How to start a cannabis delivery service
Starting a cannabis delivery service business is a great alternative to the traditional route of opening a dispensary if your starting capital is less than $100,000 however you intend to get 30% net profit. This cannabis business also affords you a much greater opportunity to provide 1-on-1 service to your customers.
Main Steps to start a Cannabis Delivery Service Business.
1. Cannabis Delivery Service Business financial model will show you how you drive the future in all major areas: investments, sales, expense items and financing goals.
2. Cannabis Delivery business plan is a tool for understanding how your business is put together. You can use it to monitor progress, hold yourself accountable, it’s a sales and recruiting tool for attracting your future investors and expand your business and of course it will help to apply for cannabis delivery license.
In the most states now a cannabis delivery service is legal as a part of dispensing (B2C) or between licensed premises by a licensee or licensee representative. For example, a cannabis retailer may deliver a cannabis item to a residence in Oregon, however the retailer must receive written approval from the Commission prior to making any deliveries and may not carry or transport at any one time more than a total of $3000 in retail value worth of marijuana items designated for retail delivery.
You need to learn cannabis delivery approval process and requirements for your state, city and county.
We are working on the detailed information about cannabis delivery opportunities in different states and soon will update this section.
Starting a cannabis delivery service means you don’t have to lease or buy an expensive store to keep your stock in, but you’ll still need a place that’s big enough, safe enough, and legal enough, to keep everything. Keeping your stock safe while its in storage isn’t the only time you’re going to have to consider security.
Be sure to have enough product to fill all anticipated orders. Research the current demand in the area you plan to service. Knowing this information will help you estimate how much cannabis products you need.
Learn the rules and regulations regarding the amount of product you can store, as well as the amount you are allowed to deliver at one time.
You’re going to need a sturdy, reliable and secure vehicle, one that fully complies with any state laws regarding the use of a vehicle for business purposes and with the vehicle registration laws in general:
(A) Capable of securing (locking) the cannabis items during transportation;
(B) Equipped with an alarm system; and
(C) Capable of being temperature controlled if perishable cannabis items are being transported.
Keep in mind that some patients who are physically capable of getting to a dispensary prefer to use a delivery service because of the extra level of discretion it ensures.
For many of the people who use cannabis delivery services, they’re often the only option, especially for those who suffer to the point that getting to a physical dispensary requires a mammoth effort.
Even if your business makes life easier for both them and you, you’ll still need to register them as in any other kind of cannabis business.
Work with your local physicians to establish good relationships that can lead to recommendations, have the appropriate registration forms with you, and don’t forget to verify their medical cannabis license.
Because cannabis is illegal under federal law, state governments and online advertising platforms are placing strict rules on how companies can market their products.
Google, Facebook and Twitter all have advertising policies that restrict the promotion of the sale of cannabis. Google’s policy prohibits ads that promote “substances that alter mental state for the purpose of recreation.” Facebook restricts any “illegal, prescription, or recreational drugs.” And Twitter bans “illegal drugs” as well as substances that cause “legal highs.” Instagram and Facebook have decided to go a step further by removing pages of cannabis related businesses.
In spite of that you are still able to promote your service directly through special platforms, including:
You should also develop the website and brand your appearance, including mission statement, logo, colors, brochures etc.Starting a cannabis delivery service business is a great alternative to the traditional route of opening a dispensary if your starting capital is less than
How-To: Start a Legal Cannabis Delivery Service Business in Ontario or Toronto in 2020.
Updated July 2020: This is general information and does not constitute legal advice. Always consult with a lawyer. Please note that the Ontario government has indicated, as of July 7, 2020 that the Emergency Order permitting curb-side pickup and delivery until July 15, 2020 will NOT be extended. Call my office to determine current status of delivery and pickup.
On April 7, 2020, the Ontario Government announced that effective immediately it was allowing legal cannabis stores to re-open, following a previous Emergency Order that had shut down stores during the COVID pandemic. The bad news? Customers cannot enter stores, at least not yet. The good news? Stores can now deliver cannabis or permit curb-side pick-up.
All retailers and retailer applicants should read the emergency rules on curbside pick-up and delivery implemented by the Ontario government. The provisions include MANDATORY requirements.
If you are completely new to the cannabis world, I highly recommend you read my piece on how to open a dispensary.
Let’s dive into the requirements through this handy FAQ I created. This applies ONLY to retail cannabis stores that have their Retail Store Authorization and are permitted by the AGCO to open in Ontario.
Can I use a third party like Dutchie to facility the delivery or pick-up of cannabis?
If third party payments processors are being used to facilitate payment online prior to delivery or curb-side pickup, that is permitted. That would ostensibly extend to a third party software that facilitates product selection prior to delivery. However, the AGCO is clear that third parties cannot be used “for the purpose of delivery.” That means that the delivery agent delivering the item must be a direct employee of the retail store. This also means you cannot use a service like Uber Eats to deliver the cannabis.
Who can deliver the cannabis products on the store’s behalf?
Only direct employees of the licence holder of the retail store can deliver the cannabis products. And these individuals must have their CanSell certification.
Do I have to deliver to a residential address or can I deliver to a person’s place of work? How far away from my location can I deliver to?
