Sourcing cannabis in Canada and in the United States are slightly different processes. In Canada, you can generally only purchase cannabis wholesale from the provincial government, which distributes product sourced from licensed producers. In the United States, some regions allow retailers to have vertically integrated operations and grow their own product. Below, we’ll explain the differences in more detail by country and province.
In the US, options for dispensaries largely boil down to one of two: either grow your own flower, or purchase it from an authorized supplier. For the most part, recreational dispensaries tend not to grow their own flower, while it is more common in the medical arena (and actually mandated in some states, like Colorado). However, even stores that do host their own grow operations will not be able to grow all the strains they would like to sell, or even all of the most popular strains – meaning virtually all dispensaries turn to licensed growers at some point. We’re going to walk through some of the considerations you should keep in mind when selecting the right choice for your operation:
While cannabis flower prices are up and overall firm (though fluctuating in certain markets) as mentioned earlier, profit margins on extracts, concentrates, & edibles have actually slightly risen in recent years, making them attractive offerings for dispensaries. Manufacturing these products yourself is probably out of reach for most dispensaries, due to prohibitive cost. Flower prices tend to fluctuate throughout the year; in some states like Colorado, they actually set average marker prices on a bi-annual basis in order to properly set the rate of excise tax on wholesale orders.
In some ways, vertical integration makes sense; however, it also precludes specialization to some extent – the best cannabis salespeople probably aren’t the best cannabis growers. Growing also takes things to a whole new level financially – it is usually a million dollar plus endeavor, which is out of reach for many operations, making wholesale purchasing even more attractive. When the time comes to evaluate potential providers, look for wholesalers with an established reputation in the industry, and those who grow the specific strains you’re most interested in marketing. You’ll also want to verify that they can produce the quantities you’ll need, and that they are in good standing as far as their own licensing status with the state.
In some states, dispensaries are expressly prohibited from being involved in cultivation. In others, they are highly encouraged to do so. In Colorado, all medical dispensary owners must grow at least 70% of their on-hand inventory. The list of approved cultivators usually publically available with a quick search.
If you’re interested and able to cultivate your own flower, you’ll also want to honestly consider whether you have the expertise to do so cost-effectively. Commercial-scale cultivation of cannabis requires a very specific skill set, which may require hiring new staff you did not originally anticipate. Errors or mistakes during the cultivation process can result in the loss of entire crops of cannabis, causing substantial expense, not to mention severe disruptions to your supply chain.
In all provinces except Saskatchewan, the wholesale and distribution of non-medical cannabis is government-operated. Most provinces have modified the purview of their liquor and gaming authorities to include cannabis, and they work directly with licensed producers to procure the supply for retailers. Here is a breakdown of each province’s supply chain:
In BC, licensed retailers order cannabis products for their stores from the Liquor Distribution Branch.
The Alberta Gaming and Liquor Commission (AGLC) buys product from federally licensed producers and distributes it to licensed private retailers.
Saskatchewan is the only province in which retailers may purchase cannabis product directly from licensed producers or other retailers. You may also purchase directly from permitted wholesalers, retailers, and licensed producers from other provinces, so long as they are registered with the Saskatchewan Liquor and Gaming Authority and the product has a Saskatchewan excise stamp.
Manitoba retailers purchase product directly from the Manitoba Liquor and Lotteries Corporation.
The Ontario Cannabis Store Wholesale is the exclusive distributor of recreational cannabis to licensed retailers in the province.
CannabisNL, a division of the Newfoundland and Labrador Liquor Corporation (NLC) is responsible for regulating the possession, sale and delivery of non-medical cannabis. They buy from licensed producers and are the sole seller of cannabis online in the province, and wholesale distributor to private retailers.