Where Dispensaries Get Supplies: Cannabis Procurement Pipeline

Every industry, including cannabis, requires a robust supply chain in order to operate. Consumers often don’t see the intricacies and transactions required to bring their favorite products to store shelves.

So what exactly happens behind the scenes? How do dispensaries acquire their products? To get the answer, it's necessary to understand what the cannabis procurement pipeline is.

In this blog post, we'll explain everything you need to know about the intricate cannabis procurement pipeline and what you can do to optimize your operations, reduce costs, and beat the competition.

But before we dive in, we want to tell you that this article is just the tip of the iceberg. If you want to learn how to master your cannabis supply chain, we have a comprehensive guide for you!

The Evolving Landscape of Dispensary Supplies

The cannabis industry has undergone significant changes since its inception. Legalization has played a key role, bringing new challenges and opportunities for businesses as the market matures.

Dispensaries' needs have evolved accordingly. Now, most businesses operate at a larger scale and offer more than just flowers. From edibles and beverages to concentrates and topicals, cannabis can be converted into many products, which has increased the demand for specialized equipment and ingredients.

As a cannabis dispensary operator, you don't just sell products – you need to comply with complex and strict regulations, implement effective quality control measures, and meet your customers' needs. This also requires more sophisticated supplies.

To sum up, today's cannabis dispensaries need the right materials, solutions, and systems. Here are the most important ones:

Key Supply Categories for Modern Dispensaries

Do you want to ensure your cannabis dispensary is successful and profitable? You'll need the following supplies:

• Cannabis products: What will your menu display? The first thing your cannabis dispensary needs is a selection of cannabis products, which can include flowers, edibles, concentrates, and topicals. The more diverse, the better.
• Packaging solutions: Cannabis must be properly packaged before being delivered to consumers. Are you using child-resistant containers, glass jars, mylar bags, or pre-roll tubes? That's part of your essential supplies, too. Besides being key for compliance, your packaging offers branding opportunities. Keep that in mind!
• Labeling and compliance materials: To meet regulatory requirements, your cannabis products must have the required labels, warning stickers, and tracking tags. Don't forget to add these to your supplies list.
• Display and storage: How will you display and preserve your cannabis products? You may need display cases, humidity-controlled storage solutions, and security systems for these purposes.
• Consumption accessories: Do you plan to offer vaporizers, grinders, rolling papers, or other accessories for cannabis consumption? It's important to keep enough stock!
• Point-of-sale (POS) and inventory management systems: How do you plan to track sales and manage inventory to streamline your operations and stay compliant? You may need technological solutions to facilitate or automate these tasks.
• Safety and sanitation supplies: To ensure your cannabis is high quality and safe to consume, you need to use the right personal protective equipment when handling materials and ingredients, including gloves and cleaning solutions. This is key to a healthy environment!

While this is just the start, every cannabis operator should know where to source dispensary supplies at a reasonable price and how to manage inventory effectively. These skills can significantly impact your bottom line and make or break your cannabis company's success.

Compliance and Quality: Non-Negotiables in Supply Sourcing

You'll likely get tired of hearing us say "compliance" in our blog posts, but trust us – it isn't a buzzword.

Every cannabis business must comply with strict regulatory standards, including many that govern product processing, packaging, and labeling. Cutting corners on compliance can have disastrous consequences for your dispensary.

Quality is another important factor for every business. If your cannabis products are of premium quality, your customers will come back. This is especially true for cannabis dispensaries.

Customers are becoming more knowledgeable about cannabis-related processes and are looking for high-quality, safe products. If that's what you offer, it'll be easier to build brand loyalty.

Your products' quality will greatly depend on your supplies. That's why you should source materials, ingredients, and solutions from vendors that:

• Offer products with detailed Certificates of Analysis (COAs).
• Provide compliant packaging and cannabis labeling solutions.
• Adjust their offerings to changing regulatory requirements.
• Can prove consistent quality and reliability.

High-quality dispensary supplies may be more expensive, but keep in mind that your reputation is only as good as the products you sell. It's worth investing in good supplies to ensure customer satisfaction and regulatory compliance.

