By The Numbers: Beware the Shipping Blues

PHARMACEUTICAL COMPANIES AND medical cannabis businesses are both facing increased demand for their products in a global market that amounts to US$28.4 billion in consumer spending, according to Brightfield Group. Supplying the $1.2-billion international component of that market requires the annual shipping of 148 metric tons of biomass and 810 kilos of processed oil from grower/manufacturers to product makers, according to an analysis by Global Go Analytics of consumer spending by product type (flower, ingestibles, concentrates and pharmaceuticals).

As a result, international logistics for importing and exporting pharmaceutical and cannabis products has become a crucial part of company operations. In this article, we will discuss the challenges and opportunities presented by international logistics for cannabis companies, and the solutions available to meet their needs.

The Challenges

Cannabis companies face several logistical challenges when it comes to importing and exporting their products. The following are some of the most significant hurdles that companies in this industry encounter:

Regulations.

Regulations and compliance requirements vary widely from country to country, making it difficult for cannabis companies to navigate a complex regulatory landscape. Companies must ensure that their products comply with the regulations of the importing and exporting countries, which can be time-consuming and costly.
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Transportation.

The transportation of pharmaceuticals and cannabis products requires specialized handling and storage to ensure the integrity and quality of the products. These products must be transported in temperature-controlled environments to maintain their efficacy and potency. Additionally, cannabis products are often subject to strict security measures, which can complicate transportation logistics.

Customs.

Customs clearance procedures can be complicated and time-consuming, with different procedures in place in each country. Companies must navigate the customs clearance process carefully to ensure that their products are not delayed or rejected.

Cultural Differences.

Differences in both cannabis and business culture can also pose challenges for companies. Understanding the cultural norms and business practices of different countries is crucial to building strong relationships with suppliers and customers in foreign markets.
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Mistrust.

“How do I know that I’ll get what I ordered?” Trust between sellers and buyers in the cannabis industry is built out of many factors but one way to strengthen is through documentation and process like (but not limited to): Certifications and licenses, quality standards, laboratory tests, and correct labeling of terpene percentage, and THC/CBD levels. Unerringly getting product to buyers on time and in good condition is truly a logistics challenge. Failure is pricy and the fact that perishable product like flower and organic biomass is being transported creates additional risks. Visual inspection of these agricultural products is definitely not enough. Mistrust is thus sometimes “built in” to the commercial transactions. And it’s usually amplified when it comes to international transactions. Bear in mind that when you ship internationally, you will never be able to return rejected products. Thus, both sides need a reliable, neutral middle man—like a mutually nominated, professional and experienced Logistics Service Provider (LSP).

The Opportunities

Despite the challenges, the cannabis industry offers many opportunities for companies that can successfully navigate the international logistics landscape. The following are some of the most significant opportunities available, including some benefits of using a third-party logistics LSP:

The cannabis world is getting bigger.

Many countries are presently working on legislation that would permit medical and the recreational use of cannabis.

Growing demand.

The global demand for cannabis products is growing rapidly, creating a vast market for companies that can successfully import and export their products.

Diversification.

By expanding into international markets, cannabis companies can diversify their customer base and reduce their reliance on a single market.

Cost savings.

By outsourcing logistics to a third-party provider, companies can reduce the cost of managing their own supply chain operations.

Increased efficiency.

Outsourcing logistics to a third-party provider can help streamline supply chain operations, reduce lead times and improve product availability.

How to Go Global

To overcome the challenges and take advantage of the opportunities presented by international logistics, cannabis companies can employ several solutions. Some of the most effective solutions include the following:
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Using specialized Logistics Service Providers.

Specialized LSPs who understand the complex requirements of the cannabis industry can help companies navigate the regulatory landscape and ensure that their products are transported and stored in compliance with the applicable regulations.

Technology.

Technology solutions,
such as temperature and damage-in-transit monitoring systems—including the most cutting-edge IoT sensor arrays—and GPS tracking, can help companies to ensure that their products are transported in the appropriate conditions and that their whereabouts are known at all times.

Communication.

Clear communication between suppliers, logistics providers and customers is crucial to successful international logistics operations. Establishing open lines of communication and building strong relationships with all parties involved can help to ensure that logistical challenges are addressed quickly and effectively.

International logistics is a crucial part of the operations of a growing number of cannabis companies, particular those doing business outside of North America. The problem of transporting a product that can lose its potency and thus its value if mishandled has by no means been solved. Add to that the challenge of moving a product across multiple jurisdictions where its legal status may be wildly different.

Companies that figure out these logistical problems and turn them to their advantage will be the ones ready to profitably meet growing global demand for cannabis in all its forms.