The globe’s sputtering supply-chain logistics are challenging for all businesses right now. But for cannabis, those challenges can be an absolute nightmare.
When hemp cultivation became legal in all 50 states in 2018, under a Farm Bill that guaranteed that hemp products could cross state lines but gave no guidelines for moving them, Kevin Schultz knew there was a serious business need.
The founder of Illinois-based The 357 Co.’s experience with the Illinois marijuana industry help him see the need for specialty logistics support for these operators.
Hemp, he said, can be trickier to move than marijuana. That’s for two reasons:
- The hemp supply chain frequently crosses state lines.
- Hemp products don’t require track-and-trace technology the way marijuana products usually do.
Hemp Industry Daily caught up with Schultz to find out more about how the global logistics mess is playing out in hemp. His answers have been edited for length and clarity.
How are hemp logistics different than logistics for other regulated products, such as alcohol or tobacco?
With alcohol and tobacco, you have some standardization and you have some guidance. You then have to play within that framework to make sure you’re doing things legally.
Where I saw the glaring hole for the hemp supply chain was after the Farm Bill in 2018 came out. You now have the golden ticket that the cannabis industry wants to bring things over state lines. But they gave you no idea on how to do it.
And I said to myself, without proper tracking and tracing and seed-to-sale and all the stuff I was used to when I was in cannabis, the supply chain is going to need a friend in that logistics component to be able to navigate through this and keep us all out of trouble. …
It’s not like tobacco or alcohol. There’s really no way that we’re being told exactly how to do it. And there’s no standardization across all the states.
How would standardization help?
It’s not like we’re taking this new product that we know for sure is always under 0.3% (THC). There’s always that worry that someone’s going to misinterpret what it is. And I don’t think you have that with tobacco and alcohol.
With alcohol, they’re able to take unprocessed alcohol over state lines to a processor. And I believe that’s one of the biggest bottlenecks in our industry right now. It’s a gray area.
I don’t see anything that says where you can take product that is testing over 0.3% THC from your processor in Kentucky to my processor in Tennessee. I don’t see how that’s not committing a crime.
I believe that’s going to have to come from the USDA. … I don’t know how the supply chain can truly ever scale to the level we all want it to until that opens up.
What’s your advice for going through different states?
We pretend as if we’re in court already. We try to make sure we have everything that driver needs to show law enforcement. We call law enforcement in advance to really get ahead, to say, “We’re coming through your state.”
And our operations team has relationships with many of the departments of ag in states we come through most often.
We always say to plan for when we get pulled over, not if we get pulled over. …
One example, we learned this lesson in the state of Florida. We reached out to the Florida Department of Ag and we asked, “What do you want us to do with it? Tell us exactly what you want us to do.”
And they had some rules with bringing in dirt or soil into Florida. It’s a big no-no. And there is a checkpoint when you go in. They want you to stop and check in.
Something that simple, but most folks I believe are blowing right past it. And they’re just hoping they’re not going to get caught.
Question about fiber logistics. Are you seeing more hemp decorticators and processing sites popping up? The scarcity of decortication facilities has historically been a big gap in the hemp supply chain.
I wish I had good news on decorticators. I still think there’s a ways to go there.
I think you’re starting to see more start to come online, just not as many as we need to cover what’s eventually going to be just an explosive side of this industry.
We keep hearing about this enormous truck-driver shortage. How is that affecting your business?
It’s been challenging for us to build a network simply because some folks won’t ship hemp. Some drivers will not take it, so we spend a lot of time educating our drivers on the rules and regulations on why it’s okay to ship it.
Ultimately, the driver does not have to. Sometimes they get cold feet and say they don’t want to play in that area. They’d rather ship other freight that we have.
If you look at logistics and transportation as a whole, driver shortages mean your capacity shrinks.
I think of some drivers that typically would go on the road are now delivering for last-mile companies, doing the front-of-the-doorstep type shipments. They’re not going to long trips cross country as much anymore.
And there’s a significant amount of drivers that are retiring.
What’s your forecast for how automation will affect cannabis logistics? Will robots and drones be making hemp deliveries?
I think where you’re going to see this from the early adopters is going to be inside the pick, pack and ship locations. Putting orders together inside a factory inside distribution centers.
The last-mile stuff, that’s a different story. When it comes to a product like cannabis and hemp, that’s not going to be here as soon as people think.
They’re underestimating the importance and the role that those drivers play, whether it’s a 21-and-older age verification or the handling of the product from the truck to the doorstep. Our drivers really play a really big role.
I do feel like the world’s going in that direction. But I think you’re gonna see that inside the distribution centers before you actually see (robot delivery) out on the streets.
Kristen Nichols can be reached at [email protected]