Navigating the Cannabis Supply Chain

To optimize your procurement strategy, you should learn more about the different parties operating in the cannabis supply chain. Here's a look at the major players and how you can build profitable relationships with them:

Cultivator and Producer Relationships

Do you want to boost your sales during the most important dates for the cannabis industry, such as 4/20, 7/10, Croptober, Thanksgiving, and Christmas? You need to maintain a consistent cannabis supply.

To ensure a steady flow of cannabis products, you need to build and maintain solid relationships with cannabis cultivators and producers. The following strategies can help you foster these partnerships:

• Always stay in touch with your suppliers. Communication is key, even if you aren't placing orders. If you understand growers' cultivation cycles and production schedules, you can plan your cannabis inventory more effectively.
• If possible, visit your suppliers' facilities to assess quality. By performing these visits, you can get first-hand insights into their operations and demonstrate your commitment to providing excellent products.
• Negotiate agreements that benefit both parties. If you commit to regular order volume, for example, cultivators might offer better prices or priority supply.
• Stay loyal but don't put all your eggs in one basket. Building strong relationships doesn't mean you have to give up on diversification. By working with multiple reliable suppliers, you can protect your supply chain from disruptions and delays.

The Role of Distributors and Wholesalers

Cultivators and producers aren't the only major players in the cannabis supply chain. Distributors and wholesalers also play a key role by acting as intermediaries between the former ones and dispensaries.

By partnering with distributors and wholesalers, you can enjoy the following advantages:

• Product variety: Distributors stock and provide access to multiple products from different cultivators or processors, allowing you to diversify your offerings without the need to interact or maintain relationships with numerous individual suppliers.
• Simplified ordering: Since you can get everything you need through a single distributor or wholesaler, you won't have to place orders from different suppliers.
• Compliance support: Many distributors handle compliance paperwork and arrange product testing, which is key to operating on the legal side. This can also significantly reduce your administrative burdens and help you save time.
• Bulk pricing: Wholesalers often offer discounts or better prices for purchasing larger quantities, which reduces the per-unit cost of your cannabis products and increases your profit margins.
• Market insights: Because they have a broad perspective of the cannabis market, which allows them to understand emerging trends and identify products with great potential, distributors and wholesalers can provide valuable insights to help you stay ahead of the curve.

Tips to Leverage Your Relationships with Cannabis Distributors and Wholesalers

Do you want to make the most of your relationships with cannabis distributors and wholesalers? Find some tips below:

• Compare products and services from multiple distributors or wholesalers to find the ones that fit your business idea.
• Get a quote from different wholesalers or distributors and compare prices to find the best deal without sacrificing quality.
• Negotiate volume discounts to save money on larger purchases.
• Find out if your chosen distributors or wholesalers offer access to exclusive products in exchange for regular orders and evaluate whether it benefits your business.
• Leverage distributors' and wholesalers' market insights to identify trends or opportunities and make informed purchasing decisions.
• Use distributors' and wholesalers' logistics capabilities to save time and simplify your supply chain.

Direct Sourcing: Opportunities and Pitfalls

Many top weed brands don't buy products from distributors or wholesalers but bypass them to source cannabis directly from producers. This option is attractive to many dispensaries because it offers several benefits, but it also comes with some drawbacks. Let's consider both.

Pros

• Lower procurement costs and higher savings by eliminating middlemen
• Greater control over product selection and quality standards
• Stronger, exclusive, and more beneficial relationships with cannabis suppliers
• Opportunities to develop unique, branded, and more attractive cannabis products

Cons

• Time-consuming and burdensome administrative workload and relationship management
• Potentially higher minimum order requirements
• Intricate logistics and increased compliance challenges
• Potentially more supply chain disruptions, such as product shortages and delays

Do you think direct sourcing is the best way to get dispensary supplies wholesale? Start small. If you build relationships with just one or two producers per specific product category at first, you'll feel more comfortable with the process, and it'll be easier to scale up.

