The Comprehensive Guide to Starting a Cannabis Delivery Service
As the cannabis market matures and consolidates, dispensaries must evolve to keep up with emerging ecommerce platforms, such as delivery services. While setting up a delivery service may seem like a daunting task, it can be a game-changer for dispensaries that aim to boost sales without overcrowding their physical locations.
In this guide, we’ll break down the best practices for implementing or extending your cannabis delivery capabilities.
Formulating a Delivery Strategy
Crafting your delivery strategy may seem challenging, but a meticulous and comprehensive approach can make it manageable. Here are some fundamental steps to get you started:
Step 1: Do your homework! Ensure that running a cannabis delivery business is legally permissible and feasible for your dispensary. Cannabis laws differ drastically, even within the same state. Make sure you can secure a delivery license to enable your marijuana delivery business.
Step 2: Collect and analyze historical data of your sales, both in-store and online. If your online orders are substantial, you likely already have a customer base that will avail of delivery services. Also, examine the profit margins of your most popular products and evaluate if these profits can offset the costs associated with delivery. Remember, delivery services can be expensive, so you need to ensure that the economics make sense for your business.
Step 3: Assess your cannabis dispensary’s customer demographics to understand if delivery services may be suitable for them. Offering delivery services may expand your reach to younger cannabis consumers and home-bound individuals who may be limited to cannabis delivery.
Step 4: Evaluate the impact of offering delivery services on your current dispensary operations. You will need to hire new staff, create new standard operating procedures (SOPs), and stock additional products. Is your business ready for these changes?
Step 5: Develop your business plan for delivery. Be realistic about the costs and potential revenue. For some dispensaries, the costs may not outweigh the benefits.
Establishing Your Delivery Radius
Once you have a robust and profitable delivery strategy, it’s time to determine your delivery boundaries. While you may be tempted to extend your reach as far as possible to outwit competition, it’s crucial to take into account the additional costs that will be incurred with increased travel distances. These can include time, additional staff, insurance, gas, and other expenses.
However, you may find opportunities to deliver cannabis to remote areas where there is a high demand for quality cannabis products.
If you’re unsure about the right delivery distance, look at other industries in your area, such as pizza shops or restaurants that offer delivery. You must strictly adhere to your delivery radius as many localities prohibit delivery or impose additional cannabis delivery restrictions.
Picking the Right Delivery Partners
The right delivery partners can streamline your workflow and maximize profits. Your ideal delivery partners integrate with each other to minimize manual work. Having a cannabis point of sale (POS) system with API integrations to popular cannabis delivery services can help you manage delivery, stay in compliance, automate taxes, and provide a positive customer experience.
Delivery software partners like Onfleet can assist with “last mile” delivery logistics, such as route optimization, customer communication, real-time data, proof of delivery, reporting, and analytics.
Ecommerce partners like Dispense and Jane can help with search engine optimization (SEO), menu integrations, real-time inventory updates, product reviews, branded product photos, and order placement.
Pro tip: To maximize your store’s visibility and centralize the delivery fulfillment workflow, list your menu across multiple ecommerce sites and push all orders to your POS system.
Optimizing Your Store Layout and Inventory
If you’re modifying your business model to include delivery, you may need to adjust your in-store layout. Consider creating a dedicated line for pick-up customers and separate terminals/staff for processing delivery transactions. This will keep operations flowing for storefront consumers while eliminating confusion for budtenders.
Also, consider other in-store configurations, staffing, or technology automation that will boost efficiency and accuracy to quickly fill orders and meet the projected delivery timeframe.
Most importantly, ensure you have clear Standard Operating Procedures (SOPs) around delivery workflows. Dispatchers, drivers, and budtenders need proper training and documentation to ensure the delivery process is efficient and repeatable.
Choosing the Ideal Delivery Model
Implementing a delivery business model that will maximize the number of deliveries you can make in a set time period is crucial. However, state and local regulations can often restrict workflows, so you must consult with compliance experts before making any decisions.
Some common cannabis delivery models are pizza shop, ice cream truck, and hybrid workflows.
Pizza-style Cannabis Delivery
This setup functions similarly to a traditional pizza shop. You have a central location (your brick-and-mortar dispensary) where you receive, package, label, and dispatch the cannabis products. This is sometimes called the “hub and spoke” delivery model.
Ice-cream Truck Cannabis Delivery
An alternative to the pizza setup is the ice cream model, where a driver carries inventory in their vehicle and makes multiple deliveries at a time. This is also called “dynamic delivery” or “warehouse on wheels.”
Hybrid Cannabis Delivery
The hybrid model mixes aspects of the pizza shop and ice cream truck workflows to best fit your dispensary’s needs. The more consolidated trips a driver can make, the more efficient and time-effective you can be.
FAQs About Cannabis Delivery
What is the best cannabis delivery method?
The pizza-style delivery method is the most popular because it’s typically the only legally allowable method of delivery in most states.
How do cannabis delivery drivers collect payment?
Dispensary delivery drivers can collect payment in a few ways, depending on their delivery software and state regulations:
- Drivers can accept cash from a customer at the door, complete the sale on a mobile device, and return any necessary change.
- Drivers can accept debit payments if they have mobile debit terminals and a SIM card for wireless activity.
- Drivers can collect cash at the door, then return to the dispensary to drop off the money. The transaction is then completed in the store.
- Customers may also be able to pay online when they place a delivery order.
Do I need a license for cannabis delivery?
Some dispensaries may need to apply for additional licensing for delivery, which may include licensing fees. Delivery licensing varies by legal cannabis business market.
How do dispensaries verify a customer’s ID for delivery?
To verify a customer’s ID during the cannabis delivery workflow, consumers often have to upload a photo of their ID to the ecommerce website where they place their order. Upon delivery, a driver checks the customer’s ID and can take a photo for further documentation.
Additional Delivery Considerations
Delivery isn’t the right choice for every dispensary. Your consumers may be eager for cannabis delivery in your market, but you must take a cautious and data-driven approach before diving into the workflow. The most important considerations before starting delivery are state and local laws and regulations.
You must also have the proper infrastructure and technology in place before you begin, or else you run the risk of falling out of compliance or losing customers due to a poor delivery experience.
Ready for Delivery with PayRio
With PayRio’s payment solution for delivery, dispensaries can improve efficiency, reduce risk, centralize fulfillment, increase revenue, and enhance the customer experience. Schedule a demo today to learn more about delivery with PayRio.