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Manufacturing Is A Critical Part Of The Cannabis Supply Chain, According To NewTropic's CEO

June 4, 2020 10:31 am
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This special presentation from NewTropic is from Benzinga’s June 1 Virtual Cannabis Capital Conference. Click here for more coverage of this event, with presentations from some of the top CEOs, investors and lenders in the cannabis space.

After spending a year talking to operators and regulators across the U.S. from 2015-2016, Co-Founder & CEO of NewTropic, Alex Rowland, learned that with the arrival of new regulations, manufacturing was going to be a critical part of the supply chain. 

Regulators were looking at manufacturers as the place in which quality, safety, dosage requirements, etc., were where the rubber would hit the road, Rowland said.

Rowland found that manufacturing was underdeveloped and underserved, and saw this as a great opportunity to enter the space.

The company pivoted its business model to exclusively focus on helping other brands plug into a manufacturing layer that they could rely on to produce high-quality products at velocity. So, they transitioned the model to be a contract manufacturer, said Rowland.

NewTropic provides brands with reliable, scalable, and compliant contract manufacturing and a supply chain platform that allows them to plug in and scale dramatically.

The Fundamental Problems For Brands

“Manufacturing and delivering compliant cannabis in states like California is really, really hard.”

This is an incredibly difficult thing to execute on as many brands have been forced to build their own manufacturing facilities or partner with existing competitors in the marketplace to execute on this which results in fixed costs which is an extremely expensive process, said Rowland.

Brands that try and enter the manufacturing space themselves run into many issues such as dealing with regulations, taxation, and figuring out how to execute a supply chain.

In turn, this causes these brands to turn their focus away from what they should be focused on: selling.

“Our goal is to build the most technologically sophisticated and scalable manufacturing platform for brands starting in California… we want to provide brands with the ability to plug into this platform regardless of the adult-use market they want to participate in.”

Image by NickyPe from Pixabay 

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