Recreational and medical cannabis combine to generate billions of dollars of revenue every year. Just in North America alone, the legal cannabis market was worth $16 billion in 2020. It is expected to grow at a CAGR of more than 26% over the next several years. But wait. There is a sleeper industry waiting to explode – home delivery.
Cannabis home delivery already exists in limited markets. Yet it is by no means as popular as food delivery, package delivery, etc. There are reasons for this and addressing those reasons could blow the doors wide open. Eliminate home delivery’s biggest challenges and you have an industry waiting to dwarf nearly every other kind of home delivery option.
The Banking Challenge
The biggest thing holding back cannabis home delivery right now is a banking problem. Beehive Farmacy, out of Salt Lake City, UT, explains that lack of access to basic banking services makes cannabis largely a cash-and-carry enterprise. That creates big problems for companies that would otherwise be willing to deliver.
The banking challenge is the direct result of federal law. Banks are reluctant to do business with cannabis companies out of a fear of federal prosecution. That could change with eventual passage of the SAFE act, a federal law that would open the door to electronic payments within the cannabis industry.
The Insurance Challenge
Cannabis companies have a similar problem with insurance. Given that most of the major insurance companies operate in multiple states, they face ongoing worries of federal prosecution as well. It is hard enough for a cannabis dispensary or processing operation to get insurance to cover its physical facilities. It is tougher to get insurance to cover home delivery.
A delivery company looking to put drivers on the books as standard employees would have to provide insurance and vehicles. If a company chose to go the independent contractor route, drivers would have to obtain their own insurance. That would not be easy.
Consumers Love Delivery
All the challenges aside, it is clear that consumers love delivery. Over the years, we have seen an explosion in online shopping due to the incredible convenience of ordering things online and having them delivered to the front door. Amazon, a company that got its start selling books, has become the world’s largest retailer based primarily on its home delivery model.
Likewise, food delivery has really taken off. It used to be that the only foods you could get delivered were pizza and Chinese. But now, every imaginable cuisine is available. Companies that do nothing but deliver food for local restaurants are thriving. And of course, do not forget grocery delivery. That is big business, too.
Knowing what we know about America’s appetite for delivery service, there is no reason to believe that cannabis delivery cannot work. It can. We just need to get rid of the barriers that don’t currently apply to other types of delivery services. Eliminate those barriers and consumers will be more than happy to choose home delivery options like Salt Lake City’s Beehive Farmacy.
In-House or Contracted
The only real question remaining is whether to offer delivery in-house or by contracting it out to third parties. Keeping things in-house allows a company to maintain maximum control. But it also means paying wages and benefits, maintaining vehicles, etc. Contracting delivery to other providers eliminates those hassles.
One way or the other, home delivery could be the next big cannabis moneymaker. The industry is poised to jump into the delivery pool as soon as lawmakers address the challenges that currently hold them back. Once those challenges are gone, expect the floodgates to open.