In this case, it's also a good idea to have backup options to ensure you can purchase your wholesale dispensary supplies even if an unexpected issue emerges.

Wholesale Strategies for Dispensary Operators

Buying wholesale dispensary supplies is easy, but it isn't just about finding a reputable distributor or wholesaler. This practice is key to a cannabis business's growth, so it requires careful planning and execution.

Need help? Below are the best strategies for finding the right partner, making smart decisions, and maximizing your profitability through wholesale purchasing.

Maximizing Profitability Through Bulk Purchasing

As we mentioned above, buying dispensary supplies wholesale or in bulk can significantly improve your profit margins, but you have to make smart purchases. Here's how:

• Analyze sales data: If you're going to buy cannabis in bulk, focus on items with proven demand. Leverage your POS data to identify best-selling products and best-performing categories.
• Understand seasonal trends: Cannabis sales often fluctuate with each season. If you want to optimize your inventory and maximize profitability, plan your bulk purchases to align with expected demand spikes, such as holidays, festivals, and local events.
• Calculate your carrying costs: Although you may get discounts when buying cannabis in bulk, storing and managing larger inventories comes with added costs. Don't forget to factor in these expenses.
• Negotiate tiered pricing: Find out if your suppliers are willing to set up tiered pricing structures that reward larger order volumes with better per-unit rates.
• Consider consignment arrangements: Negotiate consignment agreements for new or untested products with suppliers and pay only for what you sell.
• Join or form buying groups: Team up with other dispensaries to make larger, collective purchases if you want to get better wholesale rates.
• Look for cash flow-friendly terms: Analyze your data and negotiate payment terms aligned with your sales cycles. Net-30 is the most common option, but net-60 is better for larger orders.

Keep in mind that your goal isn't just to buy in bulk but to buy smart. Consider all the key aspects, such as your cash flow and savings expectations, to make better decisions.

Vetting and Selecting Wholesale Partners

If you want to ensure your cannabis dispensary's success, you need to choose the right wholesale partner. Below is a checklist of what to look for in a supplier:

• Compliance track record: Assess whether the wholesaler or supplier has been and is currently complying with all regulatory requirements.
• Product quality and consistency: Ask the wholesaler or supplier to provide recent COAs and review them closely to find out if they've had product recalls or quality control issues.
• Varied offerings: Choose partners who can supply a comprehensive range of products and meet most of your needs to streamline your procurement process.
• Reliability and communication: Find out if the supplier is reliable by assessing their responsiveness and clarity in communication.
• Delivery capabilities: Look for partners who can meet your restocking needs by providing sufficient dispensary supplies on time.
• Technology integration: Check if the wholesaler's or supplier's system can integrate with your inventory management software to streamline ordering and tracking.
• Financial stability: If you plan to establish long-term partnerships with suppliers, assess their financial health to see if they can commit to uninterrupted supply to avoid potential disruptions.
• Industry reputation: Ask other cannabis operators for references and check online reviews to determine if the wholesaler or supplier is trustworthy.
• Flexibility: Choose partners who are willing to accommodate your needs and unique requirements through custom orders.
• Value-added services: Consider working with wholesalers or suppliers who offer supplementary services, such as staff training or marketing support, as these add-ons can help enhance your operations.

Before committing to larger volumes or long-term relationships with wholesalers or suppliers, you can start with smaller orders to test that business's practices and make an informed choice.

Inventory Management: A Critical Skill for Operators

Running a cannabis dispensary involves several aspects and activities, but effective inventory management is what holds it all together. You shouldn't just keep products on shelves but make sure you have the necessary supplies at the right time to optimize cash flow, minimize waste, and guarantee customer satisfaction.

