CEO Colton Griffin and MainStem CEO Alen Nguyen share their insight on opportunities and challenges that accompany sourcing in the cannabis industry. While the cannabis industry is still emerging and despite that it maintains a healthy roster of $100-plus million revenue operators, there is a need to embrace e-technology. However, the delayed adoption of technology creates difficulties in managing efficient procurement within an early fragmented market.
“Sourcing is where cannabis procurement teams spent most of their time and still have room for improvement,” explain Griffin and Nguyen. “Brands are innovating to bring new products to market, and government regulations dictate strict and inconsistent materials and packaging requirements. New product development and scaling production drive the sourcing workflow and kick off the process to seek vendor options.”
They further explain that while cannabis operators will compare vendors before deciding who meets their criteria – lower price, faster shipping or even sustainability- all factor in the sourcing process. However, buying decisions typically disconnected from the finance team leads to confusion, unexpected expenses and a large amount of time spent.
“Brands are innovating to bring new products to market, and government regulations dictate strict and inconsistent materials and packaging requirements."
-Colton Griffin and Alen Nguyen for Food Logistics Magazine
The article outlines how sourcing for regulated cannabis Is riddled with challenges. For example, “regulated cannabis cannot cross state lines, so the market conditions an operator works in dictate supply, quality, price and the sourcing process.” When a new state opens cannabis sales, there typically is a constraint on supply, followed by a glut. Griffin and Nguyen share the challenges complicate multi-state operator ambitions to product a consistent product across multiple markets.
To learn more about the steps cannabis operators can take to mitigate risk and successfully navigate sourcing, click here to read the full article.