How To Trade Cannabis Flower Globally: A Story Of Capital
The global medical cannabis markets are growing faster than we could have predicted, and new countries are expected to come online as 2025 progresses.
With Germany looking like it will be a one-billion-euro market and Thailand exceeding one billion, all eyes are on Europe and Asia. That’s not all, though! Australia’s market has surpassed $400 million, and many other international cannabis markets are exploding.
Around the world, large corporations, entrepreneurs, and even flower brokers are scrambling to fill the needs of the largest cannabis markets in Germany, Australia, Israel, and elsewhere.
But what is really needed to trade cannabis flower globally — and efficiently — in a strict GMP world?
Image Source: Unsplash
Minimum Requirements for International Cannabis Trade
The minimum requirement for a grower to sell its product on the global medical market is a GACP-licensed cultivation facility. The minimum requirement to sell a product in most individual countries is EU-GMP-certified packaging or country-specific GMP-certified packaging.
Plenty of companies worldwide are willing and able to package and stamp products as EU-GMP-compliant or another certification. So, all growers need to do is find a packager and then find willing buyers in their target countries. Growers can also sell to one of many distributors, who will do the work of packaging and selling. It couldn’t be any easier — which is exactly why there are so many middlemen, conference hounds, and brokers running around selling flower.
On a small scale, the minimum requirements for international flower sales can work. However, as volumes increase, the need for robust inventory management systems becomes critical. Anyone can move flower from point A to point B fairly easily. Moving it from country A to countries B, C, D, & E, and then from those countries to points 1, 2, 3, & 4 is a whole other ballgame. To do so efficiently is even more difficult.
Requirements for Efficient, Effective, Global Cannabis Trade
If you are simply exporting flower from Canada and selling it to a distributor in Germany, you don’t need to read further. But what if you are selling from Canada to Germany, the U.K., Poland, and Australia, and you aren’t using a distributor?
Cannabis Inventory Management on an International Scale
Cannabis companies trading flower in multiple countries must manage multiple distributors and reach multiple pharmacies inside each country. This will require, at minimum, a robust inventory management system in your home country and every country you’re selling in. You may also need local inventory managers and local accounting companies to keep things under control.
Global Cannabis Sales Teams
In each country you sell to, you will also need a sales team large enough to handle demand. As your operation grows, the team needs to grow as well because there will be more competition and more groups to sell to.
Reaching pharmacies — and the higher margins they offer compared to distributors — requires constant communication and education. One sales representative isn’t enough to cover massive pharmacy networks. Your sales team will also act as a voice to educate doctors and clinics throughout each country on product availability and changes in offerings.
International Cannabis Quality Assurance and GMP-Certified Labs
Companies trading cannabis internationally will also need a robust quality assurance (QA) team. Since cannabis remains a registered narcotic in many countries, moving it requires a lot of people-power to register products and deal with errors — and there will always be errors.
These companies will also need local CRO’s or QA people responsible for labeling, regulatory advice, regulatory changes, etc. For large corporations, the paperwork alone can require dedicated teams in multiple countries.
International cannabis companies also need a lab associated with their trades, as each batch needs to be certified. Whether servicing big corporations or craft growers, a certified lab to provide a GMP COA is needed. this can be outsourced, but the most integrated and largest players will own their own lab. Owning your own lab makes a big difference in autonomy and service.
QA and lab teams also play a critical role in timing. Businesses with the most efficient QA teams that own their own labs have the fastest turnaround times.
Ensuring Healthy Cash Flow for International Cannabis Companies
All major cannabis corporations have robust cash flow management and large credit lines to support their international flower trade.
There can be between 3 to 5 months between when flower is purchased and when it is sold to a pharmacy. To maintain consistent cash flow, many growers end up selling to distributors at lower prices to achieve better cash flow.
Navigating import and export licenses can take a couple of months, and simply landing, packaging, and certifying flower can also take months. To top it off, the largest international cannabis companies are selling to pharmacies, and those pharmacies require 30 days of credit once received.
The process of selling cannabis internationally is long and convoluted. Growers want to get capital fast, so larger companies always have significant cash flow loans available.
Maximizing Margins in the International Cannabis Market
Globally trading flower on a small scale is very easy, but as soon as the volumes get larger — and companies want to capture more margins — the staffing issues become very complex.
Selling to the distributors, which are the lowest-priced buyers, is the easy road, but reaching directly to pharmacies and capturing the higher margins available via that route requires a large staff and careful management of every step of the process. Even then, turnaround speed is critical because cash flow is the Achilles heel of any cannabis company.
Vertical Integration in the International Cannabis Marketplace
From startups to experienced cannabis traders, all cannabis companies are navigating cash flow management and trying to capture higher margins. Only a few lucky businesses will own their own farms, manufacturing facilities, labs, warehouses, multi-country distribution networks, country-specific inventory and sales staff, and still have the capital to trade effectively. As cannabis prices continue to compress, the need for efficiency and higher margins becomes the most critical aspect of trade, and owning the entire value chain is the cleanest path there.
More By This Author:
Q4 2024: Global Medical Cannabis Continues To SoarEuropean Cannabis Q3 2024 Quarterly Update
The Best Global Cannabis Markets By Country 2023-2024