Jessica Lilga and Sadie Reyes of Alta Supply have built a distribution model grounded in strategic partnering.
The success of California’s historic transition into a fully regulated environment largely will depend on the ability of distributors to bring order to what inevitably will be chaos in the marketplace for many months following January 1, 2018. If you think about the qualities necessary to hold together the disparate parts of the industry while maintaining strict adherence to state and local regulations promulgated on the fly—with only emergency state regulations in place for the moment— finding anyone capable and connected enough to pull it off seem like a tall, if not impossible, order. Any such entity would need to know and be trusted by the cannabis community while possessing the formidable business chops and logistics expertise to scale and engage with any size company or network working in the space today and into the future. You would need to create a perfect harmonic balance between city and country?
Which just happens to sound a lot like Alta Supply. Created in 2014 by country girl Jessica Lilga and city girl Sadie Reyes, Oakland, California-based Alta is a statewide wholesale distributor of quality cannabis products, representing a curated selection of vendors not as a traditional logistics option, but as a strategic partner. “We are working with the brands to go out and knock on doors, open new accounts, provide marketing services,” said Lilga. “We do demos for our brands; it’s a full-service package. It’s the sales, marketing, and logistics options.”
The co-founders are a full-service package, too. Reyes, with a background in corporate marketing and customer relations, serves as company president and is hands-on in any number of areas, including managing the warehouse facility. “The things that Sadie brings to the team are what sets us apart,” said Lilga. Reyes responded, “I would say the same about Jessica. We are a phenomenal duo. Opposite in all the ways that mean the most, and together a powerhouse.”
Lilga, who described her primary responsibility as “the buyer, primarily negotiating with the vendors we work with for distribution,” brings years of experience in the cannabis industry, working closely with farmers, vendors, and retailers. “I have a strong cultivation background, worked in the hydroponics sector selling nutrients, and have seen thousands of growers across the world,” she said. “It’s been an amazing and useful experience because I can go on a farm and see things, and I know what it all means. I can give them advice too, so it’s very useful.”
The idea to create Alta came to her as it so often does to people: out of experience. “I was working with another brand, and it was difficult to get time with buyers. I saw a need. I saw how people liked me and they trusted me, and they started asking me, ‘What’s your opinion on this product? What do you think about topicals?’ And I thought, ‘Hey, being a third party in the distribution end is a perfect place to carve out a niche,’ because no one had come up with a distribution model at that point in the industry. We officially formed in January 2015 but opened our doors for business in 2014.”
With a Bhang
After taking about a year to formulate their business structure, Alta started with a bang, taking on a quality brand as its first client. “We originally launched with the Bhang brand,” recalled Lilga. “We took over their Northern California distribution and more than doubled sales within a couple of months. It’s amazing what time and attention and knocking on doors can get you.”
“When we first took on the Bhang brand, they were most present in the Northern California market: San Francisco, Oakland, Sacramento, and some of the North Bay,” added Reyes. “We expanded their market greatly, into the Central Coast, the Central Valley, and as far north as Humboldt County.”
Today, Alta maintains a license with Bhang that covers the top two-thirds of the state, north of the grapevine, with a different distribution service serving the Southern California market. Each relationship is unique. “With some brands, we have Northern California distribution; with other brands, we have statewide distribution,” Lilga said.
All proceeds raised through the ‘Farm To Farm’ program will be donated to affected farmers. We are accepting flower donations in four-pound units. — Jessica Lilga
More than partners
But Alta does have specific requirements respecting who they will work with and the way business relationships are structured. For instance, they require exclusivity. “We’re flexible on the bulk flower, but at this point with our other brands we require exclusivity,” explained Lilga. “It’s a good fit for us because we’re the strategic partner model, we’re in every primary account, and we don’t want to fight with other distributors. It devalues the product when price-warring starts, and you’re competing for the same customer.
“We understand our model is a little unique,” she added, and when asked ticked-off the qualities that set them apart. “Looking for the exclusivity, the strategic partnership, focusing on the brands, on the retail-ready products, and our online ordering system. The way our reps are knowledge-focused and our attention to customer service and professionalism.
