Cannabis retail is evolving fast. The industry has gone from dispensaries to marijuana delivery businesses in a few short years. With the cannabis market expected to grow as legalization advances, new innovations and ideas are revolutionizing the market. Among these is the marijuana delivery business. Like food companies and even online retail, it’s a convenient way for customers to get goods delivered right to their door.
What was already a trend in 2019 was accelerated by the first COVID lockdowns. Unable to leave their homes and with seldom to do, marijuana delivery businesses saw a sales boom from American consumers – another slice of the $9 billion global legal marijuana market.
Impressed by the strong growth, other marijuana entrepreneurs are all asking the same question “how to start a marijuana delivery service.” Below we’re explaining the ins and outs of marijuana delivery businesses – exploring the best means to get started.
Cannabis businesses come in all shapes and sizes, from beverage companies to the now-classic dispensary. The new marijuana delivery businesses typically follow three primary formats:
Deciding which type of marijuana delivery business is right for you depends wholly on your initial investment and starting capabilities.
If you’re already a dispensary owner, expanding into the delivery sector will likely mean hiring an in-house team. Of course, you can always opt for a courier service – removing the headache of running the service while still supplying customers with home delivery options.
Starting an online marijuana store is likely to be the best option for non-dispensary owners. eCommerce stores allow you to ship marijuana anywhere in the country – but as you expand, you’ll need to consider having a physical location or warehouse. That’s not a problem for couriers servicing existing dispensaries.
As with everything in business, there are trade-offs and benefits. It’s for you to decide on the best option.
Beginning any business is a complicated process – even more so in the cannabis industry. We’ve got a step-by-step guide from conception to making your first delivery.
Here’s how you can get started:
Select one of the three delivery strategies discussed above. As you determine which is right for you, research your local cannabis community. Find out if cannabis is legal and feasible in your local area. And, if you already own a dispensary, you’ll need to see how the marijuana delivery business fits with your existing model.
You also need to decide if there’s a big enough customer-based to launch a delivery service – and if you can earn enough profit from delivering the product. Consider your area’s demographics: Millennials and Gen Z are most likely to use a delivery option; alongside home-bound people, e.g., seniors and people with disabilities
Most of all, be realistic – it’s essential with any business decision to weigh up the potential costs and benefits.
Going further isn’t always better. Indeed, without getting too mathematical, the greater you extend your delivery radius from the store, you’ll exponentially increase your customer base, but you’ll also see less profit for every additional mile.
Fuel costs, driving time, traffic, and less frequent trips all drive down the potential profits of a marijuana delivery service. Regulations can also dictate the distance you’re able to travel.
If you do want to deliver hundreds of miles, consider where you position your distribution hub. Being located at the far edge of a state means traveling all the way back. Instead, find a central location to reduce the distance traveled.
No matter which model of marijuana delivery service you select, you’ll need help. In the courier model, dispensaries need to find a business capable of delivering to all their customers, and couriers need willing dispensaries. If you’re establishing an online store, you need to find a reliable supplier who can provide high-quality, bulk orders of marijuana as you need it.
That’s not all: app creation, driver navigation, driver tracking, customer communication, product reviews, online stores, and more all require talented professionals for development and day-to-day running. Without the right people, your delivery service will never be anything more than an idea.
Efficiency is the key to profit-making in the marijuana delivery business. If your drivers are standing around waiting to collect orders, they’re not on the road. The more wasted time, the fewer orders get processed.
There are broadly two potential delivery systems to consider:
Some states dictate the amount of product you can carry in a vehicle at any one time, meaning certain dispensaries opt for a hybrid model instead.
Last, you’ll want to create a simple, logical, and well-organized layout. Orders must be packaged quickly and efficiently – without disrupting any existing dispensary business. Many dispensaries follow the “bank model,” creating a dedicated space for fulfilling pick-up or delivery orders.
You’ll also want to acquire a substantial inventory – decide which products and strains are likely to be popular. Again, researching your local area is essential to gauge the demand for different types of products. To get more information about banking for a marijuana delivery service, contact the experienced team at Safe Harbor Financial.
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