featuring a dialogue between two seasoned cannabis retail experts that you won’t want to miss. In the meantime, for more on how Fire Business Strategies can help set your business up for success, please visit our contact page to schedule a free initial consultation!
