Managing the Cannabis Supply Chain

As of 2022, an estimated 38.4 million Americans consume cannabis in some form. Business in this sector is booming, but participating in the marijuana/cannabis supply chain comes with its own set of rules and regulations. Preparation and education can eliminate potential headaches along the way — here’s the latest from the FCL team on shipping cannabis products in the US:

Regulations for Transporting Marijuana/Cannabis

The legalization of recreational marijuana is still a relatively new development, which can make it difficult to find experienced logistics experts in this unique industry. Even if you’ve been part of the cannabis supply chain since its legalization in November of 2012, it’s a good idea to regularly review regulations governing cannabis transport. We’ve listed seven keys for transporting marijuana/cannabis below, but remember: every state maintains its own regulations, so be sure to review the specifics in-depth before crossing state lines.

• Do not cross state borders. There are still several states that have not authorized transporting marijuana within their borders. As a result, transporting any marijuana/cannabis product across state lines is considered drug trafficking.
• Use only licensed distributors. It is illegal to ship marijuana/cannabis through an unlicensed distributor.
• Track and trace. Every movement of cannabis products must be tracked and traced throughout the supply chain. This is from the moment it is planted, to harvest, transportation, and distribution. Choosing a good transportation management system (TMS) is essential for visibility every step of the way is key.
• Check state laws about distribution. Some states require that only one entity be involved in the distribution, from moving product between wholesalers and retailers, to actual production of the cannabis.
• Be sure you have all the necessary in-state licensing. Check with your state Department of Transportation before you attempt to transport any marijuana/cannabis goods. They can help you secure the proper licensing.
• Don’t transport open containers. Before the tractor and trailer leave the warehouse, be sure every single container is sealed. Transporting open containers can leave you with a hefty fine and jail time.

Ensure Your Documents Are Up to Date

Before your driver pulls away, make sure they have all the necessary paperwork readily available in the cab in case they are stopped. Once they arrive at their destination, they will also need to present paperwork for cannabis shipments to be received.

In certain states, distributors are only allowed to transport cannabis between licensees, but not to any retailers. For example, in California, those with a type 13 license cannot distribute any cannabis to retailers.

Challenges in Transportation

This sector of the shipping industry has its share of challenges even as profits from cannabis sales continue to rise, including:

• Expense. The vehicles considered safe to transport marijuana are very expensive. Every vehicle is required to have secured lockboxes, GPS tracking systems and heating/air conditioning to maintain safe temperatures for the cannabis. They are also required to maintain high levels of insurance.
• Distribution is illegal through typical courier services. FedEx, USPS, and UPS are not even on the table as transportation options. Due to licensing and regulations, distributors will have to seek a company with experience and the proper documentation for transporting marijuana/cannabis.
• Security. The high value of this product means that a single vehicle could be transporting thousands of dollars worth of product. Investing in sufficient security is expensive and time consuming.
• Compliance. Maintaining compliance through track and trace is difficult in and of itself, but take into account that every state has its own set of regulations and rules, and it’s even more difficult.
• Vertically integrated vs. vertically disintegrated debates. Some states require vertical integration, meaning one group must hold the license for distribution from seed to sale. In other states, it is only legal to hold a license for one stage of the supply chain process.
• Seed-to-sale software. Some states rely on seed-to-sales software databases, requiring every ounce of marijuana be tracked with this software.
• Banking. FDIC-insured banks are not allowed to do business with cannabis organizations. So getting proper financial backing can be difficult.

Consequences of Illegal Cannabis Transport

It is not worth the risk to transport marijuana/cannabis products without an in-depth understanding of the regulations governing this sector. Transporting cannabis internationally or across state lines is a felony, as it is still a Schedule I drug under federal law. The Department of Homeland Security Customs and Border Protection (CBP), federal law enforcement and state enforcement agencies monitor its transportation closely.

If you do not have proper documentation and licensing, or the safety regulations of the vehicle you are driving are not compliant with federal and state laws, you could face heavy fines and extensive jail time.

Finding the Right Partner in Your State

If you are curious about the cannabis supply chain within your state, the first place to go is your Department of Transportation. From there, they can connect you with distributors and other licensing entities to help you get started. Contact us today to learn more about the cannabis supply chain and how FCL can aid your legal transportation efforts.