Uber’s curiosity within the provide of hashish highlights the potential and pitfalls of the sector

You’d think that marijuana-supplying executives would shiver in their shoes after the boss of a ride-on giant recently pioneered the idea of ​​getting into their jobs.

That apparently wasn’t the case, however, after Uber CEO Dara Khosrowshahi told CNBC last month that his company would “absolutely” investigate the supply of cannabis if the federal government legalizes marijuana.

Rather than fearing such a statement, cannabis delivery executives hailed it as a sign that there is a national market for the services they are building.

“When companies like Uber talk about getting into cannabis delivery, it’s a really good market signal of how ubiquitous the legalization of cannabis is and how ubiquitous is consumer demand for cannabis products shipped,” said Elizabeth Ashford, senior director of corporate communications at California- . resident retailer and delivery agent Eaze.

“So I think it’s a really good sign in that sense.”

However, it was not always easy for delivery staff.

While state legalization of adult cannabis has grown rapidly in recent years, home delivery distribution has been slower due to a patchwork of regulations across and within states, in part due to a patchwork of regulations.

Profits can be elusive.

According to the Marijuana Policy Project, about two dozen states allow home delivery of medical cannabis. (See table above.)

According to MPP, 10 states allow adult delivery services – all with unique licenses and regulations.

“The delivery business is hard to navigate, but there are tons of options,” said Jesce Horton, cannabis industry veteran, CEO of Lowd, a Portland, Oregon cannabis manufacturing company.

Horton pointed out the limitations of brick-and-mortar retail in the age of Amazon and the boom in online shopping and online delivery.

“We see that the retail industry in general works that way,” he said. “We can look at almost any industry and see it shift more to the online sales market.

“And that is only growing exponentially. I think there will be no difference to the cannabis industry. “

Delivery options for adults by state

Status Delivery allowed?
Alaska No.
Arizona Yes. Agent delivery from registered marijuana companies is permitted from January 1, 2023 through January 1, 2025.
California Yes. Retailers can deliver to consumers, including non-storefront retailers.
Colorado Yes. The legislature and the governor passed a law allowing delivery in 2019. Medical deliveries began in 2020 and adult deliveries can begin in 2021.
Illinois No.
Maine No.
Massachusetts Yes.
Michigan Yes. Retailers are allowed to transport marijuana, and the law gives regulators the power to grant additional types of licenses, including those for delivery services. Delivery regulations have not yet been issued.
Montana It is not yet clear whether home delivery is allowed.
Nevada Yes.
New Jersey Yes, the Cannabis Regulatory Commission will legislate.
New Mexico Yes. Creates a license category for “couriers”.
new York Yes. Retailers, micro-businesses, and supply licensees are allowed to supply cannabis users.
Oregon Yes, with no more than $ 3,000 in the vehicle.
South Dakota Not specified in the constitutional amendment. The legislature or the supervisory authorities could allow this.
Vermont No.
Virginia No, it is forbidden.
Washington No.

Source: MPP

In fact, there are aspects of the cannabis shopping experience that could drive demand for supplies even further, he said.

For example, some regions lack the number of cannabis store fronts necessary to supply local consumers, and while marijuana stigma has been reduced, many shoppers prefer discretion, Horton said.

In contrast to carpooling or food delivery, however, transporting cannabis is far from easy.

Here’s why:

The delivery still finds its stand

In February 2020, after Eaze made 5 million deliveries in California over the past six years (7 million so far) and registered 600,000 users on its app, CEO Ro Choy announced that the company is moving to a vertically integrated model, which means That this is not the case Service retailers only, there would be one through an affiliate.

“Verticalization is Eaze’s second act,” he said in a statement. “So far, we’ve invested to prove our market viability, to build a huge and loyal customer base, and to become California’s largest marketplace for legal cannabis supplies.

“Now we are proving that we can make this business more sustainable and profitable while expanding Eaze’s existing services.”

