How Hemp Wholesale Distribution Works: The #1 Masterclass

A recent report from research firm Whitney Economics shows the hemp market was responsible for $28.4 billion in sales in 2022. Put simply, the hemp industry is booming. 

That means hemp business owners have the opportunity to boom, too. But to master your hemp business, you have to first master how hemp wholesale distribution works. 

That’s why we’ve put together the ultimate masterclass on how hemp wholesale distribution works. In this guide, we’ll cover everything you need to know to become an expert yourself. 

Table of Contents

• Hemp Wholesale Business 101 
• Behind the Scenes: Finding a Qualified Supplier 
• The Importance of Hemp Testing 
• Getting Started: How Hemp Wholesale Distribution Works
• Choosing the Right Hemp Products to Sell
• The Final Word: Standing Out as a Hemp Supplier

Hemp Wholesale Business 101

The hemp industry is abundant with opportunities for aspiring and current entrepreneurs. With a bustling cultivation and extraction industry, the market demands a middleman in the supply chain to distribute quality products to consumers. 

That’s where hemp wholesale businesses enter the conversation. Whether online or brick-and-mortar, hemp producers need an outlet for sales, and consumers need trusted retailers. 

A few of the most common selling methods that are successful for hemp businesses are:

• Dropshipping – To cut down on internal costs, dropshipping hemp businesses will use the hemp distributor to ship the products directly. Many of these businesses are operated online, which reduces the need for and cost of warehouse space and inventory processes. 
• Personal retail – You may be familiar with personal retail distribution or what’s known as wholesale. Hemp distributors will provide goods to customers at a “wholesale” price for them to upsell at a retail price in their stores. Even more, these types of distributors might offer white label or private label options, where the product is branded as your own.  
• Third-party distribution – Third-party distribution is more commonly known as resale.  Third party distributors purchase products from manufacturers at much lower margins than wholesale and then sell them to larger retail chains, such as Walgreens or Target. 

Now that you have the basics of hemp wholesale businesses and their advantages, what’s next? Find a qualified supplier to ensure you’re distributing quality products. Let’s find out what goes on behind the scenes of vetting suppliers next. 

Behind the Scenes: Finding a Qualified Supplier

First and foremost, the most important factor to seek out in a supplier is – are they legally licensed to manufacture and sell hemp? Once you’ve verified their legal status, you can move on to checking off other preferable qualities, including:

1. Cultivation Practices – The highest quality hemp products are US-grown, and don’t use harmful pesticides during cultivation. It also helps to partner with veteran growers that are committed to producing consistent quality to avoid any downtime due to costly mistakes. As well as the expertise and capabilities to continually supply consumers with the variety they demand, in unique cannabinoids, etc. 
2. References – It’s highly beneficial to inquire about references that your distributor can provide, and be sure to check the length of time they’ve been operating. 
3. Pricing – Anything priced too high or too low should raise red flags in the vetting process. A reputable supplier should be amicable to discussing pricing strategies and how they work to offer you significant profit margins. 

The Importance of Hemp Testing 

Just as important as confirming your supplier is operating legally is confirming their process for product testing. Certificates of analyses, or lab reports, should be easily accessible to customers and performed by accredited labs.

Why is hemp testing so important? As a supplier, it verifies the contents of products and ensures the packaging is labeled correctly. This not only reduces risks but also assures quality and safety for the end-consumer. Or, the customers you’ll want to keep returning to your hemp business. 

Getting Started: How Hemp Wholesale Distribution Works

Now that you have all the ins and outs of how hemp wholesale distribution works behind the scenes – how can you get started with your own business? For the most part, there are two selling models that work the best.

1. eCommerce Model – To set up an eCommerce hemp store, you’ll need a website that supports retail sales. Even more, you’ll need a savvy strategy to attract consumers to your online retail storefront. 
2. Dispensary Model – A dispensary model represents a brick-and-mortar store. It could be combined with an eCommerce component, but also has a physical location for consumers to visit to shop. It could be your own physical location or a network of dispensaries that you work with for large volume orders to increase profit margins. 

To decide which one is right for you, consider important factors that’ll affect the success of your business, such as:

• Location and acceptance or tolerance of hemp 
• Upfront costs and initial investments 
• Staffing and strategy 

Choosing the Right Hemp Products to Sell

In today’s world, more consumers are exploring all-natural wellness routines. This includes exploring the wide variety of hemp products that can benefit physical and mental wellbeing. So, how can you choose the right hemp products to sell with so many factors to consider?

To master how hemp wholesale distribution works, it helps to find a qualified supplier with a wide variety of products. Even though you could source products from multiple vendors, by finding one source with an extensive catalog, you can increase profit margins and save time and stress.

In general, some of the most popular hemp products on the market today include – 

• Edibles 
• Capsules
• Concentrates and vapes
• Tinctures and oils 
• Flower and pre-rolls 

But beyond variety in product types, it’s also important to offer a variety of cannabinoids for differing effects. For instance, CBN is a popular cannabinoid for its sleep-inducing effects, while others are increasingly seeking THCa for its euphoric mood-enhancing effects. 

The Final Word: Standing Out as a Hemp Supplier

Knowing the basics is just the start. Immersing yourself in the hemp community is a must to become an industry leader. So, to finish, how does hemp wholesale distribution work when you have to stand out from a slew of competitors?

Here are some final tips and best practices to achieve your hemp business’ goals and objectives – 

1. Stay educated 
2. Keep in tune with understanding the target market 
3. Continually stock quality products 

But most importantly, we cannot stress enough – how hemp wholesale distribution works optimally is driven by your supplier. If you’re interested in increasing your hemp wholesale business’ sales and ultimately profit margins – you’re in the right place. 

Take the time today to learn more about Elevated Trading and protect your business’s future. Ready to chat more? Get in touch to schedule a complimentary consultation!