How Coronavirus Is Affecting The Cannabis Industry Supply Chain

How Coronavirus Is Affecting The Cannabis Industry Supply Chain

Let’s face it; when times get stressful, it’s always nice to light up a fat joint or take a few bong rips and let the woes of the day fade away. While it’s not all doom and gloom, the cannabis industry is feeling the pinch of the coronavirus, or COVID-19. From delays to supply chain issues, solid relationships will be a crucial component to getting through this trying time. Here are three areas that are directly affecting the supply chain process due to COVID-19.

Shortages

Delays are looming, and they primarily impact vape devices. For example, in Maryland, Greenhouse Wellness, a dispensary, has a 10 to 18-week delay on vape cartridge shipments. Long-term supply shortages could plague the industry for some time. Why? The answer is simple: batteries. The battery life on many disposable vapes is around six months.

For cannabis retailers, a considerable part of the market is hardware. That includes vape pens, carts and packaging. According to a February 26 news release from ProVape, an online vape retailer, almost all of the world’s e-cigarettes and vaping devices come from China. And logic goes, if China’s factories in COVID-19 affected areas remain closed, it’s highly likely that there will be a significant delay in shipments if not a complete outage of products.

Sourcing

The COVID-19 situation could affect future product sourcing — in essence, buying products from suppliers closer to us than China. While it’s been a popular strategy to outsource production on many goods to China in the past, that might change. Paying a bit more for products might be a little more appealing than getting no products at all. In a year or two, the cannabis industry might mirror the apparel industry, opting for suppliers closer to home (like Mexico) to cut back on lead times and shore up the supply chain.

Right now, according to a Harvard Business Review report, the world’s biggest 1,000 companies (or their suppliers) own around 12,000 manufacturing or distribution facilities within quarantined areas. That means things are dicey, and sourcing just got a lot more complicated. How this will ultimately affect the cannabis industry remains to be seen. Flower might become more popular, and with that, an increase in glassware — and we can produce all of that right here within the borders of the U.S.

Supply Chain

Now’s the time for savvy and responsive companies in the western hemisphere to consider creating their own supply chain, in effect filling in the gap left by manufacturers in China. That would help the business get back to normal, at least theoretically. Creating a manufacturing and distribution operation doesn’t happen overnight, though.

For example, the sourcing strategy is vital. One company, Platinum, with locations in California and Michigan, is taking it all in stride. While experiencing some shortages due to COVID-19, the company had already secured significant quantities of vape hardware from a supplier based in the U.S. before the virus started affecting operations. Domestic production could result in higher prices. And timing is essential – some say that if production doesn’t start within a month or so, the industry (especially on the vape side) will already be in supply-crisis mode.

If this situation has taught us anything, it’s that preparation and relationships are essential. New partnerships may develop as a result — and the industry might end up more robust because of it. Manufacturers don’t just have to be one company. In essence, a cooperative effort between supply chains or manufacturers producing various parts and pieces to create the final piece might just spread the love a little.

About Jessica Ginet

Jessica Ginet writes for Green Scene Marketing and lives in southern Oregon. A former Tier II recreational cannabis farm manager, she cultivates (and enjoys) smokable hemp and sun-grown cannabis.