As with all the wonderful consumer goods we love, Cannabis is a product and industry-driven by logistics – which is how we can get fresh drops of tasty strains and consistent products on our local dispensary shelves. While we don’t have container ship fiascos like we’ve seen with the pandemic, the stakes are just as high – at least for those who want to get high. We sat down with Michael Dykstra, Founder, and Amber Vaughn, Director of Development for Terpene Transit, Washington State’s largest Cannabis distributor, to learn what it’s like on the inside of the industry and how delivering weed all over the state has gone from an idea to serve small farms, to becoming Whatcom County’s largest 502 employer.
What was the inspiration for starting Terpene Transit?
Dykstra: Our main driving point for starting Terpene Transit was doing my own deliveries as a Tier 1. To have to leave the facility or employ a person to do deliveries was really challenging, so I knew I wasn’t the only person in that position who wanted to have somebody else do their deliveries – that wasn’t a direct affiliate of the business. We were really thinking about how we could help farmers out, particularly the small farmers.
Originally I-502, the law passed to legalize Cannabis in Washington, didn’t allow for third party delivery services. When did that change, and when did you begin operating?
Dykstra: We were the second license to be approved in October 2016, and we began operating in the beginning of 2017. The third party transportation license was created a couple of years into the legalization process, and allows for us to run a distribution model where we can pick up products from producer/processors, bring it back to our central location, and then disperse it outwards.
Vaughn: But it does not allow for warehousing, which is what distribution is really reliant on in the real world. Distribution is taking everything from a central location out – we run that model, but we would like to be able to warehouse products and then distribute on our own accord. That would allow us to create a living inventory that is stored for a duration of time. So for now, we are considered a ‘last mile delivery service’ within state regulation, but we do believe that we are getting closer every year to a full warehousing and distribution model being allowed.
Was it hard to build a business from scratch in an industry that was in its infancy?
Dykstra: We’re Cannabis guys who were getting into logistics, not logistics guys getting into Cannabis. But now we’ve definitely learned both!
Vaughn: It’s been a journey. I had taken a step back from the industry and was working on a silent disco business when Mike started Terpene Transit, and that took precedence. We started with one van! I put everything into the logistics side, figuring it out while he kept the farm going. Understanding the struggles and what it looks like for the producer/processor side has given us the ability to be more than just a last mile delivery service to somebody, and that’s helped us create success – not just for ourselves, but for our customers.
“The craft farms can’t be in every store, but we help them get to corners and pockets of the state, and can really help them grow.”Michael Dykstra
From humble beginnings to being Whatcom County’s largest I-502 employer is a huge step! What are the numbers like today in terms of employees, routes and deliveries?
Vaughn: We are averaging between 1,600 and 1,800 deliveries a week, and those don’t include returns or rejections which are included in the service. That number only includes testing lab samples, vendor samples, and orders from producer/processors to stores. We currently have 53 employees but are rounding up to 60 before the new year, and we have 24 vehicles running between 14 and 19 routes daily.
That is an amazing volume of people, pot and routes to manage. What’s it like to dispatch all of those drivers and routes?
Vaughn: The most fun part of it all is being able to see the whole circle. Having such a diverse knowledge about the industry as a whole and being able to anticipate issues before they arrive, allows us to help our clients succeed – and that’s one of the best parts. Our diverse knowledge set allows us to look at industry trends like product lines launching, buying and ordering patterns, consumer trends, and so much more. Those that utilize us in a meaningful way, and adapt to our routes and allow us to help prioritize our fulfillment based on our routes, has also been a pleasure, and we are able to see our clients and partners grow exponentially over time. The real key to it all is the faster you get it out the door, the faster you get it on a shelf, the faster they reorder the product for sell through rates.
Dykstra: We really try to cater our business to help the farms out here. I feel like it’s underrepresented – a very hard part of the industry to create all the supply – and so we really try to help them understand their needs and time expectations, and some of the sensitivities with products we deliver to help our clients succeed.
How does security play a role in what you do?
Dykstra: We put a lot of energy, effort and money into the security of our vehicles. From tracking units that can’t be disabled, cameras, switching schedules, using different vans, making sure our drivers are on rotating routes – there’s a lot we have to do to be tactical with our operations. So if a security issue comes, we eliminate the human aspect transparently and we keep the driver from being at risk, because the vehicle is there to protect itself.
Do your drivers get to make stops for bathrooms, or is it such a security risk that they have to pull an Amazon and pee in water bottles?
Vaughn: We would much rather them stop and use a restroom! Our retailers and partners are really gracious, specifically with bathrooms and lunches, and our team gets fed out there constantly. I often come back to work and find produce from our routes to Eastern Washington, or Krispy Kremes from Seattle. We have a lot of very cool partners who are generous to the drivers along the way.
How does Terpene Transit help clients save time, money and the stress of running their own deliveries?
Dykstra: We are a buffer for brands and limit their liability. What if somebody from your brand goes in for a delivery and has a bad day? There’s no layer of insulation. So we are that buffer, where you don’t have to put your brand and company on the line in every situation. There are moments when we are the scapegoat, but there’s something to be said for letting a third party handle certain situations.
Vaughn: We appreciate people who use us for big or small orders, or as part of their business. We can do specific deliveries to destination stores or hard-to-reach locations, and especially for smaller farms, it can help them reach out statewide, while they focus on production. There are a lot of positives where we can come in, from large to small.
What is your favorite part of helping clients grow?
Vaughn: We have a client who owns a large producer/processor, and after nearly two years had gone from being involved in every aspect of internal distribution, to gaining trust and letting us run that side. I remember the owner telling us that he had, for the first time, gotten to see his son play little league baseball because he didn’t have to be worrying about distribution all the time. That I love. We are all in this industry together, and people forget that we are creating this industry from scratch, and so all of us have put every ounce of blood, sweat and tears into our operations. Watching people regain their lives after building businesses – that’s very valuable and gratifying.
Dykstra: For me, it’s seeing farms have the ability to be in a single shop in Vancouver, or in the one Walla Walla store they want to stock. The craft farms can’t be in every store, but we help them get to corners and pockets of the state, and can really help them grow. We’ve seen clients grow exponentially since partnering with us, and hearing that is my ‘I love what I do moment.’
What are your hopes for the future of Terpene Transit and the industry?
Vaughn: I love helping people streamline and prioritize, and watch their order numbers rapidly pick up and become more manageable – and I’m so hopeful for us to be able to offer warehousing someday. We also want to expand, perfect and diversify our ancillary offerings. We are often a first call as far as advice or help, whether it’s a banking issue or traceability, and where we can really help is with all of our data. We would like to provide our data with our unique ability to see what the industry and consumer trends are – it’s there, we are now figuring out how to offer it as a service.
Dykstra: There’s a reason we call ourselves Terpene Transit instead of deliveries. We want to be seen as a transit route – something consistent that is always running. We have a lot of new, cool services we want to launch next year, and we are excited to show the industry and clients how we can improve sales and sell through based on that data, helping drive their businesses forward with those factors. In the future, Terpene Transit will be so much more than a delivery service!