Full Supply Chain

Leveraging Full Control for Bigger Profits

Are you ready to go all-in on cannabis? Is your motto, “Go big or go home?” Then a vertically integrated cannabis business might be for you. Vertically integrated businesses own every step of the supply chain, from cultivation to production to retail. As you might imagine, full supply chain businesses are a major undertaking, incorporating the complexities of three distinct industry sectors. But for those with the ambition — and the capitalization — to take on the challenge, vertical integration can bring substantial rewards due to efficiencies of scale and agile responsiveness to the market.

Vertical integration requires massive start-up capital and logistical expertise. But successful full supply chain businesses can ultimately deliver higher profit margins over the long term.

Getting your vertical integration model right is dependent in equal parts on

  • developing the right spend on facility design
  • developing all parts of the supply chain effectively
  • connecting to capital and investors

With such a wide-ranging set of expertise required, you’ll need partners equipped to handle all of these factors, protect your initial investment, and guide you through each step of planning and mitigating risk. Contact Canna Advisors today and let us help you check every box.

ROI Requires Smart Management

The weighty start-up costs of a vertically integrated business must be offset by business practices that harness the benefits of full supply chain control and economies of scale.

Control Your Destiny

By owning every step in the supply chain, you have the ability to set your own prices in the marketplace, closely monitor inventory and quality control, and quickly respond to market trends. Taking advantage of these benefits, however, requires financial savvy and operations that are designed to be both transparent and nimble.

If you are accurately and comprehensively tracking your retail data, you should be able to identify consumer trends and preferences as they take shape. With a well-integrated cultivation and production system, you can respond to those trends in short order and stay ahead of your competitors.

Leverage Economies of Scale

Vertical integration is essentially three businesses in one, but not every aspect of those businesses has to be duplicated three times. By rolling up the entire supply chain under one enterprise, efficiencies and economies of scale emerge. (For example, executive roles like CEO, CFO, and H.R. leadership can generally serve all sectors of the company.)

If planned effectively, these efficiencies can allow for significantly higher profit margins along every step of the supply chain than if each sector were operating independently.

The Pillars of Vertical Integration Success

When managing a business that includes cultivation, processing, product development, and retail, complexities abound. Careful attention to these five pillars leads to success with a full supply chain company.

 

  1. Finances - No two ways about it — building a vertically integrated business takes a tremendous amount of capital upfront. Developing a network of potential investors or funding sources is key, along with mapping out a detailed business plan and pitch to bring those investors on-board.
  2. Facility - Vertically integrated businesses can’t be profitable without taking advantage of every efficiency, and that starts with property and facility design. Whether you’re building out separate facilities or multiple operations under one roof, careful industrial design can make a substantial difference in your path to profitability.
  3. People - Every business lives or dies by the quality of the people on its team, but that is especially true for a vertically integrated cannabis operation, with its massive array of technical needs. You’ll need a team with experience at each step of the supply chain, yet avoid duplicating roles to keep costs under control.
  4. Timing - When you’re responsible for every stage of the supply chain, you must stand up three separate business operations while minimizing bottlenecks or choke points. With so many moving pieces, it takes an extremely detailed plan and timeline to avoid significant delays and lost revenue.
  5. Growth - With profit margins highly dependent on economies of scale, most vertically integrated businesses need a plan for growth and expansion right from the beginning. Once your core business is established, additional opportunities to recover and build on your initial investment come by increasing your operational footprint, acquiring other licenses, and considering a multi-state presence.

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