Author: Justin Schmid
Content Marketing Specialist
Cannabis Delivery Concerns
- Cannabis is still illegal at the federal level.
- Inconsistent Regulations
- Use of Personal Vehicles
- Staying Compliant with Laws
- Keeping Delivery Drivers Safe
- Lack of Technology Savvy
Cannabis Delivery – 6 Challenges Facing Dispensaries
Cannabis delivery is breaking through as a powerful business opportunity. In 2018, retailers in California – currently the world’s largest cannabis market – sold more than $2.5 billion in cannabis products.
In that same year, Colorado retailers sold more than $1.5 billion in product, followed by Washington ($1 billion) and Oregon ($600 million).
Home delivery was already an important piece of that business. One expert estimated that deliveries accounted for up to 55% of California’s medical marijuana sales. Then the COVID-19 pandemic hit, making it even more important. One delivery service told the New York Times that their sales increased 500% after California issued quarantine orders in March.
Cannabis delivery is certainly profitable, but it’s also fraught with obstacles. Let’s take a look at some challenges distinct to delivering cannabis.
Cannabis is Still Illegal at the Federal Level
Here’s the overarching challenge: The federal government still classifies cannabis as a Schedule 1 substance. According to federal laws, it has no therapeutic value and a high potential for abuse.
Federal enforcement depends largely upon the agenda of the executive branch. A president opposed to cannabis use could direct law enforcement agencies to be more aggressive with arrests and prosecutions.
This schism between federal and state laws spawns several challenges, making the business of growing a new industry even more complicated.
Jumble of State and Local Regulations
Cannabis isn’t just an industry in a gray legal area: It’s an entirely new industry. That combination has spawned inconsistencies in state and local regulations. Even if the federal government removed the Schedule 1 designation tomorrow, that doesn’t mean that every state or municipality would follow suit and decriminalize or legalize.
Again, let’s look to California, where there are nearly 500 cities and 58 counties with their own regulations.
Some jurisdictions ban commercial cannabis activities. Still others might allow only storefront businesses to deliver. Others might reserve delivery licenses for only local license holders.
These are all obstacles to succeeding with cannabis delivery. They impact consumers by limiting choice, as well.
Reliance on Personal Vehicle for Delivery
Cannabis and food delivery share one important characteristic: Most businesses rely on drivers’ personal vehicles. This makes it difficult to implement tracking systems.
The logistics of implementing technology that would be easy to install and remove at the beginning and end of each shift is difficult to overcome. Even if the telematics industry conquers that hurdle, there’s still the issue of tracking the products and cash, which is of far higher value than anything delivered by Grub Hub or Uber Eats.
Telematics will allow effective tracking of product and cash to comply with cannabis laws. But without tracking the vehicles, management won’t have real-time insights for preventive maintenance.
On the other hand, growers and labs could use these features if they own vehicles.
Finding the Formula for Compliance
Each state where cannabis has been decriminalized or legalized has an oversight agency. These agencies maintain the regulations for obtaining a retail cannabis license.
Cannabis delivery is a vector for fraud, theft, and numerous other problems. States enact regulations that specify every step of a delivery’s journey from the time it’s prepped to leave the dispensary until it’s placed in the customer’s hands.
Ultimately, it’s still on licensees to comply with the rules. That’s not always easy, especially if they rely on paper rather than digital solutions. While some rogue licensees may be lax on compliance, better-run operations make every effort to avoid fines or revocation of their licenses.
A plug-and-play compliance solution is a must for this growing industry.
Keeping Cannabis Delivery Drivers Safe
Delivering cannabis can be dangerous. Robberies are so common that industry experts are urging marijuana-related businesses to work together to create policies to protect drivers.
These two important factors can jeopardize cannabis delivery drivers’ safety:
- Because of cannabis’ federal designation as a Schedule 1 substance, many banks won’t take the risk of working with marijuana-related businesses. That means they deal with substantial amounts of cash, making their drivers targets for robbery.
- Cannabis products are also in high demand, and they’re expensive. That makes delivery drivers a target, and it’s worth investing in their well being.
Lack of Technology Savvy
Dispensaries and grow houses pour their energy into product innovations. From more-efficient grow lights to personalized products based on a customer’s biochemistry, they always seek a competitive product edge through innovations in technology.
However, the business side is another story. The industry is rife with manual processes and old-fashioned paperwork. Also, many dispensaries use combinations of apps to track sales, accounting, dispatch, and a variety of other functions.
“All of the data that comes from these apps is disparate in most instances, requiring manual fetch and manual recording of multiple data points between all of these disparate apps,” said John Johnson of Mary Jane Intel, a company that worked with GPS Insight to create a solution that ties those loose threads together.
Johnson sees two types of cannabis business owners: those who have farmed cannabis products for three generations, or newcomers jumping in with little experience about the industry. One side is seasoned in the business, while the other side consists of risk-taking corporate opportunists. Neither graps technology well enough to identify and close the gaps left by their variety of apps.
Lessons Learned from Delivery Businesses
Cannabis delivery is in a complicated phase. Fortunately, many of the telematics solutions that worked for truckers apply to transporting cannabis from dispensaries to end customers.
GPS-based telematics solutions allow dispensaries to meet many of the challenges we’ve mentioned: Fleet management solutions can unravel the different laws of varying jurisdictions, just as it does for simplifying IFTA reporting or calculating Hours of Service.
With fleet software, dispensary managers can get real-time vehicle location data. They can even work with certain providers to create custom solutions, such as panic buttons. This is critical for drivers carrying large amounts of cash and an expensive product.
It’s also possible to craft a solution that tracks the product and cash rather than the vehicle, which overcomes the difficulties of relying on personal vehicles for delivery.
Best of all, fleet software is advanced enough to handle these tasks without significantly adding to the staff’s workload.