As legislation legalizing the use of marijuana continues to pass in the United States, the number of service-provider businesses supporting the legal industry continues to grow. Among the most popular of these ventures is cannabis delivery. Serving both the medical and recreational markets, there’s a strong need for this type of business as increasing numbers of patients and recreational users desire increased, timely access to a range of cannabis products.
Those who want to launch a delivery business need to consider a number of variables to see if they qualify. In the legal marijuana industry, each state operates by its own set of laws and requirements. Until the day when the U.S. federal government addresses the reality and huge public demand for legal marijuana, the laws for this commodity will vary state to state. When it comes to cannabis laws, each state is an island, operating by its own code, with most products unable to cross state lines.
Take Colorado and California as two prime examples of inconsistent laws relating to cannabis. Both of these western states are leading the way for nationwide legalization and have some of the most progressive laws allowing cannabis production, distribution, and use. Yet, they differ on some significant issues. One of them is cannabis delivery businesses. In short, California allows it, but Colorado does not.
A cannabis delivery company makes good sense for a number of reasons. Less startup capital is necessary to launch your business, and you will enjoy one-on-one, personalized relationships with your customers, putting your business in an excellent position to serve their specific needs. The personal touch a delivery company allows creates great opportunities for building customer and brand loyalty.
Is It Legal?
If you want to start a cannabis delivery business, the first step is to determine if it’s legal in your state. Colorado and California serve as vivid examples of differing statutes for cannabis distribution. While both states agree that citizens should have access to cannabis products, the manner in which they can receive them is somewhat different.
If you live in a state that allows cannabis deliveries, you still have many hurdles to navigate before you can open your business. Even in legal delivery states, some cities and counties may prohibit it. This can create a logistical dilemma for delivery service companies. The more you research and examine the realities of running a compliant cannabis delivery business, the more you’ll realize that it’s not a simple start-up operation. Cannabis delivery is in a completely different realm from other common delivery services like pizza delivery, which is usually just a service provided by individual pizza businesses or chains. The cannabis industry is much different.
Realities of Starting a Cannabis Business
Before you open your cannabis delivery company, you will have a long checklist of necessary steps to address. Established plans must be in place for a compliant operation and the manner in which it is run.
Let’s examine some of the necessary factors for opening a marijuana delivery business.
- Business Licenses and Applications. Many types of businesses must have business licenses before they can open their doors and make money, and a cannabis operation is no different. The license takes time and money (less than $10,000 in most parts of the country) to acquire. Research the necessary state and local applications you will need. Expect to pass a background check as part of the application process. City-specific business applications are part of this process at the local level. Cities have a limited number of cannabis licenses to grant, and they want to make sure only the worthiest applicants receive them. Cannabis consulting companies usually have application writers who can assist with crafting compelling applications, so seriously consider enlisting their services. These consultants have been through the process before and know what to expect—and you don’t want any surprises when it comes down to the wire for submitting your application. Although the individual components of the application will vary depending on your region, expect to submit a solid business plan. You also may need to submit other plans that relate to security, specific areas of operation, and community relations.
- Business Plan. Your business plan will probably be the most important component of your business application. Depending on the scope of your business, your proposed delivery business might require a less-detailed plan than a dispensary or cultivation business. Although this may be the case, expect to submit a robust, detailed plan that will receive close scrutiny during the application process. Do you plan to distribute cannabis from local cultivation companies, or do plan to grow it yourself if that option is legal? These are important operations plans to define. All of your ducks must be in a row, with no details left out, when it’s time to submit your application.
- Compliance. The cannabis industry is all about compliance. Every aspect of your business must comply with local and state laws. All cannabis businesses are under scrutiny from various legislative bodies, and infractions can cost money and ruin a business. Do the smart thing and hire legal counsel before you get started—hopefully, a lawyer who serves the industry.
- Startup Capital. In most cases, a cannabis delivery company will require less seed capital (no pun intended) to launch than a retail operation. If you have less than $100,000 to kick off your new business, being a cannabis delivery service provider may be an attractive option. Determine how much money your new business will require. Most likely, it will require more than your initial estimate, but you need a starting point.
- Staffing. How many people will it take to successfully launch your delivery company? Since your business involves working directly with cannabis and related products, your employees will require special licenses or certification. While this cost is usually absorbed by the employee, since he or she is the license holder, recognize these unique cannabis industry requirements when building your specialized staff. How many drivers will you need? They must own reliable vehicles and have good driving records. Will you require more than one dispatcher? Although these numbers may change depending on the success of your business venture, have a specific staffing plan to include with your application.
- Access to Product. Do you plan to grow your own product or use a local cultivation supplier? Choose your cannabis products and flower wisely. After all, these are the products that drive your business and build your brand. The higher the product quality, the more satisfied your customers will be with their purchases. Excellent cannabis is common these days, so remember that you can’t build customer loyalty with inferior product. You’ll need the necessary ERP software to track inventory and ensure a seamless supply chain. Running out of product is not an option.
- Enterprise Resources. Where do you plan to open your business, and how much room will you need for the necessary inventory and operations equipment? Factor in the costs of security, video surveillance, safes, and alarms. You also need to finance furniture, phones and dispatch equipment, as well as POS and ERP software systems. Will you need software development or acquisition for a phone app and ordering system? The cost of adequate resources can add up quickly.
With careful planning and attention to detail with compliance, a solid business plan, and all of the necessary resources, a cannabis delivery company can make an excellent venture. The acceptance and demand for legal marijuana is at an all-time high, so providing fast access to the plant and excellent customer service is a recipe for success. If delivery works for pizza, it’ll work for cannabis. For some customers, there’s no doubt that separate pizza and cannabis deliveries will occur on the same night!