“We are an employee, an extension of that brand,” she continued. “We’re all selling weed, so what differentiates this flower from that flower? It’s the story and the marketing. That’s such an important goal for distinguishing the product.”
Reyes said communication plays a role, as well. “A distribution relationship is very intimate on both ends,” she said. “You need to have conversations of all types to progress into a positive future. We’ve never had a break-up with a vending partner, and I think that’s a result of our vetting process. We make sure before we get married that it’s a good fit and we usually agree. We offer all the components of service, and we do it well. When you have that and good chemistry and a binding contract that helps legally commit you to another, you have the basics of the structure.”
Committed to working only with licensed cannabis companies, Alta Supply is in full-preparation mode for the future marketplace. “We focus on retail-ready, prepackaged products, whether it be concentrates, edibles, vape pens,” said Lilga. “That’s the majority [of our products].”
Alta currently wholesales bulk flower but is ready for the inevitability of prepackaged flower. Flower already is the most problematic product. “It’s the most perishable and expensive and up most for debate and negotiation,” explained Lilga, “so it’s more challenging and risky.
“I see a future in prepackaged retail-ready flower,” she continued. “It’s harsh, but there are reasons why it’s the best option. Los Angeles is going to require [prepackaging], and I think it’s only a matter of time before the state requires it. A lot of [the issue] comes down to liability. If I sell bulk flower and a patient tests it and comes back and says, ‘It’s contaminated with Myclobutanil, and I want to sue the grower,’ the grower cannot be held liable. The store could have been the place of cross-contamination, because it was weighed out and could have been contaminated there.”
For that same reason, prepackaged flower may be better for consumers “because [prepackaging] has the potential to maintain better product integrity,” Lilga said. “I want my food prepackaged from the factory and handled by as few people as possible.”
2018 and beyond
If Alta Supply represents the future of distribution in California, then the industry, the state, and the community at large should rest at ease. With a staff of fifteen, the company epitomizes professionalism and passion, and doesn’t sweat the small stuff. “We are friendly with our competitors, but we don’t put a lot of focus on what they are doing,” said Lilga. “We like to focus on what we are doing.”
That focus is clear. “We feel strongly about clean, pesticide-free products, which is how we built our niche,” she continued. “We’re looking for brands that understand the value of branding and have a pretty package with a good product inside. We want good business people who desire to participate in the legal, regulated market and are willing to do what it takes to adapt to this ever-changing space. We’re looking for good branding and products, with all the testing protocols in place.
“That right there eliminates a lot of people,” she added. Those demands aside, the team is committed to helping growers over the coming year. “We want to support the small farmer, and our online platform is set up to do that. It’s also why we do not require exclusivity for farmers with bulk flower currently. We want to help cultivators transition through this next year.”
For Reyes, education will be the key to a smooth transition year, especially for consumers experiencing extreme sticker shock as the new regulatory scheme results in pointedly higher prices. “For the next twelve to twenty-four months, we’re in a huge stage of transition where you need to get consumers acclimated to a new pricing structure,” she said. “It’s probable that the cannabis they’re buying today could double [in price] in the next six months.”
Companies like Alta Supply—which purchase product at a distribution price and then store it in their facilities to fulfill retail orders as needed—will by definition serve a key role in the normalization of pricing as the market matures. To that end, explained Lilga, “What we like to do is to create standardized wholesale pricing. We don’t want different pricing in the south and the north, or one store having special pricing. We work with the manufacturers to create standard wholesale pricing. Also, retailers are not necessarily accustomed to the distribution margins for flower, and so we want to help ease them into that. We have twenty-two partner brands right now, and we count cultivators a brand. We’re looking to work with licensed cultivators and put their flower under their farm name. Even if all they have is a name and a logo, that’s good enough.”
Such sophisticated attention to the nuances of the emerging market, and the willingness to meet need with innovation, bodes well for Alta’s future, which includes plans for multiple warehouses to serve a vast state that will see every level of distribution try its hand in the market.
“There will always be different levels of service in distribution,” said Reyes, “including some with both the size and quality of a Nordstrom’s.”
So… would Alta Supply like to become the Nordstrom’s of cannabis distributors? Reyes said, “That is absolutely our goal!”
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