What Is Cannabis Brokerage and How Can It Help My Business?

By Gregory Frye

Brokers or brokerages are commonplace in pretty much every commodity-driven industry. This allows buyers and sellers to focus on what they do best without getting bogged down in the wholesale marketplace.

The same principle applies to the cannabis world -- perhaps even more so! However, not all operators are aware of how beneficial a brokerage can be for their business. Learning the ins and outs of how a cannabis brokerage like Tamerlane Trading functions and utilizing its services can make a big difference for suppliers and buyers. 

MAXIMIZE RESULTS

One of the biggest benefits of working with a quality brokerage is they know everything about the who, what, when, where, and why of the marketplace. 

Suppliers and buyers who work with brokerages receive market insights that allow them to understand the best way to move or acquire product while getting the most out of it. For instance, a supplier trying to move product on their own may only have a handful of potential buyers in their network. Meanwhile, a brokerage like Tamerlane has access to 100s of potential buyers. The same applies to buyers looking to find the right supplier. 

Not only that, but a business that foregoes using a brokerage will usually have to pay someone to procure and move product and complete other administrative tasks, while a good brokerage like Tamerlane can act as an extension of their client's team and eliminate superfluous costs. 

GAIN TRUST AND TRANSPARENCY

It’s natural for any marketplace to have ups and downs, which can make things really hard on cannabis suppliers that need to move their product, or when buyers are having trouble sourcing what they need. Having a brokerage in your corner is the best way to weather that turbulence. A broker's job is to develop a trusting relationship with suppliers and buyers, guiding them and providing assurances during the highs and lows.

Brokers listen, alleviate concerns by providing transparency about the market's present and future, and make certain their clients have the information they need to support their business structure.

Trust and transparency is one of the top value-adds in working with a brokerage. “The broker is the glue or cement that brings buyers and sellers together, managing those relationships and ensuring a smooth transaction,” says Jhavid Mohseni, founder of Tamerlane Trading. “Brokers add value to buyers and sellers of cannabis by virtue of our expertise, our network, and creating a high-fidelity transaction through arranging all the moving parts, as well as negotiating any bumps that show up throughout the transaction.”

AVOID MARKETPLACE PITFALLS

Developing new relationships in business can be hard. Imagine shipping $80,000 worth of cannabis to a new buyer – how do you know they are going to actually pay for it?

This is where brokers can act as trusted advisors to a certain extent, Mohseni explains. “Because we talk to so many people, we definitely have our finger on the pulse – whether it’s good, bad, or ugly. Through that networking effect, we know what people are looking for, we know which players you might want to avoid – and all of that allows us to connect the dots to make sure the transaction goes smoothly.”

“Sell, market, source, verify quality, call people, that’s all we do, all day long. That’s our job,” Mohseni says.

SAVE TIME AND MONEY

Clients who use a broker are more likely to have consistent sales, leading to consistent revenues, leading to consistent cash flow, and a decrease in money problems. Not only does this help a business grow and thrive, but it also can save tremendous stress. 

Brokers also help ensure that suppliers are not undervaluing their product and that buyers are not overpaying. With their unique position in the supply chain, brokers have the advantage of witnessing all the market fluctuations and knowing the fair market value. Transparent brokers like Tamerlane Trading will then pass that knowledge on to their clients. 

As noted, a good broker should act as an extension of their client's team, thus also improving a business' time management. A dependable, experienced broker like Tamerlane Trading will save time by allowing clients to focus on the core of their business while a broker handles the rest, from sourcing to transportation and all the little details in between. That also includes marketing -- an often overlooked, costly, or time-consuming aspect of the business. 

Brokerages can also help new suppliers and buyers establish themselves within the industry, by connecting them to a larger network they otherwise wouldn't have known. A supplier could be dealing with two or three other companies that buy their product, while a broker could be shopping their product to over 100 companies.

Buyers and suppliers who use a brokerage benefit from being able to leave all these aspects in the brokerage's hands. 

WHEN SHOULDN'T YOU USE A BROKERAGE?

With all that in mind, are there times when someone shouldn't use a brokerage? Those who don't favor trust and transparency won't get far in the industry, or with a good broker.

“If you’re skipping a broker in order to not pay fair market price, you’re taking advantage of your supplier – which you will only be able to do for so long," warns Mohseni. "Eventually, they’re going to realize they’re being taken advantage of, or you’re going to help them go out of business.” And it goes both ways for those who are charging over fair market price, “Buyers will realize eventually if they're not being charged a fair price, and you’re going to have weak relationships,” Mohseni explains. 

At the end of the day, brokerage is for those who value trust and transparency, who want to maximize their results while avoiding pitfalls, and who wish to save time and money. 

Gregory Frye

Writer

Gregory Frye is a storyteller, writer, editor and award-winning journalist with a love for meaningful collaboration. Most recently, he was part of the founding team at Green Flower Media, where he spent almost five years as executive online editor.