Do you want to know how to ensure effective cannabis inventory management when buying wholesale dispensary supplies? Below are some strategies:

Balancing Stock Levels and Cash Flow

Having enough supplies to meet demand is crucial for a cannabis dispensary, but you should also avoid tying up too much capital to your inventory. It's challenging for most businesses to find the sweet spot between the two, but the following tips can help you maintain the right balance:

• Implement a "Just-in-Time (JIT)" inventory system: Whenever possible, plan your orders in a timely manner to ensure that your supplies arrive just when you need them. Although this strategy requires in-depth analysis of your sales patterns and close coordination with suppliers, it can help you optimize your inventory to avoid losses.
• Use the 80/20 rule: Identify the 20% of products that generate 80% of your sales and adjust inventory levels to always keep them in stock. If necessary, you can adopt a more flexible strategy for slower-moving items.
• Set par levels: Set minimum and maximum quantities for each product and configure your POS system to alert you when you're close to those inventory levels and it's time to reorder.
• Consider consignment arrangements for slow-moving items: To effectively manage products with uncertain demand, negotiate consignment terms with suppliers or wholesalers to avoid getting stuck with unsold inventory and incurring additional storage costs.
• Monitor turnover rates: Track and analyze how quickly your products are selling. Use this data to determine the right time to replenish your supplies and optimize your ordering.
• Account for lead times: When setting your reorder points (ROPs), which are the levels at which your inventory must be replenished, consider the time it takes to receive orders from suppliers or wholesalers to avoid stockouts or overstocking.
• Use ABC analysis: Categorize your inventory based on products' value and impact on revenue. To do this, divide your items into A (high value and impact, low quantities), B (moderate value and impact, medium quantities), and C (low value and impact, high quantities). Then, allocate your resources accordingly to make your management strategies more effective.
• Implement cycle counting: Instead of performing a disruptive full inventory count every so often, conduct smaller but regular cycle counts to maintain accurate inventory records without disrupting your operations.

Technology Solutions for Inventory Tracking

Technology is crucial for today's cannabis business. The right solutions will not only make it easier to manage your inventory but will also help you streamline your operations, save time, and stay compliant.

Distru is a good example of how technology can streamline cannabis inventory management. Actually, our seed-to-sale ERP system is designed to support the key aspects of your cannabis business.

Another great advantage of using Distru is that our software seamlessly integrates with other solutions essential to operating in this industry, including the following:

• POS systems: Some POS systems are equipped with cannabis-specific features that can be used for many tasks beyond transaction processing. These tools can help you track inventory in real time, verify ages or purchase limits, manage loyalty programs and marketing campaigns, integrate with e-commerce sites, provide valuable sales analytics, and more.
• Inventory management software: Many inventory management solutions also offer advanced features tailored to the unique needs of cannabis businesses, such as real-time inventory visibility, demand forecasting, multi-location tracking, automated purchasing, regulatory reporting, mobile management, and many integrations.
• RFID tracking: Radio-frequency identification tags, also known as RFID tags, enable you to track both individual items and batches throughout the supply chain, from procurement to sales.
• Barcode scanners: With these tools, you can significantly speed up inventory counts and reduce the risk of human errors during data entry.
• Integration platforms: Ideally, your tech stack should include solutions that integrate with your POS, inventory management, and recreational or medical marijuana accounting software. Integrations ensure data flows seamlessly between all of your systems for improved efficiency, guaranteed accuracy, and better business performance.
• Mobile apps: Many modern inventory systems offer mobile apps that allow you to monitor stock levels and place orders from virtually any location, providing increased flexibility and convenience.

Distru is a comprehensive solution designed to address all of the technology needs of your cannabis dispensary. Our solution can:

• Integrate with leading POS systems to ensure your essential data is accurate and up-to-date across all platforms.
• Provide you with robust inventory management tools specifically built for streamlining cannabis operations.
• Leverage RFID technology to make it easier to track cannabis throughout the supply chain.
• Integrate barcode scanners to reduce errors and save time when managing inventory.
• Create a unified operational ecosystem by serving as a central hub where all of your essential cannabis-specific solutions are integrated.
• Integrate with state-mandated seed-to-sale software and assist with cannabis inventory adjustment reasons by automating changes.

Additionally, at Distru, we have a friendly and knowledgeable customer support team willing to help you leverage our solution and its features to optimize your operations.

