by Canna America | October 13, 2023 | Cannabis
From the obvious increase in product pricing to the difficulty in establishing customer loyalty, it is evident that the cannabis supply chain poses a number of potential problems from within the industry and with external consumers as well.
Taxation Burdens
From distribution owners to retailers to consumers, the taxation aspect of the cannabis supply chain affects all players involved in the legal cannabis industry. With wholesale prices plummeting due to oversaturation within the industry and just the overall decrease in profit with the increase of people in this newly legal field, it seems unfair to have the additional financial stress of taxation involved. On the distribution’s end of the taxation woes, there is the additional stress of keeping up with both a city tax and DAMA tax. Dispensaries, on the other hand, have to worry about an excise tax. And, of course, consumers cover the tax with the obvious increase in cannabis costs. All in all, it seems that the cities allowing for licensed cannabis locations are the only ones to benefit from any profitable financial revenue. While distribution centers and the retail market carry the task of covering these taxes, they don’t actually reap any financial benefit since the money from these taxes is used to pay the cities. More paperwork from the inside and higher costs for consumers externally makes for a troublesome increase in stress and purchase price for all involved.
Compromising Cannabis Freshness
With the seemingly long supply chain from farm to manufacturer to testing to distribution then finally to retail, the green bundles of joy endure quite a journey before they ever even make it to the actual consumer. Sure, these steps ensure safe quality cannabis, but the fact is that the fresh factor of the plant is surely compromised along the way. By the time the product reaches the distribution center, if not in final form, the product must then be packaged and stored in a storage room before making its way to retail shops. All of these stages of the supply chain produce a compliant product, but are consumers paying higher prices for less fresh cannabis? The legal cannabis market is fairly new, so perhaps alternative steps are yet to be discovered in order to ensure both a fresh and compliant product for consumers.
Establishing Loyalty in an Oversaturated Industry
Amongst the endless number of celebrity brands, og cannabis companies, and newly emerging cannabis players, there is an abundance of products, gimmicks, and canna personnel to choose from. Consumers are faced with maybe too much of a variety with different promos and strains offered monthly or even weekly. Understandably, it’s difficult for consumers to devote any type of loyalty when their favorite strain may not be available when they want it or only offered as a limited time type of item. Having different options of products and brands to choose from may seem helpful to consumers at first, but once favorites and preferences are established, it may be difficult to keep the same customers coming to a retailer’s place of business if they cannot again provide the same product that a customer came to love. Hopefully, as this new market grows, retailers will learn how to narrow down customer favorites and have the ability to provide a more convenient and enjoyable experience for all consumers.
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