The Next Big Cannabis Winners Look to Own the Supply Chain
Ryan Allway
June 3rd, 2019
App, Exclusive, News, Top Story
Many investors fail to appreciate the importance of supply chains. For example, Amazon.com may be best known as a leading ecommerce retailer, but it should be known as a supply chain innovator. Many shoppers prefer the website for its free two-day deliveries, made possible by its team of 100,000+ robots, air cargo hubs, efficient trucking technology, and its efficient pricing and marketing of products using advanced machine learning algorithms.
In the cannabis industry, new state-by-state regulations are paving the way for the rise of a new supply chain that could create the next big cannabis companies. States like California introduced new regulations that created distribution licenses to separate production and retail outlets. These distributors handle transportation and logistics for multiple manufacturers and represent multiple brands when selling goods to stores — making them a central hub.
Let’s take a look at these moving parts and how innovative companies like ManifestSeven could become the cannabis industry’s next big players. ManifestSeven plans to go public in the near future. Prior to that, accredited investors may want to take part in the company’s pre-public financing.
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Cannabis Supply Chain: A Primer
The cannabis supply chain begins with growers or cultivators — just like any other agricultural product. These companies hold cultivation licenses and specialize in harvesting high-quality cannabis in indoor or outdoor facilities. After the harvest is complete, growers either process the flower into their own products or pass the raw materials to a wholesaler that will trim, dry and cure the plants before creating a finished product.
The manufacturing of finished products may take place at specialized manufacturing businesses or by licensed distributors. These companies specialize in taking processed flower and converting it into tangible products, such as cannabis extracts, edibles or pre-rolls. In addition to manufacturing, these companies may package these products and take over some aspects of the branding and marketing process.
Cannabis distributors serve as important middlemen in the industry. Depending on the state, distributors may be responsible for shipping a product on behalf of a wholesaler, warehousing the product on behalf of a wholesaler, serving as an external sales team for the wholesaler, collecting payment and paying taxes, or even contract manufacturing products. They have relationships with both cultivators and retailers, making them an important piece of the puzzle.
The final piece of the supply chain is the retailer, which sells products directly to the consumer. Many retailers operate dispensaries in specific regions, but delivery services have become increasingly common. In the future, delivery licenses may be more important than physical storefronts. Retailers rely on distributors to select the right brands and understand what products may appeal the most to their customer base.
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ManifestSeven Aims to Become a Leading Distributor
ManifestSeven is currently expanding from roughly 40,000 square feet of logistics and industrial space (for THC, CBD, and ancillary products alike) to more than 100,000 square feet across California, Colorado and Arizona by the end of this summer. Its operations include manufacturing, distribution, delivery, and retail, are already generating significant revenue. The company’s goal is to redefine the cannabis supply chain, creating an experience where customers (whether cannabis businesses or end-consumers) located anywhere can order cannabis products that are quickly fulfilled from just about everywhere.
Like Amazon, ManifestSeven aims to create a series of warehouses and distribution hubs from which it can distribute its own in-house products and third-party products. It also plans to build out its own in-house delivery services capable of directly reaching consumers. The company can then help third parties distribute their products, ensure compliance, brand and market their product, and make valuable connections with other cannabis businesses.
By owning the entire supply chain, the company reduces its dependency on any third parties, increases the reliability of its services and realizes significant economies of scale. The goal is simply to bring the cannabis supply chain into the limelight to simplify the lives of wholesalers and consumers. In order to finance this strategy, the company raised $15 million by mid-March, three-times its initial target. Since then, M7 has raised an additional $5 million in an over-allotment.
On April 2, the company received a temporary license from the California Bureau of Cannabis Control in connection with its distribution facility in Long Beach, which will serve as its Southern California distribution hub. After a minor buildout, final inspection and a municipal license, the company will commence operations and connect Southern California markets, such as San Diego and Los Angeles, to its existing Northern California hub.
Looking Ahead
ManifestSeven recently secured shareholder approval for a merger with a wholly-owned subsidiary of P&P Ventures Inc., which will be filing for a listing on the Canadian Stock Exchange (CSE) and changing its name to ManifestSeven Holdings Inc.
The company plans to become publicly-traded upon completion of the transaction under the ticker symbol “MSVN”.
Investors may want to keep an eye on the company over the coming months as it moves closer to a public listing on the CSE. In the meantime, accredited investors can find out more about a pre-public financing opportunity.
Accredited? Click here to receive an investor presentation and corporate updates
Disclaimer
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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