California regulators brought a lot of attention to the role distributors could play in the industry when they made them a permanent fixture in the state’s cannabis economy. Although it took some time, many Golden State operators have found value in working with a third-party distributor — and the demand for their services has expanded into other state markets.
Although Washington and Oregon have no requirements for cannabis distribution, savvy businesses have found a niche for licensed retailers in both states. Marijuana Venture spoke with standouts from each market to get a better idea of how they are becoming fixtures in these state markets.
Oregon’s license structure includes a “wholesale” tier that functions as a distribution license and also allows for manufacturing.
“We are the middleman between the farms and the brands and the retailers,” says Nimble Distribution CEO and co-founder Joy Hudson. “You really need somebody who already has the time and attention of the buyers.”
Though less than a year old, the female-founded, social justice-focused company builds on the experience of founders Hudson and Marissa Rodriguez, who spent more than five years working for what is now one of the state’s largest distribution companies.
“It’s an incredibly tough market, but we’ve got some real staying power and that’s because of the relationships we’ve cultivated over the last five years and people know the type of business that Marissa and I run,” Hudson says.
Oregon’s open license structure has created an extremely competitive industry that can be difficult for cultivators to not only find time to meet with retailers, but to navigate a sales environment in general, an opening Hudson recognized immediately upon entering the industry in 2015.
“I wasn’t this long-time consumer who has this cool relationship with the plant itself, but what did I know? I knew sales and I knew how to do it in a professional way,” she says. “As a farm working with Nimble, now you’re plugged into a distribution network.”
Hudson says that same level of professionalism is why retailers turn to Nimble. For store owners, Hudson says the distributor takes time to look over the store’s menus and tries to fill any holes they might see.
“We’re going to bring them a variety of products,” she says. “We take deep notes each appointment so that we’re making sure that we are being intuitive with our buyers to bring them what we believe they need, instead of just what we want to sell.”
Nimble grew to work with 44 retailers in just three months and expects to expand to 200 shops in early 2022. The company currently has contracts with six farms to sell all of their flower and pre-rolls. Nimble also manufactures and sells its own pre-roll brand, called Kites, and uses profits from those sales to benefit communities affected by the War on Drugs.
The “social enterprise” side of the company is also not just a marketing ploy, but one of the main reasons Hudson and Rodriguez founded Nimble, not only giving back but putting QR codes on its Kites products so consumers can track the actual dollar amounts the company has contributed.
“We’re really inviting in the retailers and the consumers to know the good that we’re doing with this product,” Hudson says. “We even do quarterly impact statements to the retailers where they know how much money in the quarter we gave to each project and how much their dispensary was responsible for and then a story of who got funds and what they did with it.”
SEATTLE HEMP COMPANY
Founded to capitalize on the unique opportunities presented by the passage of the 2018 Farm Bill, the Seattle Hemp Company is the first hemp-focused distribution company in the nation, helping put CBD brands into all sorts of different retail environments.
“Our customers aren’t just dispensaries,” says CEO and co-founder Babar Ali. “But we work with places like Metropolitan Market, high-end grocery stores, chiropractors, massage therapists, all of these types of folks.”
And though focused on Washington and Oregon, the Seattle Hemp Company operates in eight other states, including New York, New Jersey and California, with more than 70 retail clients. Ali says the benefits of going through a distributor like his company are that Seattle Hemp is “agnostic” about its brands and is focused on educating clients on the products and ensuring the right ones find the right retailers.
“We have no dog in the fight, so to speak, so we’re going to tell you what would work well for you, what your customers — especially for your type of business — are generally looking for,” Ali says.
Prior to getting into the cannabis industry, Ali worked in corporate finance and strategy for Fortune 500 companies, from old-school insurance like Liberty Mutual to tech companies like online retailer Wayfair, though he sees a link from his previous career to his new one.
“It’s been a bit of a wild ride,” he says. “But you know, a lot of it is, ‘How do you wrangle high-growth industries in a very methodical and meaningful manner that’s going to help not just your own business?’”
For retailers, Ali says a good distributor like Seattle Hemp can help a store “solve the selection issue,” including watching sales trends, vetting products and dealing with vendors, but also in merchandising so, say, a chiropractor can remain focused on helping patients instead of figuring out signage and counter space for products they carry.
For producers, Ali says the biggest benefit of working with a distributor is “entry into a market without having a massive capital investment” such as hiring a salesforce, managing different state markets or expanding into new markets all across the country. Ali says his company can also provide feedback from retailers and points to an example of one company that was using metal bottles for its CBD lotion. After hearing from a few customers that the bottles were easily damaged and were uncomfortable for therapists, Seattle Hemp brought it up with the producer, who was able to change its packaging to something more preferred.
Ali says the next challenge for the Seattle Hemp Company is to get into the “exotic side of hemp,” such as fibers and bioplastics and construction materials. The company is even looking to branch into manufacturing and is working on developing its own bioplastic product.
“So every time I see a plastic spoon or plastic straw, a little piece of me dies inside,” Ali says. “So how do we replace that with something that is affordable, biodegradable and as American as hemp can be?”
Seattle Hemp Company also continues to lobby the Washington State Liquor and Cannabis Board, the state’s regulating body, to allow for distribution licensing within the state’s adult-use cannabis industry, something not currently allowed in the Evergreen State, though often a feature in more recently created state markets.
“Distribution models have existed in pharmaceutical and beer, wine, liquor, things like that, and there’s a good reason why,” Ali says. “That’s really a reflection of a mature industry.”