You must deliver to a residential address but there is no restriction on how far away it can be from your store as long as it is in Ontario. You must ensure the delivery driver is a direct employee of the store and you cannot use third-parties to deliver. So theoretically, you can deliver to the other side of Ontario – as long as you follow those conditions. Unless you want to pay your employee to do that, it’s not really practical.
Where outside the store can I facilitate curb-side pickup? Do my customers have to be in vehicles?
The AGCO says the pickup must take place in an “outdoor area in close proximity to the retail store.” Customers are not allowed inside the store and at all times the transactions must be “clearly captured” by the store’s video surveillance. There is no requirement for customers to be in vehicles. Check with your landlord to see how you can best facilitate curb-side pickup in relation to your property.
Do I have to deliver the product to the same person that placed the order?
For curb-side pick-ups, the person picking up the order must be the individual who placed the order. For deliveries, you can only deliver to the person that placed the order or another person who resides at the residence that is 19 years of age or older.
What payment options can I accept?
Unfortunately as of the April 7, 2020 order, all payments must be completed online or over phone prior to curb-side pick-up or delivery. This will hamper efforts to facilitate sales to those that might not have access to a credit card or debit card, such as those with housing challenges. While it’s not ideal, the next best option is to have customer purchase a pre-paid credit card and place an order via phone or internet when they have access. Since you can only deliver to residential addresses, for those with no fixed address the curb-side pickup option, which doesn’t require your customer to be situated in a vehicle, is a much more practical route.
Do I need to ID customers for curb-side pick-up and delivery?
You must ID all individuals that you suspect to be 25 years of age or under.
Can I re-open my store for in-store sales?
No, customers are not permitted to enter the store at any time.
Can I charge for Delivery?
Yes, there is no limit to the amount you can charge for delivery.
What prices can I charge for products? Can I offer promotions and deals?
You can’t distribute cannabis or cannabis products for free, so you do need to charge customers for those items. But the pricing is up to you. Similarly, you can offer promotions and deals to customers, as long as you don’t offer any unlawful inducements. Don’t know what you can or can’t do? Get in touch with a cannabis lawyer now.
Are there any COVID-related measures or requirements I need to know about?
You are required to obey all government directives and orders with relation to COVID-19. Under previous That means that more than 5 individuals cannot gather together. Refuse curb-side service to any individuals not following government directives. The AGCO also encourages retailers to implement social distancing measures as applicable.
How much cannabis can I deliver or permit for curb-side pick-up per individual? Can multiple individuals from one household place order(s) totalling more than 30 grams in one purchase?
You can deliver or permit for curb-side pickup 30 grams of cannabis or its equivalent per person. Since curb-side pickup must take place in an outdoor area, it will be in a public place and by that fact each customer can only curb-side pick-up a grand total of 30 grams or its equivalent per visit. The AGCO is silent as to whether multiple individuals at one household can each place an order that together comes to a grand total in one delivery trip of more than 30 grams or its equivalent. This is one area the AGCO should clarify, but in the absence of an answer, limit each delivery to only one customer and only one order of 30 grams of less per visit your delivery driver makes.
Do I have to have certain vehicles or security mechanisms in place when delivering cannabis?
There are no special requirements with regards to the vehicle used. Cannabis must remain in its packaging the whole time and cannabis must be secured at all times. Cannabis cannot be left in the delivery vehicle overnight. It is essential you have standard operating procedures in place for all ordering and delivery processes, and it is wise to hire a security consultant to ensure security is engrained in your process flow.
What else do I have to know?
The permitted hours of “sale, delivery, and curb-side pickup” are from 9AM to 11PM daily. That means deliveries and curb-side pickups must be completed prior to 11PM. The ability that stores now have to deliver cannabis and permit curb-side pickup is limited to the next 14 days. That period will be crucial to demonstrate to the Alcohol and Gaming Commission of Ontario that Ontario retailers can comply with all the rules. If things go off without a hitch, expect the Ontario government to consider making this more permanent.
Make sure you have a written set of terms of sale that address the complexities of pickups and deliveries. For example, what is the delivery cost and if someone pre-pays (which is required), how much of their purchase is re-fundable if they don’t show up for pickup or delivery? These terms and conditions should be displayed on the out-side of the store as well as on the website in the place where consumers place their order and pay.
You should also establish rules and protocols for employees involved in curb-side pick-up and delivery. You should develop a set of reasonable rules for those employees, for example prohibiting impairment and mandating the use of whatever safety-related measures the store puts into place.
Important: Get in touch with your insurance provider in advance before you offer curb-side pickup and delivery so that you can ensure your newly-offered services will be protected by insurance. This will likely result in an increase in your insurance premiums.
I’m a Toronto-based lawyer assisting small businesses with applying for their cannabis retail applications, including Retail Operator Licence (ROL) and Retail Store Authorization Applications under the Cannabis Licence Act. Call me at 1-855-542-0529 or email me. One reason to call Harrison Jordan? I only focus on cannabis-related matters. You want someone on your side that understands the cannabis-related dimensions to your legal issues.
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About This Site
Harrison Jordan is a Toronto, Ontario-based lawyer focussing specifically on cannabis issues.The 2020 Guide to Starting a Dispensary Business Legally Delivering Cannabis in Toronto & Across Ontario. Cannabis Lawyer Harrison Jordan walks you through the process. ]]>