National Post (National Edition)
U.S. pot companies look ahead to distribution
The U.S. marijuana industry has been so focused on the “who,” “what” and “when” of the legalization effort that many have forgotten the “how” — but that's about to change.
With Democrats taking control of the Senate, the cannabis industry can shift its focus from whether it will win national acceptance to the nitty gritty of how to sell its products. A key issue will be distribution models.
In Europe, cannabis is largely distributed through pharmacies, but the U.S. is more scattershot. Medical cannabis is sold primarily through dispensaries, while recreational products can utilize direct-to-consumer models and items with CBD, a non-psychoactive compound in marijuana, even show up at many gas stations and convenience stores.
Distribution can influence how the industry evolves. Witness Molson Coors Beverage Co.'s move to launch its first U.S. CBD drink in the state of Colorado last week. The deciding factor on where to introduce it was not that state's long history with legalized marijuana, as one might think, but instead about the company's existing infrastructure.
“It's the only state where we own the distributorship,” Molson's president of emerging growth told me. “While more distributors are getting curious about CBD, some aren't ready to go full in.”
Multistate operators are taking a closer look at how their product moves around because the Democratic Senate is renewing hopes that interstate transport will soon be allowed. Kim Rivers, chief executive of Trulieve Cannabis Corp., said the company is developing a hub model that will divide the U.S. into five regions. The evaporation of state boundaries and quirky laws that limit cultivation area in some states will come as a huge relief to her company and others.
Yet there are questions over just who's going to be moving the product through such hubs on the way from greenhouses to customers.
Tilray Inc. CEO Brendan Kennedy sees a battle brewing among cannabis, alcohol and tobacco companies, all of which will push to use their distribution networks. While Tilray is based in Canada and Europe, it has a partnership with Anheuser-Busch InBev SA, which gives it a slight preference for the alcohol model, he said.