Government Puts Delivery Logistics and Security in the Hands of Cannabis Companies

January 25, 2019 -

Federal government officials in Canada have confirmed that there will not be a specific license requirement for the transportation of cannabis in that country. The government is putting the delivery and security of product squarely in the hands of the manufacturers and distributors of cannabis.

Major companies on the supply side of cannabis with significant interest in this development include XPO Logistics, Inc. (NYSE: XPO), United Parcel Service, Inc. (NYSE: UPS), and International Business Machines Corporation (NYSE: IBM). Each of these infrastructure providers can capture significant market share by playing a role in the delivery and security of cannabis.

Innovative new companies such as TrackLoop Analytics are keen to offer new solutions to build this exploding market. TrackLoop Analytics (CSE: TOOL) is providing one of the first fully integrated Supply Chain Management (SCM) platforms for the emerging Cannabis, Food & Pharma logistics industry. Its real-time tracking solutions offer the very latest in IoT and AI, providing valuable data and business intelligence to support the producers facing challenges.

Officials swing the door open for independent companies

Under regulations established earlier this year by Health Canada, all federal license holders are responsible and accountable for the safekeeping of cannabis, which includes the distribution, delivery and transportation process. That’s a big mandate, especially for these new companies.

Government officials have said that any company or person who is retained by a licensed company to transport cannabis will be subject to the provisions of the Cannabis Act.

Medicinal marijuana handling and distribution has been governed through the Access to Cannabis for Medicinal Purposes Regulations and had consumer shipping has been handled through Canada Post and courier services.

But with the legalization of pot in October of this year, companies have been forced to significantly scale up their shipping methods and logistics capabilities to meet the increased demand requirements from new retailers, including crown corporations.

Delivery and logistics Play a Big Role

Cam Battley is the chief corporate officer at Aurora Cannabis, who sees the movement of product as a critical aspect of his company’s operations since the legalization of recreational marijuana.

“Logistics now becomes a core competency of the larger company, because we don’t yet have all the details as to what the transportation requirements are going to be province by province,” Battley said.

Canopy Growth Corp., Canada’s largest licensed producer, is working with a new security services company that has turned its attention to servicing the cannabis sector.

Thomas Gerstenecker, the founder and chief executive of 3-Sixty Secure Corp., sees the opportunities in the transportation and support space.

“There are a couple of licensed producers at the moment that are taking care of that internally, but I’m confident that’s going to change just because of the amount of product that’s going to have to be moved,” Gerstenecker said.

He expects the regulations surrounding the movement of cannabis to evolve and change over time.

“I think work still needs to be done on regulating or introducing regulations for moving product, particularly ones with a higher value,” he said. “The regulations are a bit lacking in that area.”

Logistics players key to success

With the explosive emergence of new legal cannabis markets, there is a major demand for “regulated” real-time traceability in cannabis supply chain, as with the supply chains for food and bio-pharma.

The cannabis sector has an almost shocking reliance upon paper or non-universal barcoded recording, which lacks traceability and proper control along the supply chain. An estimated 65% of cannabis operators are still using outdated logistics strategies.

TrackLoop Analytics is an early provider gaining traction in this space. The young company is an AI, Blockchain, IoT, Coldchain tracking and logistics company providing real-time solutions for the food, pharma, and cannabis industries. It is the only end-to-end integrated API, with up to 70% reduction in integration cost and lowest operational down-time.

TrackLoop is already moving beyond its initial success and has entered U.S. markets with a newly announced launch in California’s $5.1 billion pot market.

TrackLoop’s system is fully integrated and compliant with Metrc, the regulatory and compliance system deployed in California, Colorado, Ohio, Alaska, D.C., Oregon, Nevada, Maryland, Michigan and Montana.

Jurisdictions still sorting it out

The executive director of the Cannabis Canada Council, Allan Rewak, said decisions about how to ship large quantities of product from producers to retailers is largely on the shoulders of the individual provinces.

“Each province will take a different approach, whether they use a private corporation specializing in secure delivery, or they’re doing it themselves through their own company,” Rewak said.

Companies with significant stakes in the approach to supply logistics, distribution and product fulfillment in the cannabis industry could capture huge value from this new industry including:

XPO Logistics, Inc. (NYSE: XPO) provides logistics services (as well as transportation) in North America, Europe, Asia, and internationally. Its Logistics segment offers a range of contract logistics services, including engineered and customized solutions, value-added warehousing and distribution, cold chain solutions and other inventory management solutions.

United Parcel Service, Inc. (NYSE: UPS) provides letter and package delivery, logistics, and financial services. The company also offers shipping, visibility, and billing technologies; and insurance, financing, and payment services. It operates a fleet of approximately 119,000 package cars, vans, tractors, and motorcycles; and owns 45,000 containers that are used to transport cargo in its aircraft.

International Business Machines Corporation (NYSE: IBM) recently announced growing adoption of its food supply chain network, IBM Food Trust. The blockchain-based cloud network offers participating retailers, suppliers, growers and food industry providers with data from across the food ecosystem to enable greater traceability, transparency and efficiency.

For a more in-depth look into logistics for the cannabis business and TOOL, you can view the report at:

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