By Theo Norton
To be successful in the medical marijuana business, you have to think like a customer. That means putting yourself in the patient’s shoes and examining your business from the other side of the counter.
So how would you feel if you trekked over to your preferred dispensary only to discover that your favorite strain is sold out? What if you were finally able to buy that strain again but the quality had deteriorated?
You’d probably be pretty frustrated, to say the least. Perhaps you would start to wonder if you were really getting a consistent medicated dose. You might even start looking for a new dispensary. And the dispensary might then start looking for a new grower.
These types of problems are common in the medical marijuana industry, but they can be avoided by fine-tuning the supply chain management process.
The Current Supply Chain Environment
Dispensaries want what their patients want: consistent, pure and potent medication. Growers want that, too, as well as certainty in price and distribution. The key is to figure out how to accomplish all of this in a turbulent environment.
I like to equate the current supply chain landscape to a bumper car ride. We’re all getting bumped and pushed by unseen forces, making it hard to operate with any consistency. Just when everything seems to be going smoothly, you get blindsided and forced in a new direction. And there are a ton of variables that could affect what happens next. There are bumper cars of various sizes, they move at different speeds, some don’t even have bumpers, new ones are appearing all the time, and there is no end to this ride in sight.
With that as the backdrop, you can imagine how chaotic it is being a supplier. Growers are attempting to insert supply into an undefined chain.
It is into this environment, where no certainty exists, that we attempt commerce. The natural business of making a product to meet demand occurs in an unnatural supply chain environment.
Diversity Brings Inconsistency
There’s a ton of diversity when it comes to suppliers, in everything from experience and style to environment and finances. Some use a single tent in an apartment or a room in a home. Others use a green house plot or an entire field. The size of the growing operation and the speed at which marijuana is grown therefore vary greatly.
This diversity has created inconsistency, which has yielded a weak supply chain.
To remedy the situation, the proper strategies and organizations must be formed. These strategies must cover all suppliers, from those growing less than three pounds a month to the large-scale growers with thousands of plants.
We can borrow from military supply, sports defense and video gaming strategies. Each entry point to the supply chain must be flexible, catering to different sizes and qualities. As each supplier is aligned with suppliers of like size and quality, a marketplace is formed. Marketplaces are then organized by size, quality and variety.
Ahhh . . . so easy to write.
But it’s much harder to implement. Why? Because the laws have made it difficult to engage in normal commerce. The resulting environment is characterized by fear, mistrust and black markets. No wonder we have a broken supply chain. Chaos reigns in all phases of the supply and distribution of medical cannabis.
Do not despair, though. There are some ways to remedy the situation.
Shifting the Balance of Power
The key to creating balance and shifting some power to suppliers lies in strategy and organization. Suppliers must form collectives and then develop a strategy for each supply level. For example, growers providing less than three pounds per month could collaborate on timing, strains and vendor tactics. The larger suppliers could band together to create power within commodity exchanges, possibly by selling to fellow commodity producers or new commercial suppliers.
We also need to work together to clearly define the market and its segments. Currently, the market is defined in two ways: stoners and true patients. As we all know, a portion of every dispensary’s client base consists of general smokers who don’t really need marijuana for medical purposes. And, like it or not, most dispensaries attempt to target these customers as well as the true patients with serious medical conditions. This type of customer wants the coolest strain names, smell, color, etc., while the other type of customers (patients) want the most medicinal value possible without losing the pleasurable effects of marijuana. It is difficult to supply such an undefined client base.
By forming collectives and defining the target market, we can truly enhance and improve the supply chain. The untapped strength that is here today can be utilized and mobilized for our collective good. We will win this battle if we can unite and stabilize this industry together. Otherwise, we’re each left to paddle in this turbulent sea on our own.
The Future of Marijuana Supply Chain Management
Legalization is here…almost. We need to build for that future and make ourselves attractive for purchase when it arrives.
The future is central warehouses where supply is homogenized. This generic product will supply many basic needs, which is a volume play.
The future is central warehouses where unique supply is preserved. This specialized product will supply the target markets they are designed to serve, which is a specialty play.
The future is central warehouses where supply is prepared in compounded pharmaceutical mixtures. These mixtures will supply the unique opportunities found from combining the base products, which is a boutique play.
Find your place to play before the future arrives. The supply chain will balance out when legalization comes. Cooperate. Organize. Plan. Execute. If we follow these steps, everyone involved in the marijuana industry will win.
Theo Norton is a former telecommunications executive who is in the process of launching two MMJ firms, Guaranteed Cannabis – which will provide single and compounded pharmaceutical solutions to medical marijuana patients in California – and the consultancy T2 Kinetics.