This segment connects licensed cannabis operators (cultivators, manufacturers, dispensaries) and ensures the secure, legal, and efficient movement of cannabis products across the supply chain.

Core Functions

1. Secure Transport
   • Physical movement of cannabis and cannabis-derived products
   • Vehicles must meet strict security standards (e.g., locked compartments, GPS tracking, armed or licensed drivers in some states)
2. Inventory Management
   • Real-time tracking of product quantities, batch IDs, expiration dates
   • Integration with state-required traceability platforms (like METRC or BioTrack)
3. Compliance Logistics
   • Verification that all shipments are licensed, documented, and reported
   • Chain-of-custody documentation to prevent diversion or mislabeling
   • Adherence to testing, packaging, and labeling laws before distribution
4. Order Fulfillment
   • Pickup, warehousing (in states where permitted), and delivery to licensed retailers or processors
   • Includes B2B fulfillment and, in some states, direct-to-consumer (delivery) services

Key Licensing Requirements (State Dependent)

• Must obtain a cannabis distribution license separate from cultivation or retail
• Often prohibited from holding other license types to prevent vertical control
• Required to pass regular compliance checks, inspections, and reporting audits

Challenges & Considerations

• Regulatory Variability: Rules differ widely by state, and even by county or city
• Cash-Only Constraints: Many transactions are cash-based due to banking limitations, increasing security needs
• Cost-Intensive: High insurance, security, compliance, and technology overhead
• Scale Limitations: Limited routes or markets due to patchwork legalization across states

Opportunities in Cannabis Distribution

• Technology Integration: Platforms offering route optimization, digital manifests, and real-time compliance syncing
• Cold Chain Logistics: For temperature-sensitive edibles, concentrates, or beverages
• Multi-State Logistics Coordination: Emerging in limited ways for hemp and federally legal cannabis components
• Niche Delivery Services: Serving hard-to-reach dispensaries or on-demand home delivery (where legal)