How to run cannabis delivery operations in legal US markets

Delivering cannabis is not like delivering food or flowers. With the strict rules and regulations differing by market, you must thoroughly research the laws in your area to find out what options you have and how to best use them. Optimizing a workflow with so many rules and steps can be overwhelming, so that’s why we are here to walk you through it.

Cannabis sales are only legal when tracked, so tracing and reporting each driver is key to running a successful delivery operation. Maybe you already run a dispensary and want to branch out your offerings but delivery hasn’t been a cost-effective option in the past. Now that delivery is spreading across legal cannabis states, so are the opportunities for retailers.

Cannabis delivery increased by 25% during the height of the pandemic in 2020. Since then, Cowen and Company revealed a prediction of legal cannabis sale increases of 20-30% each year starting in 2022 and the good chance it will hit 50 billion by 2026. So, now’s the time to jump into delivery, iron out kinks ahead of time, and let the sales grow.

First things first, you gotta keep it regulated.

Prepare to open your operations compliantly. You will need some hefty upfront capital to get things off the ground. You’ll need to fund:

  • Licensing or permit fees
  • Compliant tools and packaging
  • Consulting fees
  • A delivery vehicle (some states allow drivers to use their personal cars and some even require the vehicle to have built-in GPS)

In cannabis, small mistakes can lead to very large fines. So, you’ll also need delivery staff and the right technology to stay within state regulations. In addition to your POS system and online menu, all states that permit the legal sale of cannabis require the thorough use of a state-approved seed-to-sale tracking system. It works just like it sounds: it tracks each product from the plant’s initial growth and cultivation to the consumer it goes home with. This tracking system keeps every sale compliant, away from the unregulated market, and ensures purchasing limits which also can vary by state. For example, METRC is a popular seed-to-sale tracking software that the majority of states use to follow each item by its SKU (tag/inventory number). METRC stands for Marijuana Enforcement Tracking Reporting Compliance, and if you already run a dispensary, you may already be familiar with it.

You will also need a software service like Onfleet, or another provider for last-mile tracking. The reason is, since cannabis still sits in a grey area of legality, state officials need to know where every package is going and when. Similarly, a lot of states will require you to print turn-by-turn directions to accompany your delivery manifests. Delivery manifests are online forms that track each sale from your POS to your state tracking system like METRC. In most states, not carrying the paperwork or having the customer sign it at the door makes the sale not compliant and a red flag to regulators. You also don’t want your driver getting pulled over without the proper paperwork. Other states track this digitally, so check your state’s compliance rules when creating a SOP (standard operating procedure).

Here are three examples of how the laws change across the US:

  1. In Arizona, only medical patients can receive deliveries. Recreational users must go into the physical store. Drivers will need to verify medical cards through both the original order mechanism (like an ecommerce solution) and again with their ID at the door.
  2. In Oregon, the recreational and medical markets vary drastically in purchasing limits. A recreational customer can only buy an ounce of flower per day, whereas medical patients can buy 8 ounces a day. Be sure the proper customer type is getting the proper package size—luckily ecommerce and POS solutions can include these parameters and keep your business safe.
  3. In Massachusetts, dispensaries can outsource to courier companies, but they need to pair two employees with every delivery and wear body cameras for visibility during the drop-off.

Take these security and compliance measures into account in each state, for each purchase. Delivery is available in almost every legal state (see the map), with the above nuances in mind, so understanding these rules is still worth your time when you think about the revenue potential.

Now that you grasp the importance of understanding regulations by location, we can move on to the different types and how they operate.

Delivery model types:

  • Pizza delivery model (single delivery): one-at-a-time deliveries that are received & packaged at the dispensary, manifested, and then taken directly to the customer.
  • Beehive delivery model (bulk delivery): multiple delivery orders taken by the same driver in a batch, just along a longer route that dictates the order of each stop. We’ll refer to it as bulk delivery.
  • Ice cream truck delivery model (dynamic delivery): mobile inventory and unique menus for each truck. A driver can take, fulfill, and deliver multiple orders while out in the field, just like an ice cream truck would.

In some states, you have to follow the pizza delivery model. That means your driver can only carry one customer’s order with them at a time. This can be time-consuming for the driver and less efficient for your dispensary’s sales because the driver has to return to the store between each delivery. The bulk delivery model is better when you can group the routes geographically. It’s like the pizza delivery model but it moves much more efficiently because the driver can prepare and leave the store with multiple orders. The ice cream truck model is also known as dynamic delivery and it’s the most flexible, but only currently available in states like California and Michigan. This model is lucrative for those states but comes with additional on-truck security measures.

Enterprise operators may have to tailor their delivery offerings by state. Remember that cannabis is still illegal in the US, so your operations can’t cross state lines or pass through federal land.

If you are in one of the lucky, booming, dynamic markets—you may want to think about how to package your products for ultimate freshness. While cannabis products must leave the dispensary in childproof and tamper-proof packaging, they should still be sealed to prevent air from drying out the buds or gummies. Anything airlocked, like a glass jar, is a plus. Keep the product in a cool and dry place at around a 70-degree temperature. Too high temperatures can actually change the effects of the plant and too low temperatures can lead to microbial growth on the product. Fresh inventory often means repeat customers, so make sure the storage on the truck is up to these standards.

It’s no surprise that larger operations require additional staff.

If you want to run a larger-scale delivery, you may need a dispatcher who assigns the orders to each driver, manifests in METRC, updates orders, and handles any issues or communications.

Any retailer running anything bigger than the pizza delivery model should consider hiring delivery drivers instead of pulling a budtender off the sales floor. The drivers will log the driving route on the manifest and follow it exactly, complete an operational checklist, organize the payments and corresponding paperwork, and bring it all back to its proper filing place at the dispensary.

Your drivers should hold cannabis work permits and be trustworthy enough not to smoke on the road or engage in any behavior that could get them pulled over. While the paperwork protects you, it doesn’t protect you from irresponsible staff. They should be mindful of time management and get the product to the customer in a reasonable amount of time. These time windows should also match your manifests to keep your operations compliant. Average delivery times vary significantly based on road conditions, traffic, route times, and more, so give a wide window of arrival time when starting out. With more experience, you can narrow that window down for efficiency.

Consider marketing your delivery services with tactics like targeted promos by zip code to create frequent purchases from those close by while continuing to expand your reach within regulatory limits.

Dutchie products are also here to support the process of streamlining your operations and promoting them online. Bulk delivery is the most promising option in most legal states currently, so we’ve recently expanded our LeafLogix operations to grow with multi-stop deliveries. You can now plan routes, print multiple manifests, and assign multiple orders to a single driver easily within the backoffice. Reduce your time spent with our return-to-store checklist, built-in traceability, and insightful route data. We’ve enhanced our integration with OnFleet to keep your communications up to speed as you report to state regulators.

Since LeafLogix seamlessly connects your POS, Ecommerce, OnFleet, and state reporting systems, offering deliveries can become worthwhile financially. You can also set order price minimums within Ecommerce to ensure that the cost is worth your store’s while. Our online menus make it easy for customers to discover your products and how to easily get them to their homes. Make cannabis ordering more comfortable and discreet for consumers who prefer not to shop in-store with delivery orders. We’re here to help social smokers and parents who puff get what they need when they need it—and we can help make it convenient and cost-effective for you, too.

Kat Kuchtjak

Kat Kuchtjak

Bend, OR