You don't need to watch the news or follow politics to know that supply chain issues are plaguing most industries. If you've done any holiday shopping, then you've likely felt the pinch of extended shipping times and inventory delays. But, for businesses that rely on components, parts, and equipment from all over the world, these delays can be devastating.
Interestingly, the cannabis industry is uniquely positioned to adapt to whatever challenges come along. Its illicit history brings an unrivaled experience in adaptability during times of adversity. Regardless of the hurdle, cannabis has proven time, and again, it will go on.
Long before the days of legalization, the illicit market flourished, even with the known risks. Cultivation operations took place in the shadows, and distributors often delivered their products in plastic baggies. This not-so-distant past proves that where there is a demand, someone will find a way to supply it – regardless of legality.
Today, legal, commercial cannabis production is a much different endeavor. In a regulated industry, packaging requirements, commercial-grade cultivation, and specialized processing equipment come with much larger price tags, complex requirements, and steep penalties for non-compliance.
For example, much of the mandated, child-proof cannabis packaging is made overseas. Industrial-grade, GMP-quality extraction and cultivation equipment may often come from European or Asian manufacturers, and the electronic components in consumer devices like disposable vape pens, cartridges, and vaporizers generally come from China.
Without question, cannabis industry businesses are feeling the impact of this supply chain chaos, but many businesses are embracing their pioneering ingenuity to adapt and overcome.
Go Back to Your Roots
Cannabis Tech had the opportunity to speak with Robert Beasley, CEO of Fluent, a premier cannabis MSO operating in Florida, Pennsylvania, and Texas. Beasley has a rich history in the legalization of cannabis in Florida. A former attorney, his career evolved with the industry.
Today, Fluent has 27 locations across Florida and Beasley said, “We're not stopping there,” with plans for several more by the second quarter of 2022. However, despite its rapidly expanding footprint, Fluent hasn't been without its share of setbacks this year.
Speaking of supply chain issues, Beasley said they've been waiting more than a year for specialized rolling benches for one of their greenhouses currently under construction. He said, “They're still in Holland somewhere, or maybe they're on a ship. We have no idea where they are.”
Then he continued, “Now, the fertigation system that we ordered, which is a high-tech digital system – we have the mechanical parts, but we don't have the digital parts. The shade is somewhere in China.”
Yet, despite lacking various components, Beasley proudly stated, “The fact is, we still have a crop that's about to harvest. We did things old school, and we had a beautiful crop. We grew in soil in pots on the ground, and we hand watered. We studied the diurnal period of the Sun to ensure we had the darkness hours we needed. We went back to our roots and got the crop out.”
“The interesting thing about cannabis is that it's still very much a frontier business, and being a frontiersman means you end up adapting and constructing things from other industries, and you do a lot of making it up as you go – we're still in that phase, “he explained.
When All Else Fails, Build it Yourself
EcoGen, a Kadenwood company located in Colorado, also has a unique approach to limiting its dependence on the supply chain. CEO Garrett Bain admitted during an interview that supply chain issues have “impacted us more on the consumables and packaging side of things. Anything plastic that needs to be shipped in from Asia on boats or trucked across the country, such as ingredient packaging, plastic containers, and mylar bags, have been challenging to procure.”
Yet, when it comes to processing equipment, EcoGen fabricates most of the equipment they need in-house. Bain said, “we have a 5,000 square-foot fabrication facility just outside our offices in Grand Junction, and we are fabricating columns for distillation, homogenization tanks, and the crystallization reactors for our isolation process.”
He continued, “Our fabrication team can do preventative maintenance, replace parts and wipers and even entire columns when necessary. And that capability has kept us very nimble as we navigate supply chain issues.”
While they still rely on pumps and chillers from other manufacturers, the fabrication team at EcoGen can handle anything in stainless steel, such as tanks, columns, and vessels. Their staff includes experienced and skilled welders, MiG and TiG welders, and machinists.
Bain stated, “It's a cost savings for us. A lot of the equipment imported from Asia, Germany, and other parts of the world comes with high price tags. We can do it at a fraction of the cost, and we can do it a lot quicker.”
How to Adapt and Overcome
Unfortunately, the immediate outlook calls for continuing problems for the supply chain. As Beasley stated, “I don't see a near-term solution to it. With oil prices and material shortages, I honestly believe it will get worse before it gets better.”
“We're just going to have to be flexible,” he continued. “We have to do the best we can to the products to the consumers while maintaining quality and safety. And frankly, with our industry being fresh out of the frontier, we're probably more versatile than most.”
Beasley concluded, “Today, all the money in the world doesn't get that product off the ship any faster, and it doesn't get those plants to grow any faster, either – so it kind of levels the playing field.”
Without a fabrication team on staff, businesses can still find the equipment they need. Bain reminds, “There is plenty of used equipment here in the United States that is being liquidated by producers and labs that have gone out of business.”
Bain recommends looking for auctions and business sales for things like packaging and consumables.
No one knows if we've witnessed the full ripple effect caused by the pandemic, or have we yet to hit the apex? Whatever challenges may come, the cannabis industry will adjust and continue, just as it has for decades, in defiance of all previous roadblocks.