Are California's 'Pot Deserts' About to Get Greener?
About half of California’s population lives in cities or counties that have banned the sale of cannabis within their boundaries. Rise of these so-called Pot Deserts means that a massive number of citizens cannot reap the benefits of Proposition 64 without traveling a great distance.
Imagine an old lady -- we’ll call her Mavis -- living in a county that prohibits the sale of cannabis altogether. Mavis can’t drive, but she uses cannabis for glaucoma and to augment her experience watching procedural cop shows. Mavis is out of luck.
Related: California's 'Pot Desert' Problem
Under the Bureau of Cannabis Control’s proposed permanent rules, however, legal delivery services (and brick-and-mortar shops that offer delivery) would be allowed to sell and deliver cannabis to any jurisdiction in the state, as long as they abide by every other rule in the book.
These new rules would mean that our friend Mavis could dial up a delivery service in the San Fernando Valley and have some Blue Dream delivered to her doorstep, local regulations be damned.
Not Everyone's A Fan
Cannabis delivery is actually a divisive issue. Groups like the California Police Chiefs Association have come out hard against “wandering weed,” claiming that opening up delivery to any jurisdiction not only undermines the authority of local governments (authority that voters were assured would be retained under Prop 64), but it will also necessitate an increased police presence to deal with safety concerns.
Consider, though, the choice that will confront folks living in pot deserts: They will either be completely out of luck and deal with it, or, more likely, they will turn to California’s thriving black market -- unlicensed delivery services with untested cannabis and untaxed prices.
Though “black market” sounds seedy and dangerous, a lot of these services are run by friendly people wearing backpacks and driving Priuses. They are more accessible and much less scary than the media makes them sound. But they are also opportunists who are running illicit businesses and taking risks to make a buck. Activities that definitely violate the spirit of the Prop 64 program.
If Mavis has nowhere else to turn, aren’t we enabling these illicit services?
New Delivery Models
Regardless of how the Wandering Weed issue shakes out, there is no doubt that cannabis delivery will be a primary driver of the legal cannabis business moving forward. Let’s take a look at some of the ways dispensaries / delivery services are approaching the problem.
The Fulfillment Center Model
Some large delivery companies have opted for a “dispensary-as-fulfillment-center” model, where retail partners sit in the background and fulfill orders that come through a customer-facing menu. In other words, the website shows you a bunch of brands and products, you select what you want, and then a nameless dispensary fulfills the order and delivers your cannabis to your doorstep.
From a customer standpoint, this is appealing, because it’s easy (although there are countless stories of ordering an item that is actually out of stock, so real-time inventory needs to be figured out). However, from a retailer standpoint, this doesn’t make a whole lot of long-term sense. Retailers know how important it is to build a robust and trustworthy brand – that fosters loyalty among your customers and becomes a recognizable name in your community. This model strips shop owners of the ability to market themselves and relegates them to a distributor role. In addition, this fulfilment model is losing favor, and some municipalities are enacting legislation to stifle its growth.
The Do-It-Yourself Model
In this delivery model, shop owners can opt to do everything themselves, including hiring drivers (cannabis delivery drivers technically need to be employed by the retailer), sourcing vehicles, setting up an ordering dashboard, and managing logistics. This puts control back into the retailers hands, but it's a lot of work and it's costly.
The eCommerce + Delivery Model
Retailers work with high-quality eCommerce companies (“high-quality” means direct integrations to point-of-sale systems, automated content population for each product, real-time inventory, and the ability to push orders to fulfillment software) can opt to on-board last-mile delivery partners that will do all of the initial legwork. That means sourcing both drivers and vehicles, as well as hooking up the shop with technology to manage actual delivery logistics.
This model allows the retailer to retain ownership over the brand and messaging to the end user, as well as offload much of the initial pain points that come with developing a delivery infrastructure.
Related: The Bright Future of Cannabis Retail
Fear of The Big Guys
In the cannabis space, we have a weird relationship with technology and innovation. Corporate players are often gun-shy to enter the space due to the federal government’s antiquated stance on the industry, so smaller companies take up the torch to facilitate operations. There’s always a lingering question, though -- when will the big guys throw their hats in the ring and leverage their considerable infrastructures to enter and dominate?
The delivery space, and its current lack of a clear market leader amidst a sea of promising startups, tickles this lingering question. When will Uber or Lyft open their eyes, relax some policies, and dominate cannabis delivery with an army of drivers and a truckload of cash? Will the startups have enough time to build a series of small competitive advantages to stave off a billion-dollar advance?
Time will tell. Let’s just make sure Mavis gets her medicine while we still can.