Over the last few years, marijuana-adjacent products, all derived from the hemp plant, have made the transition from counterculture staples found in the more obscure corners of the intent into a thriving national industry. This year, CBD and other hemp-related products have matured into an approximately 3.5 billion dollar industry. The meteoric rise of these products is expected to continue, increasing to a staggering 13.4 billion dollars by the end of the decade.
When it comes to CBD and hemp, most of the information you find on the internet is geared toward the consumer. Today, we’re going to look at hemp and CBD product fulfillment from a 3PL/ supply chain perspective to help emerging businesses in the industry get off the ground, at least where logistics are concerned.
What is CBD?
Every year, scientists learn a little bit more about the myriad of beneficial effects of hemp-derived products. From their medicinal value, which offers pain and nausea relief as well as a strong anxiolytic effect, to their vast recreational value, hemp has become a ubiquitous fixture in our society. But to understand how hemp and logistics fit together, first, we have to understand the nomenclature involved.
The hemp plant is the mother of all things CBD and marijuana. Its tough, fibrous stalks are used to make a number of industrial products, including rope, fabric, and paper. It’s the leaves and flowers, however, that are in such high demand. Approximately 113 distinct chemical compounds, known as cannabinoids, have been identified and isolated within the flower itself. Each of these has a different effect on the human body; some are nominal, others are euphoric. For example, THC-9 is the psychotropic substance found in what we commonly think of as recreational marijuana. THC-8 is the primary ingredient in CBD products and lacks the mind-altering effects of its cousin. Due to the wide range of chemicals contained in the plant, there are literally an endless array of potential products waiting to be synthesized. And that’s how we arrive at demand.
Domestic Hemp Demand
There’s never been a better time to start a hemp-related business. If you have a mind for both legalities and logistics, that is.
As of this writing, 19 different states, Washington D.C. and Guam, have approved full recreational use for marijuana and hemp-derived products. It should be noted that while products with THC-9 aren’t yet universally legal, CBD products containing less than .3% THC are legal across the country. Medical marijuana, however, is legal in almost every other state except for a handful of holdouts, and a federal bill decriminalizing use is on the horizon.
Despite the conservative estimates referenced above, U.S. demand blew those numbers out of the water throughout the COVID-19 pandemic. In 2020, 17.5 billion dollars worth of hemp-related products were sold across the U.S. The sea is wide, however. Innovative companies have brought a huge range of CBD-infused products to market. From lotions to supplements, tinctures, and beauty products, the hemp industry has matured into something far more complex than simple edibles and vape cartridges. But with such a steep level of demand, business owners need to worry about CBD product fulfillment: shipping, transport, and other logistical factors.
Interstate Fulfillment Challenges
There’s a catch here, a hurdle crafted from legalities.
While marijuana-adjacent products have become legal on a wide scale —perhaps a universal one if federal legalization takes effect— the system is far from cohesive. The laws that govern the hemp industry are still a state’s rights issue, so at the core, CBD manufacturers and marijuana growers are looking at up to 50 different rule sets (depending on their company’s service footprint) which govern the production, sale, and transport of their goods. Most CBD product fulfillment laws harken back to the 2018 Farm Bill.
Over the past four years, attempts have been made to normalize hemp product transport, but things remain imperfect. The disparity between state-by-state legalization efforts and current federal law forms the crux of the problem. Due to federal law, transporting hemp-derived products across state lines remains nebulous. The 2018 Farm Bill stipulated that to safely —and legally— transport marijuana-adjacent products across state lines, each product must contain less than .3% THC. CBD products fit the bill and are more readily transportable, but what about products derived from newer compounds? As the industry has matured, so has interstate demand. Brick-and-mortar stores have become more common, but sales via the e-commerce channel remain an industry haven. That means a wider sales footprint.
When it comes to hemp and CBD product fulfillment, production and shipping activities come with a razor-thin margin of error regarding legality. Given the logistical hurdles that are inherent to the industry, how can 3PL companies, such as Symbia Logistics, service complex, emerging markets like the cannabis industry?
Increased Agility With Private 3PL Companies
With more agility than our competitors, that’s how.
That’s because smaller, privately-held companies like Symbia operate with a higher level of regional adaptability than our large-scale competitors. Nationally known entities such as FedEx, USPS, UPS, and DHL may offer their customers well-vetted shipping, transport, and supply chain services. Still, companies that operate at that scale must be sensitive to the shifting level of legality that cannabis imposes on their respective businesses. For example, there is no wiggle room when shipping through USPS. With CBD product fulfillment, all products must contain less than .3% THC, and large quantities are cost and logistics-restrictive.
The same issue exists for major fulfillment players like Amazon. The Amazon corporation is a mammoth-sized, multinational entity. They are bound by a vastly complex web of regulations —state, federal, and global. That’s why Fulfillment by Amazon’s official stance is “NO MARIJUANA/ HEMP SALES!” through their platform.
In other words, demand is surging, but is the supply chain ready to accommodate? The answer lies in smaller, private 3PL companies like Symbia Logistics, which features a solid, well-developed regional infrastructure. Smaller players like Symbia can leverage hyper-local supply chains and fulfillment options —even across state lines— that adhere to all current policies, both federal and state. Smaller outfits also have the leeway to change gears and pursue sourcing alternatives thanks to thorough expertise regarding local fulfillment options.
Hemp and CBD products represent an increasingly complex regulatory landscape. Until federal legalization occurs and states figure out a proper taxation schema for these products, emerging CBD growers and manufacturers must rely on their partnerships with logistics experts like Symbia to help guide them to long-term stability.