- Some cannabis businesses expect a 250% spike in orders on April 20, a cannabis holiday.
- Legal restrictions on how deliveries are managed make handling that spike a challenge.
- A bad delivery experience can send shoppers back to the illegal market.
- See more stories on Insider’s business page.
Nice Guys cannabis dispensary in California’s Marin County is gearing up for the biggest sales day of the year. Luckily for the outfit, the pandemic has prepared the team well.
“When shelter-in-place hit, we were able to do 600 orders in a day, which was crazy,” said Monica Gray, a cofounder and the COO of Nice Guys. “But we had all hands on deck. I feel like this year we’re better prepared for 4/20.” Gray plans to have 12 drivers working on the big day — compared to seven or eight on a normal Tuesday.
April 20 is a cannabis holiday, and with the pandemic perhaps winding down, delivery is the most important element to success for dispensaries on this high-pressure day. Once again, Gray said, “it’s all hands on deck.”
But because local and state regulations put all sorts of constraints on how product goes from seller to buyer, Gray needs a bigger plan than putting more drivers on shift. Each of the 36 states that have legalized the sale of medicinal or recreational cannabis has put its own mix of restrictions on the budding business.
If Nice Guys, and other dispensaries, masters the quirks and constraints of cannabis delivery, it stands to win the day. And it’s coming prepared.
The gig economy is off-limits
In most areas, logistics businesses that are staffing for a rush, even UPS and FedEx, lean on contractors. They hire temporary workers before the surge and cut them loose afterward. The gig economy has made this even easier, since contractors can be hired at a moment’s notice, with no extra paperwork needed.
Cannabis businesses can hire seasonally, but in most states with legalized marijuana, all of their hires must be W-2 employees. That adds expense and responsibility, and takes gig workers off the table. Plus, there is a long list of other requirements — with a few through lines in every state that allows delivery. Cannabis delivery is legal in Arizona, Arkansas, California, Colorado, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, New York, Oregon, Rhode Island, and Vermont.
In most states, deliveries must be done in a closed vehicle — no bikes. Vehicles must often be tracked with specific technology and sometimes cameras. Cannabis must be kept in a lockbox in the vehicle. The time the vehicles can be away from their base location once a delivery is complete is often restricted — just 30 minutes in some cases. There’s also usually a cap on the value of cannabis each driver can transport at one time.
All these limits mean that cannabis dispensaries have to be delivery experts to compete with each other and with illegal operations, which don’t abide by the same rules. Restrictions on the time a delivery vehicle can be away from its base, for example, makes batching deliveries for efficiency — a logistics no-brainer — next to impossible, said Chris Vaughn, the CEO of cannabis-delivery platform Emjay. Vaughn’s solution: He had the company build its own routing software to make the most out of every driver.
Vaughn said legal businesses without advanced tools such as batching and routing software could easily lose out to illegal sellers that offer faster delivery and greater convenience. To win, the legal experience has to mimic the best aspects of the experience cannabis users knew in the time before legalization, he said, and that means speed. Carrying extra product in delivery vehicles so that incoming orders can be fulfilled without dispatching a fresh car is an essential part of speed, but it’s not possible in all states.
“California recognizes that if we really want to bring an illegal industry into the legal world, we have to introduce competitive regulations that allow people to shop the same way they do in the black market,” Vaughn said. Delivery is a hallmark of illegal cannabis, he added, while so far brick-and-mortar locations have dominated legal weed.
Cannabis delivery has to be fast
A great delivery experience is make-or-break in cannabis delivery. It’s not just about speed, Gray said, but also about meeting or exceeding the ETA that Nice Guys gives to customers. Arriving late is a good way to lose customers.
To make that happen, Nice Guys uses the software platform Onfleet to orchestrate hundreds of deliveries per day. Onfleet works across industries, but given the restrictions on cannabis-delivery labor, the startup has taken a massive market share with dispensaries. Khaled Naim, its CEO, said most of the 500 dispensaries using Onfleet will see a 120% increase in delivery volume on 4/20 — but that the few days prior are just as busy.
To make sure delivery goes smoothly, Emjay is using discounts to try to spread out the volume by encouraging users to schedule deliveries for the days leading up to 4/20.
But just as the pandemic helped prepare Nice Guys and others for a gangbusters day, it could also deflate this year’s rush.
As a result of pandemic-driven lockdowns, Californians have become less impulse-driven with their cannabis purchases, preferring to stock up a lot in one go and keep more on hand. But, Gray said, some of the popular outdoor smoking havens will likely be closed on Tuesday to discourage large gatherings (indeed, San Francisco’s Hippie Hill celebration is going online this year), meaning small celebrations at home may be more likely — driving up the number of deliveries.
“I always think that people are going to prepare over the weekend. But to be honest with you, stoners never really prepare,” Gray said.