Utah is among a growing number of states with legalized marijuana that have chosen to embrace home delivery. There are just 15 licensed medical cannabis pharmacies in the Beehive State, and only one that delivers state-wide. Cannabis delivery in some states is much more prolific. In other states, not so much.
There are essentially two ways to deliver cannabis: direct-to-customer and third-party delivery service. Is one better than the other? That depends on who you ask. Customers probably don’t care as long as they get what they’ve paid for.
The direct-to-customer model keeps delivery in-house for dispensaries and pharmacies. Retail operators hire and maintain their own delivery staff in much the same way pizzerias do. A dispensary might own the vehicles or ask delivery drivers to use their own. Either way, delivery drivers are employed by the pharmacy or dispensary just like any other person on the payroll.
Contracting cannabis home delivery to a third party is very similar to what grocery stores and restaurants do with services like Instacart and Grubhub. The third party contractors go to dispensaries and pharmacies to pick up orders, then deliver the packages to customer homes. A delivery charge is added to the total cost to compensate the service provider.
There Are Costs to Consider
Delivery is a service that cannot be provided for free. There are costs to consider. Ultimately, the costs need to be passed on to customers by way of additional delivery fees for higher retail prices. Retailers need to keep that in mind because it affects their pricing structures. In terms of the cost themselves, retailers must think about:
- labor costs
- fuel and insurance
- vehicle maintenance and repairs
- vehicle registrations, tags, etc.
- alarm systems and other equipment.
According to the marijuana pharmacy Beehive Farmacy in Utah, delivery vehicles in Utah need to be equipped with certain security features. Vehicles also must be nondescript. The one company offering statewide delivery has spent a lot of money on vehicle compliance. It is not cheap.
There Are Security Concerns
The costs of offering delivery are just the beginning for retail operators. They also need to address security. And yes, there are legitimate security concerns in a business that still operates largely on cash. A delivery driver could potentially be carrying an awful lot of money around town. That is one of the reasons Utah regulators decided that vehicles in their state had to be nondescript.
There is also the issue of the marijuana itself. The fact is that legal marijuana is more expensive than its black market counterpart. That makes delivery vehicles a prime target for criminals willing to steal the marijuana and sell it on the street for less.
Figuring Out the Best Plan
For the individual retailer, just the decision to get into home delivery is big enough. Trying to figure out the best plan makes the decision even more daunting. There probably isn’t a one-size-fits-all solution for every dispensary and pharmacy. Each retailer needs to assess their own needs and circumstances.
From a purely cost perspective, it might be better for a local retailer to leave delivery to a third-party contractor. Let the contractor absorb all the expenses. Then again, does the retailer charge a higher price at the register, or do they leave it to the delivery provider to add its own fee?
The fact that retailers even need to consider all of this is evidence that consumers want cannabis delivery. And as long as the market is there, someone will provide the service. It is just a matter of who.