No Market is Immune from Supply Chain and Labor Shortage Woes – Even the Cannabis Market

Every corner of the country, and possibly even the world, has been impacted by the labor shortages and supply chain snarls created by the COVID-19 pandemic. Michigan is not alone. Unfortunately, many small businesses are feeling the pinch even more than larger corporations. This means some changes are in the works for small businesses, like marijuana dispensaries throughout the state.

Most Michigan dispensaries are small businesses. Like so many others, they are struggling with the same types of problems businesses of every kind are facing in the current economy. A recent Moody on the Market article discusses the extent of the problems small businesses face that include the following:

  • Increasing labor costs.
  • High turnover rates.
  • Social distancing costs.
  • High absenteeism.
  • Inflation.
  • Supply chain disruptions.

These issues do not even include things like customer confidence or the struggle of finding new ways to get products into the hands of their customers, such as offering contactless delivery or other options to customers. Dispensaries also have the added burden of working within the confines of laws and regulations surrounding the marijuana industry in Michigan.

On the downside, the supply chain issue doesn't appear to be correcting itself. The problem has only been exacerbated by mandates, crowded ports, and labor shortages at every step of the supply chain from the port handlers who offload goods from container ships to train thefts, truck driver shortages, distribution hub labor shortages, and consumer-facing labor shortages.

Supply chains

It's not all a problem of people being ill from coronavirus. Many people have decided not to return to the labor force or are finding higher-paying jobs forcing small businesses, those with lower profit margins, to begin with, to pay more for the labor in their businesses. This is a great thing for workers, at first glance. The unfortunate reality, though, is that it is driving the prices of goods, especially those sold by small businesses that can ill afford to absorb increasing labor costs, higher.

Unfortunately, that's just labor costs at the retail end of the supply chain. That doesn't even cover rising costs related to labor on the distribution side, rising fuel costs on the transportation side, rising costs for managing the technology that drives the supply chain in our high-tech world, and so many other costs that make it difficult for small dispensaries to compete with larger corporate interests, even in the world of marijuana dispensaries.

The bottom line is that workers are needed in every facet of the business of supplying CBD, medical marijuana, and recreational marijuana to the masses. The one area where things are good for Michigan dispensaries is that much of the marijuana being distributed is not shipped from other countries. The truck driver shortage continues to impact the supply chain struggles with companies paying up to $150,000 per year for first-year drivers and the federal government initiating a program to allow drivers between the ages of 18 and 20 to drive large trucks in order to mitigate the crisis. This is unprecedented for drivers who cross state lines where the minimum age has previously been 21.

Cannabis

What does this mean for Michigan marijuana dispensaries?

Ultimately, it means the future is uncertain for many small and struggling marijuana dispensaries. That is why it is a good idea to use Weedmaps to find Michigan marijuana dispensaries that may be able to meet local demand for CBD and marijuana products you can count on.

The supply chain problems appear monumental to the casual observer faced with empty supermarket shelves, higher prices at the checkout, and wages that aren't keeping pace with the demands of everyday life. Those looking for work can find well-paying jobs in the supply chain field at every stage of the game (with entry-level jobs paying well over $20 per hour with many companies).

Opportunities abound when it comes to seasoned supply chain management staff as companies of all sizes seek to gain an edge over competitors by having their supplies on the shelves. Even small businesses are upping their supply chain games by investing in significant technology to help keep the goods flowing across the country and across the state of Michigan.

While it is unlikely that the state of Michigan will run out of marijuana in the year ahead, there may be times when it is less available than others due to the supply chain disruptions that are affecting every industry in the country. That is why you want to keep an eye on your options when it comes to finding reputable dispensaries in your city and throughout the state. The more options available to you, the less likely it is you'll have a problem finding the supply you need for your medicinal marijuana needs and more.

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Mark Bernberg
Mark Bernberg

Mark Bernberg is a long-time cannabis investing enthusiast and founder of The Green Fund, Asia Pacific's preeminent media house, positioned at the forefront of the global cannabis industry.