Business News Retail

Will Delivery Services Save the Cannabis Retail Market?

With lower overhead and leaner operating structures, delivery makes increasing sense for consumers, independent operators, and brick-and-mortar retailers.

Even before the coronavirus pandemic changed everything, the climate for conventional retail appeared headed for an ice age. As early as 2015, analysts put shopping malls on life support; by 2019, blueblood department stores like Barneys New York, Lord & Taylor, and Macy’s had shuttered multiple locations or declared bankruptcy or both. All blamed the rising popularity of online shopping and the legions of delivery vehicles ferrying everything from grocery basics to pre-fabricated buildings straight to consumers’ front doors.

But what about cannabis retail?

It’s hard to make business model comparisons between nascent and established industries, especially when one industry is subjected to a hodgepodge of state and local regulations with no comprehensive models or guidelines for shopping online or in stores. How consumers get their weed in legal states currently depends on what’s allowed by local officials in counties, cities, and small towns.

In areas that don’t allow cannabis retail storefronts or dispensaries or where stores are scarce, consumers may be limited to relying on licensed delivery services. For homebound patients, delivery always has been their only option. The black market always has delivered and still does. In some states, it’s difficult for consumers to tell legal delivery services from rogue companies that sell illegal product.

There’s good news on the latter front, though. In October, Jamie Schau, senior analyst at cannabis and CBD market research firm Brightfield Group, told online financial publication MondayMorning.com, “Brightfield Group’s consumer data shows roughly 13 percent of cannabis consumers purchase product from their local delivery service as of mid-2018, down slightly from 14 percent in 2016. However, since delivery services are primarily located on the West Coast—specifically California, where state regulators are clamping down on cannabis businesses operating illicitly after the moratorium on the enforcement of new regulations there—smaller delivery services without ties to larger brick-and-mortar installations are becoming more difficult to maintain.

“In fact, only 1.2 percent of product is being made available through delivery services at present, and advertising and marketing will be further restricted in the future,” she continued. “Thus, unlicensed delivery services and those without ties to a larger formal operation are primary targets of increased enforcement and will struggle to compete and survive in this market in the medium term without formalizing and—in many cases—consolidating.”

To Read The Rest Of This Article By Joanne Cachapero on mg Retailer

Published: April 22, 2020

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