You may have heard the terms “Cannabis growers”, “Cannabis sellers”, and “processor” bandied about in conversations related to the cannabis business. Each of these has a significant role in the supply chain. However, though their functions are interconnected like a computer network, they all serve different purposes in the cannabis industry.
As the cannabis industry continues to grow, so do the number of business models available to entrepreneurs. While some companies focus on growing their own cannabis crops, others make their profits by selling marijuana to other businesses through a processor or distributor. Each type of cannabis business must apply for different licenses as required by the laws in the state of operation.
To help get a better understanding of these three different categories (“Cannabis growers”, “seller”, and “processor”), we’re going to take a closer look at what they are and what each role entails.
Cannabis Growers are the producers of raw cannabis and marijuana-infused products (MIPs). They grow the plants, which are then harvested and processed into MIPs by other members of the supply chain.
Cannabis Growers are well-versed in horticultural methods (seed germination, cloning, transplanting, controlling pests and diseases specific to plants, and harvesting). They also know how to utilize technology such as adjustable lighting, sensors, irrigation and fertilization techniques to their advantage. Growers are also familiar with harvesting different strains’ unique growing demands.
A grower typically plants cannabis in bulk at a dedicated facility and then sells that product to a processor or retailer. However, in some states, growers cannot sell directly to consumers.
Growers also have an important role in the supply chain because they must ensure that their crop is safe and clean before it can be processed into other forms like oils or edibles. Some growers have extensive indoor facilities that use artificial light to simulate sunlight, while others have outdoor farms where the plants get natural sunlight and wind. Others might have hybrid setups that use indoor and outdoor spaces to grow different plants.
As a cannabis grower, you can also choose to sell marijuana-infused products (MIPs) to processors, or you may want to go through the entire process yourself. However, most growers who produce MIPs sell them at dispensaries instead of processing them themselves.
It is also noteworthy that the term “cultivator” is often used interchangeably with “grower” when referring to producers of raw cannabis only and not MIPs.
A processor creates finished goods using cannabis or hemp-based ingredients. This could be a pre-packaged product, like a vape pen cartridge or gummy bear, or something further along the production value chain, like a bottled cannabis tincture or an infused balm.
As the link between cannabis growers and retailers, processors are responsible for marketing, packaging, and labelling cannabis products. They are not just limited to creating finished goods. They also produce raw materials for other manufacturers to use in creating their end products. For example, processors may create cannabinoids (such as THC and CBD) in various concentrations so that manufacturers can access them in bulk. This can help keep costs down for those making consumable products such as edibles and lotions with low-profit margins.
Sellers are also called retailers in this industry. They sell consumable cannabis goods directly to consumers at their storefronts or online dispensaries. Licensed by the regulatory bodies, they must abide by all local, state and federal laws and regulations regarding cannabis products.
Retailers may also receive products from other retailers as part of an inter-business exchange program. Here, they can transfer unused inventory back and forth between each other within limits set forth by local laws and regulations. When doing this, they must keep to the standard of vendor management.
Cannabis retailers sell various products, including flowers (buds), concentrates, edibles, tinctures and topicals. In addition, they may sell accessories such as pipes, rolling papers, or vape pens.
Retailers may also operate a delivery service, which allows them to sell cannabis products in states where it is legal. However, delivery services are usually only available in states that have legalized recreational marijuana.
Retailers must have a license to operate in the cannabis industry. State governments typically issue retailer licenses, though some cities and counties may also issue their licenses for retailers. Retailers can sell both medical and recreational cannabis products. They often work with growers or distributors to get the product they need to sell at their stores.
There’s a lot to know about cannabis, especially if you are part of the supply chain closely monitored by enforcement agencies. This article is only an overview of what it means to be a cannabis grower, seller or processor in the industry. For more information on how these roles work together to produce top-quality cannabis products and how to stay compliant with regulations, check out our cannabis compliance services or talk to one of our team members today.