Finding reliable, high-quality cannabis vendors to supply your licensed dispensary is a crucial step in preparing your retail store for opening.
It is not as simple as reaching out to people you know that grow cannabis -- you are operating under a licensed dispensary, so you need to do things by the book. This will mean only doing business with licensed cannabis growers.
This process consists of plenty of research, vetting, and relationship building. We are going to share with you our experience sourcing products for our retail store, Cannabis Central. Watch the video below, and then read on for more information on dispensary vendors.
Understanding supply and demand of cannabis in your state
Finding cannabis vendors is not black and white across state lines -- the amount of effort you’ll need to put in greatly depends on the number of licensed growers in your state.
For example, in Washington, we had a huge shortage of product at first. There were hundreds of retail licenses and only 25 licensed growers! This may be the case in your state, or, it could be the opposite -- excess supply.
More often than not, the market levels itself out -- but since the government regulates the cannabis industry and awards licenses to growers, it is really up to them to fix supply/demand imbalances.
Nevertheless, things have changed. Nowadays, there are tons of licensed growers in Washington. The same is true of Oregon, where prices are plummeting due to a huge surplus of cannabis products. In the future, hopefully, cannabis can move across state lines and issues with supply/demand will become more scarce, but unfortunately, that doesn’t appear to be on the horizon just yet.
In Washington State where I am located, vertical integration is not allowed. That is to say, we have legally separated retail cannabis shops from the growers and processors. It’s a closed-loop system. By that, I mean only state-licensed retail shops can operate here and only licensed growers and/or processors can operate legally as well.
And one final point; as a retail cannabis shop owner, I may only purchase products wholesale from state-licensed wholesale producers. They may only sell their products to state-licensed retail shops. Bottom line? I cannot survive without them and they cannot survive without me. We sink or swim together.
Creating A Fruitful Relationship With Cannabis Vendors: An Example From Washington State
That being said, however, growers, producers, and processors have had a very tough time and survival has been challenging to say the least. Competition has been vicious. I have been very fortunate to be on the retail side of the cannabis industry equation. I, therefore, feel a strong sense of responsibility to the growers, producers, and processors.
By extension, I feel a sense of responsibility to the entire cannabis industry here in my home state. Let me explain. There are two sides to this story from my viewpoint; the human side and the industry side. I’ll start with the human side.
When we first opened in August 2014, it was a wholesaler market. There was a dramatic shortage of product and some wholesalers took advantage of this market situation, but more on that another time.
However, by November of that same year, producers were really beginning to hit their collective stride and soon, especially when the outdoor crop hit the markets, the undersupplied market flipped to one of oversupply. Over the next several months and during much of the 2015 calendar year, prices dropped, products became more readily available and the variety and quality of products improved exponentially.
Unfortunately, many growers and producers were unable to stay up and running for many months. Therefore, by the time they were able to begin delivering product, their business model and their resulting wholesale pricing structure was hopelessly out of touch with the actual market reality.
Many retailers were unkind to these businesses, many of which were family-owned, very small, and likely undercapitalized. Many retailers beat up and attempted to bully and humiliate these struggling startups. I took a different approach. I am fortunate to have a shop located next door to a fantastic family-owned diner.
I took many producers’ representative’s next door for coffee and conversation to attempt to gently break the news that their wholesale prices were not in line with the current reality, and that a trip back to their drawing board was necessary if the business was to have any chance of surviving.
I always attempted to be fair and informative. In many cases, people had put their lives on hold, cashed out 401Ks, borrowed from family, left primary jobs etc to get in this industry. I could not and will not ever be anything other than compassionate and understanding in working with any wholesale operation. This is the right thing to do and the right way to act and treat others.
But while I have my own reasons for treating my fellow man with dignity and respect at all times, there are other reasons to help each other. Competition among wholesalers and among retailers is good for consumers. Competition drives up quality and drives down prices, both good things for end-users.
Its basic rules of supply and demand and the crux of what is at least potentially good in the model of capitalism. But cutthroat competition drives out participants which can have, over time, negative effects on prices and/or quality. I know what you’re thinking; adapt or die, only the strong survive, etc. And I can honestly say, as an Economics major from Central Washington University, Class of ‘82, I get all that.
But we need many players so as to prevent the markets from being dictated and controlled by a few. This will have the opposite effect on prices and quality and selection I believe. In full disclosure, there are bad, inefficient businesses out there being mismanaged which need to go away.
I am not about propping up poorly run organizations, but what I want and what I plan to continue doing is to help those who are doggedly trying to improve and compete. I can only do so much but I plan to stay committed to doing what I can do. The entire industry will benefit by business owners helping others in the field.
In summary, let’s always attempt to be kind and helpful to others in our industry. The industry needs good people, good systems, well-executed plans of operation. We need to be efficient and management-driven, of course. And, at least in Washington State, its not a cliche’, in fact we truly do need each other for the benefit of one another.
How to find cannabis vendors for your dispensary
The process of finding licensed cannabis vendors for your dispensary is going to involve some digging.
In Washington, I was reaching out to cannabis vendors well before we had our license. I wanted to be very proactive, and get ahead of the curve so to speak. I started emailing, calling, and even sending mail to these vendors to start building relationships.
As you may already know, relationships are everything in this industry. Creating a relationship with your cannabis vendors will ensure long term success for both parties.
Introduce yourself, and get vendors familiar with your store. Do your due diligence in vetting your potential cannabis suppliers. Make sure the quality is where it needs to be, and make sure they are operating by the book as well.
Vetting your cannabis vendors
Finding cannabis vendors is one thing, but knowing how to work with them and vet them is another. There are a few things you should do with every vendor you talk to, including:
- Verifying their vendor license is active and up to date
- Discuss barcodes on products
- Communicate your expectations for the relationship
- Discuss variations of product
- Discuss lead times, stock, and their ability to meet demands
While it may sound like a lot of dirty work, making sure you’ll have plenty of sources for inventory is important. And rest assured that eventually, as your store grows, vendors will start reaching out to you! These days, we get tons of vendors reaching out wanting to put their product on our shelves. Again, establishing relationships and spreading the word that you are opening will go a long way in attracting quality cannabis vendors.
Need help sourcing cannabis vendors for your dispensary?
If all of this sounds a little overwhelming, and you don’t know where to begin, let’s chat. Drop a comment below, or reach out to me with a message and I’ll respond asap.
I understand the dynamic between cannabis retailers and suppliers, and is part of the reason I started Cannabis Consulting Nationwide. There are things I had to learn the hard way that I can help you avoid, such as:
- Knowing the differences between sourcing cannabis according to the time of the year
- How to develop a system of reaching out to vendors
- What your vetting process should look like
- How to build authentic relationships with cannabis vendors early on
- How to negotiate price with cannabis vendors
The most important takeaway here should be putting an emphasis on relationship building with other figures in the cannabis industry. There is room for everyone, and by getting to know the other players, we can all work to further the cannabis industry, while ensuring you have high quality product in your store at all times.