Owning part of the supply chain could be a path to profitability since the cost of delivery is so high as a business.

Uber’s current delivery model is based on gig workers, but cannabis delivery drivers in California must be W-2 employees, noted Eaze’s Ashford.

To complicate matters, there are both state and local licenses that have evolved over the years and can vary from market to market – even the city of Los Angeles and Los Angeles County have different permits.

“The fact is, ever-changing regulations are difficult for companies,” said Ashford. “And I think that was definitely a challenge.”

Dutchie’s approach

As with Eaze, Oregon-based Dutchie shipments come through W-2 employees (who work for the retailer) rather than Uber-like gig employees.

Like Eaze, the company has expanded beyond delivery to develop the industry-leading point-of-sale (POS) solution – the software that completes transactions, tracks inventory from seed to sale, and provides sales data for analysis and Data can be compiled reporting.

The POS system is used regardless of whether products are bought in-store, picked up at the roadside or delivered.

Working with more than 30 partners, Dutchie aims to provide retailers with e-commerce solutions that are tailored to their needs.

The strategy will help the company overcome the patchwork of government regulations that make tech companies difficult to scale, said Jon Bond, director of partnerships at Dutchie.

“All of those little moving parts are little barriers to entry for anyone who wants to get into the room,” he said.

A limited number of licenses

Dutchie’s POS software also gives the company access to markets where delivery is legal but licenses for delivery are not yet available.

In Massachusetts, for example, it has taken the state Cannabis Control Commission some time to finalize adult supply regulations designed to promote social justice.

The state offers two types of licenses, one of which bypasses brick and mortar retail completely.

Marijuana courier license holders can ship products from retailers and are paid by the store. You cannot sell directly to buyers or buy wholesale.

In contrast, marijuana deliverers can wholesale wholesale products directly from manufacturers and deliver them from their own warehouse. You are not allowed to conduct a business or repackage goods.

Licensees can work with companies like Eaze and Dutchie, but the two companies must have relationships with licensees and cannot own the permits themselves – at least for now.

For the first three years, the state grants all delivery licenses exclusively to members of its program for social justice and economic empowerment.

According to David O’Brien, the president and CEO of the Massachusetts Cannabis Business Association, the rationale was that delivery operations did not require the same amount of capital as grow and retail stores, which created barriers for those in the program looking at other aspects of the industry.

It is a decision that has been fraught with some controversy.

Some retailers felt the ability to bypass a shop front wasn’t fair, and the Commonwealth Dispensary Association launched a lawsuit against the CCC that was later withdrawn after the group received backlash from some of its members.

The Massachusetts Cannabis Business Association, on the other hand, expressed its support.

“I’m excited to see the potential to level the field,” said O’Brien.

More than 60 licenses have been issued to date, but licensees have not yet announced when the first delivery will take place.

Delivery requirements unclear

When the COVID-19 pandemic first hit, cannabis sales skyrocketed as consumers stocked up to break lockdowns and the popularity of delivery soared.

According to Eaze Insights, the data and market research arm of Eaze, in the first month after March 13, 2020:

  • The number of new registrations increased by almost 60%.
  • First deliveries rose 44%.
  • Order sizes increased by 15%.

But those numbers have flattened out, and Marie Montmarquet – co-founder of San Francisco Bay Area-based cannabis companies MD Numbers and Marie’s Deliverables – wonders if delivery helped grow the business through the pandemic.

“The question for delivery staff,” she said, “… are these new people or are they the same people who came into the store?” So are we just bringing it to them now? We do all the work? “

Even so, no one believes the demand for supplies is waning, and this is certainly not just the case with cannabis.

“We live in a society of convenience where I don’t even want to disclose how much money I spend on DoorDash,” said Dutchie’s Bond.

“Ultimately, this is driven by instant gratification as a society – the ability to achieve and maintain results instantly is embedded in every single element we do from a technology perspective.

“So delivery and cannabis are no different, are they?”

Comments are closed.