Do you want to learn more about how Distru can improve your inventory management? Download and check out our comprehensive guide titled "The Ultimate Guide to the Cannabis Supply Chain: Tips for Operators" to find valuable case studies and implementation strategies.

Expanding Your Product Line: Smoke Shop Supplies

If you need to attract more customers and increase your average transaction values, diversifying your product catalogs is a must. Smoke shop supplies can help you achieve this goal by complementing your offerings and making them more appealing to both medical and recreational consumers.

Identifying Profitable Smoke Shop Items

Are you planning to stock smoke shop items? Choose supplies that align with your brand, the core products you offer, and your customers' needs. Below are the most popular categories to consider:

• Vaporizers and accessories: These products, which can include everything from vape pens to high-end desktop vaporizers, can appeal to customers who are more health-conscious or prioritize discretion.
• Rolling papers and wraps: These supplies are available in many forms, from organic to flavored varieties, to meet different needs and suit customers' preferences.
• Grinders: These tools also come in multiple forms, including plastic or metal models and those with premium features, such as kief catchers.
• Glass and water pipes: These smoking accessories are quite popular among cannabis enthusiasts and offer unique consumption options.
• Dabbing equipment: Dab rigs, nails, and carb caps have become indispensable for many businesses and consumers as cannabis concentrates become more popular.
• Storage solutions: From humidity-controlled containers to smell-proof bags, you can stock and offer many supplies designed for cannabis storage, which can be very convenient for most customers.
• Cleaning supplies: Adding maintenance items to your offerings, including resin cleaners and pipe cleaners, can motivate customers to buy from you again.
• Odor eliminators: Products that neutralize cannabis odors, such as sprays and candles, can also be great add-ons.

To make the right decisions when selecting which smoke shop supplies to stock, consider the following tips:

• Pick items with healthy profit margins to maximize your bottom line.
• Look for products that complement or enhance your existing cannabis offerings.
• Analyze customer feedback before adding such products to align your decisions with buyers' preferences and market trends.
• Make sure all products you add to your offerings comply with local regulations on dispensary sales.

Sourcing Quality Smoke Shop Supplies

If you're looking for reliable suppliers for smoke shop items, keep in mind that the process may be slightly different. The following tips can help you with your search:

• Attend industry trade shows: At events like Champs Trade Shows or the Cannabis & Hemp Trade Show, you can connect with smoke shop suppliers and build solid relationships with such providers.
• Research online wholesalers: Some digital platforms, such as Kush Supply Co. and 420 Science, offer plenty of smoke shop supplies for cannabis dispensaries.
• Check with your current distributors: Many cannabis distributors are expanding their product lines to add smoke shop items and may offer competitive prices.
• Buy directly from manufacturers: By buying directly from popular cannabis brands, you can negotiate better prices or exclusive deals.
• Source from local artisans: If you want to find unique, high-end pieces and exclusive items, you can partner with local artisans, such as glassblowers.

When selecting a smoke shop supplier, always consider the following factors:

• Product quality
• Product durability
• Brand reputation and image
• Minimum order qualities
• Pricing tiers
• Shipping times
• Suppliers' reliability
• Return policies
• Customer support

Final Thoughts: Future-Proofing Your Supply Chain

If you want to secure your long-term success in the dynamic cannabis industry, you must anticipate regulatory changes and adopt sustainable practices. This will future-proof your supply chain!

It's always a good idea to keep a close eye on evolving legislation, make sure your operations can adapt to new requirements, and cultivate relationships with regulators and industry associations to get up-to-date information and valuable insights about the market.

Sustainable practices, such as eco-friendly packaging and energy-efficient operations, can positively impact your business. Partnering with environmentally conscious suppliers will give you access to green offerings that can be key to complying with environmental regulations and help you reach a wider audience, for example.

Finally, don't forget about technology. Your business should be equipped with innovative tools that allow you to manage your supply chain timely and ensure accuracy. Distru, for example, offers all the features you need to streamline your operations and prepare to overcome future challenges.

If you focus on regulatory compliance, technological innovation, product variety, and sustainability, you'll set the stage for positive business development in the ever-evolving cannabis industry.