Marijuana Distribution | LOOKAH

How to Start a Marijuana Distribution Business in the USA

Transporting marijuana isn't like transporting food or flower. There are strict rules and regulations that vary from market to market. Operators need to thoroughly research the laws in their area to find out what options are available to them. With so many rules and regulations, optimizing a workflow can be overwhelming, but we'll walk you through it in this article so you know what to expect.

Selling marijuana is only legal if it is prosecuted.

Therefore, tracking and reporting each driver is key to a successful delivery operation. Perhaps you already operate a dispensary and want to expand your offerings to those who can't visit your location, but delivery hasn't been a cost-effective option in the past. Now that delivery is spreading to states where marijuana is legal, the opportunities for retailers are expanding.

Not surprisingly, marijuana shipments increased 25 percent during the height of the pandemic in 2020. Since then, Cowen and Company has released a forecast that legal marijuana sales will grow 20 to 30 percent annually starting in 2022, potentially reaching $50 billion in sales by 2026.

If you're thinking about getting into the delivery business, now is the time. Here's how to jump on the bandwagon and increase your sales.

Is cannabis delivery right for your pharmacy?

In order to comply with all legal requirements, you must expect to pay significant upfront costs.

You must pay for the following:

• A license or permit fee
• Compliance tools and packaging
• Consulting fee
• Delivery trucks (some states allow drivers to use their private vehicles and some even require vehicles to have built-in GPS)

In the cannabis industry, even a small mistake can result in hefty fines.

Therefore, you also need careful delivery staff and the right technology to comply with regulations.

In addition to your point of sale system and online menu, all states that allow legal cannabis sales require extensive use of state-approved systems to track seed sales.

It works exactly as it sounds: it tracks every product from the initial growth and cultivation of the plant to where it ends up at the consumer.

The tracking system ensures that all sales are legal, do not end up on the black market and that the purchase restrictions, which vary from state to state, are not exceeded.

METRC (Marijuana Enforcement Tracking Reporting Compliance) is a popular seed sales tracking software used in most states to track each product by its SKUs (inventory number). METRC tracks reporting compliance on behalf of marijuana enforcement, and if you already operate a dispensary, you're probably already familiar with it.

You'll also need a software service like Onfleet or another provider that offers last-mile tracking services. The reason for this is because cannabis remains a gray area of ​​legality, and state authorities need to know where each package is going and when. Additionally, many states require you to print out directions detailing each turn the vehicle makes to include with your delivery manifest.

Delivery slips are online forms that track each sale from your POS to your state tracking system like METRC. In most states, not carrying paperwork or requiring customers to sign at the door makes the sale non-compliant and that's a red flag for regulators. You also don't want your driver to get stopped without proper paperwork. Some states track this digitally, so check your state's compliance rules when creating your delivery SOP (standard operating procedure).

Here are some examples of how regulations vary from state to state:

• In Arizona, only patients who use medical marijuana are allowed to receive cannabis deliveries. Casual users must go to a brick-and-mortar store. Drivers must verify medical cards through the original ordering mechanism (e.g., e-commerce solutions) and re-present ID at the door.

• In Oregon, purchase limits vary considerably for the recreational and medical markets. Casual customers are only allowed to purchase one ounce of cannabis per day, while medical patients are allowed to purchase eight ounces per day. Make sure the right type of customer gets the right package size – fortunately, e-commerce and POS solutions can take these parameters into account, keeping your business safe.
• In Massachusetts, dispensaries can outsource delivery to delivery companies, but must employ two people on each delivery and wear body cameras during delivery to ensure visibility. Given the above nuances, delivery is possible in almost all states where it is legal (see map), so it's worth knowing the rules if you're thinking about earning opportunities.

Now that you understand the importance of understanding location-specific regulations, we can move on to discussing the different types and how they work.

Types of Cannabis Delivery Models:

Pizza delivery model (Individual delivery): One delivery at a time is received in the pharmacy, packaged, displayed and delivered directly to the customer.

Beehive delivery mode (Group delivery): The same driver accepts multiple delivery orders in large quantities, but on a longer route that determines the order of each stop. We call this group delivery.

Ice cream truck delivery mode (Dynamic Delivery): Move inventory and a unique menu for each truck. The driver can accept, fulfill and deliver multiple orders on site, just like an ice cream truck.

Some states require you to follow the pizza delivery model. This means your driver can only transport one customer's order at a time. This can be time-consuming for drivers and less efficient for sales, as drivers must return to the store between each delivery. The bulk delivery model works better if you can group routes based on geography. This is similar to the pizza delivery model, but is more efficient because the driver leaves the store with multiple orders. The ice cream truck model, also known as dynamic delivery, is the most flexible, but is currently only available in states like California and Michigan. This model is profitable for these states, but comes with additional safety measures for the trucks.

Business owners may need to tailor their delivery products to each state. Remember, marijuana is still illegal in the U.S., so your operation cannot cross state lines or cross federal lands.

If you operate in one of the lucky, thriving and dynamic markets, you should think about how you package your product to ensure the best freshness. While marijuana products must leave the dispensary in child- and tamper-proof packaging, they should still be sealed to prevent air from drying out the flower or edibles.

Anything that is airtight, like a glass jar, is beneficial. Store the product in a cool, dry place at around 70 degrees. A temperature that is too high can actually affect the potency of the plant, while a temperature that is too low can lead to microbial growth on the product. Fresh produce usually means repeat customers, so make sure the storage in your truck meets those standards.

Larger operations require additional staff.

If you plan to make deliveries on a larger scale, you may need a dispatcher to assign jobs to individual drivers, view lists in METRC, update orders, and handle any issues or communications.

Any retailer that operates a delivery service larger than pizza delivery should consider hiring delivery drivers instead of hiring store clerks. The driver will record and follow the route on the checklist, complete the operations checklist, arrange payment and related paperwork, and return everything to the correct drop-off location at the pharmacy.

Your driver should have a marijuana work permit and be trustworthy enough not to smoke on the street or behave in a way that could get you pulled over. While paperwork can protect you, it can't protect you from irresponsible employees. You should be mindful of time management and deliver products to customers in a reasonable amount of time. These timeframes should also align with your checklist to ensure compliance. Average delivery times vary greatly depending on road conditions, traffic, route times, etc., so plan for a large arrival time frame when you start. With more experience, you can shrink the time window to be more efficient.

Consider marketing your delivery service using strategies such as targeted promotions by zip code to entice people in your area to shop frequently while continuing to expand your reach within legal limits.

In most states where cannabis is legal, bulk delivery is currently the most promising option. Thanks to leading software solutions, you can now easily plan routes, print multiple lists, and assign multiple orders to a single driver. Reduce your time with our return checklist, built-in traceability, and insightful route data. If you have the size and finances to expand into cannabis delivery, it can skyrocket your earning potential as a dispensary.