How to Start a Weed Delivery Service in California
By Liam Noonan
6/25/21
Weed delivery may seem like easy money, but heavy regulations, logistics issues, and shifting laws make turning a profit tough.
With that being said, COVID-19 created a need for more delivery services and the California market responded.
It’s now common for dispensaries here to operate their own delivery services. In California, you can even start a delivery business without operating a physical storefront. For this, you’ll need a non-storefront delivery license.
Continue reading to learn more about starting a cannabis delivery service in California whether or not you have an existing dispensary.
How to Add a Delivery Service to Your Existing CA Dispensary
1. Meet the Compliance Requirements
To successfully add delivery to your storefront, you’ll need to stay up to date on all of the city/state compliance requirements. Find out more here.
2. Decide on a Delivery Radius
An important decision when adding a delivery service is to set a firm operating radius. It may seem economical to open up your addressable market by delivering to far away distances, but that may not be the case. Before setting your radius, make sure to factor in additional costs like driver pay, insurance, gas, and more. One good way to decide on a radius is to look to other successful local delivery businesses like pizza places. Odds are they have their radius correctly mapped out and that’s something you may be able to copy to get started.
3. Make Sure You Form the Right Partnerships
To make money with delivery your entire process needs to be streamlined. Oftentimes, managing your own delivery service ends up becoming one big logistical headache. Much like restaurants operate today, you can outsource deliveries with companies similar to Door Dash and Uber Eats, but for cannabis. On the other hand, outsourcing will most likely mean lower profit margins and a multitude of additional fees.
If you end up outsourcing, make sure to partner with a delivery service that is well established and will provide your buyers with quality customer service.
4. Update Your Inventory & Storage for Delivery
An often-overlooked aspect of adding a delivery service to your dispensary is the fact that your existing inventory and storage setup may need to change. For example, you will probably need to prepare a separate intake area for delivery drivers to arrive and pick up their products. You’ll need to also keep in mind things like additional staffing and technology requirements to meet all of your delivery needs.
5. Decide on a Delivery & Driver Model
When it comes to cannabis delivery, you can typically go with the ice cream truck model or the pizza delivery model. This can typically be decided depending on your local regulations and tax laws.
The ice cream truck driver method entails each driver carrying a small selection of weed products in the vehicle. Therefore, you can fulfill multiple orders in one run. This may help maximize time and mileage. On the other hand, the pizza delivery model operates with the driver only delivering one or two orders at a time.
On top of this, you’ll need to make sure your drivers, their vehicles, and their inventories meet all of the various compliance regulations.
How to Start a Non-Storefront Cannabis Delivery Service
In California, it is legal to open up and start a non-storefront delivery service. That means you can sell goods for delivery, but you cannot maintain a physical location open to the public. Some of the biggest companies in the space include Bud, Nugg, GrassDoor, and plenty more.
Eligibility Requirements for a non-storefront Delivery Service:
1. Proof of your legal right to use the proposed premises.
2. Provide all of the necessary delivery business documents.
3. Proof that you meet all of the local compliance requirements.
4. Provide the necessary transportation procedure forms.
5. Submit an inventory procedures form.
6. Submit a Security procedures form.
7. Submit a delivery procedures form.
Inventory Requirements for a Non-Storefront Delivery Service.
Aside from the requirements listed above, you will need to meet and provide proof of necessary inventory requirements as listed below.
1. A Driver Inventory Ledger:
Non-storefront cannabis delivery services are required to keep an inventory ledger for every sale and delivery made. More specifically, the inventory ledger must list out every product type, total retail value, brand, and more. These ledgers must also be kept electronically and accessible for any audits.
2. A Licensed Premise to Store Cannabis Inventory:
Even without a retail space, you’ll need a licensed facility to store inventory in a safe and secure location. This premise must also be completely closed off to the public.
3. Your Inventory Must Meet All Packaging Requirements:
Packaging requirements may vary from state to state and county to county. Read more about cannabis packaging requirements in California here.
4. Each Delivery Driver Must Meet the Maximum Inventory Requirements:
As you can imagine, a car full of weed becomes a prime target for theft. That’s part of the reason for the maximum delivery driver inventory requirement. As the rules are written, “a delivery employee shall not carry cannabis goods valued in excess of $5,000 at any time, with no more than $3,000 of cannabis goods that are not already part of a customer order.”
Get a more detailed overview of all the non-storefront delivery requirements here.
How Much Money Can You Make With Delivery?
Before thinking about how much money you can make, you should consider how much it will cost to get up and running.
You’ll start by paying a non-refundable application fee of $1,000 as well as a licensing fee that’s based on your projected annual gross revenue. For example, if you expect to bring in $3m you’ll pay $30,500, but only $7,500 for delivery bringing in $1m.
A well-run operation can scale and bring in upwards of $1m a year. Big dispensaries like Harborside even operate with $20m in revenue.
Resources For Cannabis Delivery Services
Cannabis Consulting Companies:
Canna Advisors http://thinkcanna.com/
Quantum 9 Inc. https://quantum9.net/portfolio/cannabis-consulting-services/
DispensaryPermits.com http://dispensarypermits.com/
Comprehensive Cannabis Consulting https://www.3ccannabis.com/
Green Rush Consulting http://greenrushconsulting.com/open-a-dispensary/
GreenZipp https://greenzipp.com/pages/states
Medicine Man Technologies http://www.medicinemantechnologies.com/
Cannabis Delivery Software Companies
Meadow https://getmeadow.com/
FlowHub https://flowhub.com/markets/california
Blaze https://www.blaze.me/
Cova Software https://www.covasoftware.com/
GreenBits https://www.greenbits.com/
Helpful Links for Getting Started
Licensing in California https://cannabis.ca.gov/licensing/
Opening a Dispensary CA https://stonedroot.com/blog/how-to-open-a-dispensary-in-california/
Starting a Canna Business https://www.leafly.com/news/industry/how-to-start-a-cannabis-business
California Department of Public Health https://www.cdph.ca.gov/
The California Burea of Cannabis Control https://www.bcc.ca.gov/
Summary
The hard truth is, though, that once your cannabis delivery service is licensed and up and running it isn’t going to go anywhere without advertising and marketing.
That’s where Stoned Root comes in. We provide professional digital marketing solutions for the cannabis industry. We help cannabis brands grow by crafting custom SEO-rich content marketing.
We can get your social media, website, and digital marketing off the ground and set you up for success from start to finish.
Click here to learn more about Stoned Root digital marketing solutions for the cannabis industry.
Thanks for reading! Be sure to check out our blog for more articles on how to get your cannabis business up and running today!
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