Wednesday, May 22, 2024

How Supply Chain Problems Have Impacted The Cannabis Industry

Since the challenges cannabis retailers are facing don’t appear to be going away anytime soon, the best case scenario is for them to be able to successfully adjust to a new normal.

Just as the cannabis industry was beginning to catch its stride, the world was swept into a panic caused by COVID-19. The ways in which the pandemic has affected the supply chain across industries has made life difficult for consumers of products across the board — and the cannabis industry has been no exception.

Here are just a few ways the industry has struggled through recent supply chain challenges.

Cannabis Companies are Having A Harder Time Finding Basic Supplies

The process of providing consumers with cannabis products becomes that much harder when they can’t find the supplies necessary to manufacture and package them in a timely fashion. The products that are becoming harder for cannabis manufacturers to find include things consumers may never give a second thought to like the hardware that goes into vaporized cannabis products.

cannabis sales
Photo by Michele Ursi/Getty Images

Making matters more complicated is the fact that most cannabis retailers rely on Chinese factories to produce those products since not many domestic factories are equipped to produce those types of products. Even though most Chinese factories are back to work, many have enacted social distancing policies that have made it difficult for them to produce the supplies at a rate efficient enough to keep up with demand.

Prices of Growing Supplies Are Unpredictable

Cannabis retailers can’t sell products that they can’t cultivate. One of the biggest obstacles currently facing cannabis retailers is the fact that supplies that make it possible to grow are becoming increasingly more costly. According to recent reports, volatility within the industry has led to many cultivators buying products like fertilizer, grow lights and other materials in bulk for numerous reasons.

RELATED: The Biggest Challenges The Cannabis Industry Will Face In 2021 And Beyond

The first reason is because there is a current 2-to-3 month delay in receiving products. Next is the fact that they’re hoping to avoid experiencing price hikes, which experts say are nearly inevitable. Even though the volatile market within the cannabis supply industry started at the onset of the pandemic in early 2020, it’s showing no signs of ending any time soon.

cannabis industry
Photo by colnihko/Getty Images

Lack of New Talent Within the Cannabis Industry Capable of Solving Supply Chain Related Problems

The challenges that the cannabis industry is currently facing are compounded by the complex regulatory nature of the industry itself. Making matters worse is that the industry is relatively new, so there are few people who have both the experience with navigating its highly regulated nature and experience with supply chain management. That presents the challenge of hiring new employees from different industries to manage supply chain issues which could lead to costly mistakes being made.

RELATED: US Cannabis Industry ‘Flourishing’ In Spite Of (Or Because Of?) General Economic Downturn

This is often the case because many newcomers into the cannabis industry don’t possess an accurate understanding of exactly how regulated cannabis markets operate. That costs cannabis retailers because not only are they still faced with the same supply chain issues they originally faced, but now they have to go correct their mistakes too which costs time and money.

For the most part, the challenges presented by the supply chain have yet to impact most recreational cannabis customers. Since the challenges cannabis retailers and product manufacturers are facing don’t appear to be going away anytime soon, the best case scenario is for them to be able to successfully adjust to a new normal. If they can’t sustain their business models as-is, there’s no telling what that means for consumers in the long-term.


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