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Investment research report / market analysis
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2.08 MB
Summary
This document is page 43 of a 2017 investment report titled 'Chapter III Cannabis Industry Segmentation' produced by Ackrell Capital, LLC. It analyzes 'Distribution Services' within the cannabis market, outlining opportunities such as e-commerce and branded dispensaries, as well as challenges like customer acquisition and restrictive regulations. The document bears the Bates stamp 'HOUSE_OVERSIGHT_024679', indicating it was part of a production to the House Oversight Committee.
Organizations (4)
| Name | Type | Context |
|---|---|---|
| Ackrell Capital, LLC |
Investment firm producing the report on the cannabis industry.
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| FINRA |
Ackrell Capital is noted as a member.
|
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| SIPC |
Ackrell Capital is noted as a member.
|
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| House Oversight Committee |
Implied by the Bates stamp 'HOUSE_OVERSIGHT_024679'.
|
Key Quotes (4)
"Distribution services is emerging as a prominent subsegment of the cannabis industry"Source
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Quote #1
"Currently, distribution activities must be conducted only intrastate"Source
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Quote #2
"Companies that provide digital retail platforms for cannabis products will benefit as consumers migrate to e-commerce transactions."Source
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Quote #3
"We see an opportunity for cannabis dispensaries to attract significantly more customers by establishing storefronts in malls and other high-profile retail locations."Source
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Quote #4
Full Extracted Text
Complete text extracted from the document (3,172 characters)
ACKRELL
CAPITAL
CHAPTER III Cannabis Industry Segmentation
CAPITAL
CHAPTER III Cannabis Industry Segmentation
Distribution Services
Distribution services is emerging as a prominent subsegment of the cannabis industry; services in this
subsegment include wholesale distribution of cannabis products to retailers and production inter-
mediaries, as well as related transportation and logistics services. Historically, a high percentage of
product manufacturers have sold directly to retail dispensaries, and some of those manufacturers with
established “in-house” distribution channels are now leveraging their experience to offer distribution
services to third-party manufacturers.
subsegment include wholesale distribution of cannabis products to retailers and production inter-
mediaries, as well as related transportation and logistics services. Historically, a high percentage of
product manufacturers have sold directly to retail dispensaries, and some of those manufacturers with
established “in-house” distribution channels are now leveraging their experience to offer distribution
services to third-party manufacturers.
Currently, distribution activities must be conducted only intrastate, and providers of distribution
services must comply with regulations related to “touching the plant,” including testing and tax-
collection requirements. As laws are changed to allow more interstate and international transportation,
purchasers will be able to compare products and prices on a national or international basis, and dis-
tributors who provide superior product selections and transportation logistics should have significant
competitive advantage.
services must comply with regulations related to “touching the plant,” including testing and tax-
collection requirements. As laws are changed to allow more interstate and international transportation,
purchasers will be able to compare products and prices on a national or international basis, and dis-
tributors who provide superior product selections and transportation logistics should have significant
competitive advantage.
Distribution Opportunities
We believe opportunities in this segment include:
We believe opportunities in this segment include:
E-Commerce Distribution. The ability to accept electronic orders and deliver cannabis products
on demand represents an attractive distribution channel and growth opportunity. Companies that
provide digital retail platforms for cannabis products will benefit as consumers migrate to e-commerce
transactions.
on demand represents an attractive distribution channel and growth opportunity. Companies that
provide digital retail platforms for cannabis products will benefit as consumers migrate to e-commerce
transactions.
Branded and Vertically Integrated Dispensaries. We believe that consumers will ultimately con-
centrate their purchases with a small group of branded dispensaries that provide a distinct, consistent
and trusted retail experience and offer supporting e-commerce solutions. Dispensaries that integrate
vertically to offer their own branded products should achieve superior margins on those products.
centrate their purchases with a small group of branded dispensaries that provide a distinct, consistent
and trusted retail experience and offer supporting e-commerce solutions. Dispensaries that integrate
vertically to offer their own branded products should achieve superior margins on those products.
High-profile Retail Locations. We see an opportunity for cannabis dispensaries to attract signifi-
cantly more customers by establishing storefronts in malls and other high-profile retail locations.
cantly more customers by establishing storefronts in malls and other high-profile retail locations.
“Land Grab” of Desirable Locations. Companies able to navigate the licensing and real estate chal-
lenges required to secure and operate multiple dispensaries in desirable locations should benefit from
existing high barriers to entry and capture significant market share.
lenges required to secure and operate multiple dispensaries in desirable locations should benefit from
existing high barriers to entry and capture significant market share.
Distribution Challenges
Challenges in this segment include:
Challenges in this segment include:
Customer Acquisition and Retention. Like e-commerce businesses in other industries, providers of
e-commerce solutions in the cannabis industry face intense competition for customers who can easily
change vendor loyalties. Companies will be challenged to minimize customer acquisition costs and
retain customers.
e-commerce solutions in the cannabis industry face intense competition for customers who can easily
change vendor loyalties. Companies will be challenged to minimize customer acquisition costs and
retain customers.
Restrictive and Changing Regulations. Obtaining a state dispensary license or other type of dis-
tribution permit typically involves a multi-month application process that requires the applicant to
demonstrate compliance with complex criteria. In addition to state laws and regulations, dispensaries
tribution permit typically involves a multi-month application process that requires the applicant to
demonstrate compliance with complex criteria. In addition to state laws and regulations, dispensaries
© 2017 Ackrell Capital, LLC | Member FINRA / SIPC
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