This commentary was written by John Hartsell, CEO and co-founder of Dizpot. The views expressed here are solely those of the author and do not necessarily represent the views of Modern Shipper or its affiliates.
Navigating the current supply chain is today’s greatest challenge for businesses due to global transportation limitations and the ever-lingering COVID pandemic. These unprecedented circumstances in the supply chain have exposed a lack of technology at U.S. ports, which are woefully behind in their use of robotics and software to manage intake. Now, U.S. ports are over-burdened with antiquated tech and port congestion.
Like many industries, shipping and logistics have seen a downturn in workforce numbers. Without enough dockworkers, drivers, and available trucks to move products, many customers are left with empty shelves and no distinct timeline on when they will be able to restock products. Early planning, technology, and automation are essential to meeting the needs of the cannabis industry and ongoing supply chain challenges which will not end anytime soon considering today’s reality.
According to a report by ResearchandMarkets.com, the U.S. cannabis packaging market size is expected to reach $2.9 billion by 2028 and is expected to expand at a CAGR of 30.3% from 2020 to 2028. During this turbulent time with the supply chain, the cannabis industry is pivoting to more automated methods to create supply chain solutions for its rapidly growing consumer base. Most mainstream industries have felt the shockwave of delays and even failed shipments, but for the cannabis industry, heavy regulation and complex, state-by-state compliance initiatives add to supply chain stagnation with federal legalization is still at bay.
Having a sophisticated operations model, with high-tech machinery and integrative automation, helps streamline seed-to-sale logistics. This approach also curbs compliance violations and ensures that products are standardized, regulated, and follow industry and state weights and measures laws.
As a regulated product, cannabis suppliers and operators are held to another standard when it comes to weights and measures. Ensuring quality while staying compliant is a struggle for many cannabis operators and packaging suppliers because organic matter like cannabis can degrade and fluctuate in weight over time, from when it leaves a cultivation facility to when it arrives at a dispensary.
With the right systems in place, companies are beginning to create a unique filling and weighing systems to overcome cannabis industry infractions since cannabis weighing systems are accounting for variable container weight. Technologies to track shipment containers, including RFID technology, will continue to play an important role in automation with the supply chain. This systematic approach relies heavily on state-of-the-art automation from packaging procurement to shipping packaged goods. Automation is important as the cannabis industry rapidly matures. Additionally, it’s essential to understand the international supply chain and its pivotal role in the cannabis industry. Knowing the struggles that the supply chain faces with the existing solutions allows a company to thrive in a less-than-ideal environment.
The U.S. relies on Asia for many of its supply chain needs and while COVID has created extensive issues, it has also driven technological innovation in those regions. According to Finances Online, a review of 351 container ports around the globe, ranked Los Angeles as 328, behind Tanzania’s Dar es Salaam and Alaska’s Dutch Harbor. While other ports are navigating supply chain challenges, U.S. ports are still relying heavily on human labor versus automation, which is contributing to problems.
Events in Ukraine have caused oil prices to skyrocket, pouring gasoline on what was already a smoldering fire. According to AAA, Brent crude topped $130 a barrel in early March, and gasoline prices recently hit $4.305 a gallon.
These major issues play into revenue losses for cannabis companies due to added packaging fees and delays in retail sales.
Not only does the cannabis industry need to keep the current state of the supply chain in mind for growth but plans for future advancement are needed now to prepare for industry policy changes when they come to fruition. Federal cannabis legalization and eventual interstate cannabis commerce is on the horizon. Just as beets and corn are shipped from state to state, there are options for cannabis products and supplies when the industry becomes federally recognized.
Evolution will be critical for cannabis businesses that want to rise above the competition with these changes approaching. A strong logistics plan and packaging partner are the first steps to creating a more efficient and cost-effective cannabis operation that can handle not only multi-state but national growth.
About the author
John Hartsell is CEO and co-founder of Dizpot, a one-stop shop for dispensaries located in Arizona. Learn more by visiting DIZLOGIC.com