Editor's Note: This post was originally published in April 2020, and updated in June 2023 to reflect the current state of cannabis delivery.
With cannabis retail quickly evolving and consolidating, dispensaries must adapt to newfound ecommerce options like delivery.
While it requires upfront work to implement, delivery can be a game-changer for dispensaries looking to increase sales without crowding their physical store.
In this post, we’ll outline five best practices for implementing or expanding delivery capabilities at your dispensary organization.
1. Develop a delivery strategy
Determining your delivery strategy doesn’t have to be daunting, but you must be thoughtful and comprehensive. These basic steps will help you get started:
Step 1: Do your research! Make sure that a cannabis delivery business is legal and feasible for your dispensary. Cannabis state laws can vary significantly, even from town to town. Ensure you’ll be able to acquire a delivery license to operate your marijuana delivery business.
Step 2: Gather historical data of your sales, both in-store and online. If you see significant online orders, you likely already have a customer base that will use delivery.
Then, look at the revenue generated from in-store sales. What are the profit margins on your most popular products, and would these profits outweigh the costs associated with delivery? Remember, delivery services can be expensive so the unit economics need to make sense for it to be a profitable offering for your business.
Step 3: Evaluate your cannabis dispensary’s customer demographics to understand who your customers are and whether delivery may be appropriate for them.
55% of Gen Zs and 60% of Millennials have more delivery apps than streaming services, so offering delivery may increase your marketability to younger cannabis consumers. On the flip side, home-bound people (seniors or those with disabilities) are often limited to only utilizing cannabis delivery, so you may attract more of these customers as well.
Step 4: Determine the impact that offering delivery will have on your current dispensary operations. You will need to hire new employees, create new SOPs, and stock more products. Is your business ready to make these sorts of changes right now?
Step 5: Create your business plan for delivery. Make sure to include all costs associated (gas, vehicle, hardware, employees, etc.), as well as the potential revenue.
For some dispensaries, the costs of delivery will not outweigh the benefits. Be realistic about this, especially when you see competitors adopting delivery.
2. Set boundaries on your delivery radius
Once you’re ready to offer cannabis delivery and have identified a strategy to make it profitable, you must determine where you’ll draw the delivery boundary.
You might be tempted to go as far and as wide as possible to beat out the competition, but you must consider the other costs you will incur as travel distance increases, such as time, additional delivery staff, insurance, gas, and other expenses.
Note: You may also be limited in your delivery radius by local regulations, so learn the rules first!
If you’re struggling to figure out the right delivery distance, look at other industries in your area, such as pizza shops or restaurants that offer delivery. How far are they willing to drive for a delivery?
You should also consider where other nearby dispensaries are located, their delivery radius, and where there is an opportunity for you to deliver to underserved consumers.
You must strictly adhere to your delivery radius, as many localities prohibit delivery or have additional cannabis delivery restrictions in place.
3. Choose the right cannabis delivery partners
Delivery partners can make or break your delivery business. You must pick the best possible partner(s) to streamline workflow and maximize profits.
The ideal delivery partners integrate with each other to minimize manual work. Having a cannabis POS with API integrations to popular cannabis delivery services can help you manage delivery, stay in compliance, automate taxes, and provide a positive customer experience.
Delivery software partners like Onfleet help with “last mile” delivery logistics, such as:
Proof of delivery
Reporting and analytics
Search engine optimization (SEO)
Real-time inventory updates
Branded product photos
Pro tip: List your menu across multiple ecommerce sites and push all orders to your point-of-sale system. This maximizes your store’s visibility and centralizes the delivery fulfillment workflow.
4. Configure your store layout and inventory
If you’re changing your business model to include delivery, you might need to change your in-store layout as well.
Consider creating a dedicated line (or lines) for pick-up customers and separate terminals/staff for processing delivery transactions. This will keep operations flowing for storefront consumers while eliminating confusion for budtenders.
If your dispensary design follows the bank model, you could have one terminal — and its associated inventory — dedicated solely to delivery orders. This would provide the most clarity to inventory management.
You must also consider what other in-store configurations, staffing, or technology automation will boost both efficiency and accuracy so you can quickly fill orders and meet the projected delivery timeframe.
Download the Cannabis Delivery SOP Template
Most importantly, ensure you have clear standard operating procedures around delivery workflows. Dispatchers, drivers, and budtenders need proper training and documentation to ensure the delivery process is efficient and repeatable.
5. Select the right delivery model
It’s important to implement a delivery business model that will maximize the number of deliveries you can make in a set time period.
However, state and local regulations can often restrict workflows, so make sure to consult with compliance experts before making any decisions.
Some common cannabis delivery models are pizza shop, ice cream truck, and hybrid workflows.
Note: The ice cream truck delivery model is most popular in California. Many states may not explicitly ban ice cream truck deliveries, but will urge dispensaries to avoid this workflow.
Pizza-style cannabis delivery (most popular)
The pizza shop delivery setup looks and functions essentially the same as your traditional pizza spot. You have a central location (your brick-and-mortar dispensary) where you receive, package, label, and dispatch the cannabis products. This is sometimes called the “hub and spoke” delivery model.
In most cases, deliveries are made one order at a time. In some states, you have the option to take multiple orders at a time to cut back on delivery time, but all orders must be processed and packaged before leaving the dispensary. Check your state and local regulations for clarification.
Ice-cream truck cannabis delivery
An alternative to the pizza setup is the ice cream model, where a driver carries inventory in their vehicle and makes multiple deliveries at a time.
Just like your neighborhood ice-cream truck, cannabis drivers are allowed to receive and process orders within the vehicle and oversee inventory management, driving, and selling. This is also called “dynamic delivery” or “warehouse on wheels.”
Hybrid cannabis delivery
The hybrid model mixes aspects of the pizza shop and ice cream truck workflows to best fit your dispensary’s needs.
Some states only allow a certain amount of product to be carried in vehicles, which will limit your delivery reach as well as your profits and may limit your choice of delivery models.
The more consolidated trips a driver can make, the more efficient and time-effective you can be. Remember, a higher volume of deliveries is where you’ll start seeing a return on investment.
You will also need to pay close attention to regulations regarding delivery drivers and their vehicles, such as who can deliver products, what vehicles can be used, whether you can include branding on the delivery vehicle, required insurance, and what kind of GPS tracking is necessary.
Frequently asked delivery questions (FAQs)
What is the best cannabis delivery method?
Of the three most common cannabis delivery methods (pizza, ice cream truck, and hybrid) the most popular is the pizza-style delivery method. Customers place orders to the brick-and-mortar dispensary location, then the retailer fulfills orders one at a time with a delivery driver.
Pizza-style cannabis delivery is the most popular method because it’s typically the only legally allowable method of delivery in most states.
How do cannabis delivery drivers collect payment?
Dispensary delivery drivers can collect payment in few ways, depending on their delivery software and state regulations:
Drivers can accept cash from a customer at the door, complete the sale on a mobile device like an iPad, and return any necessary change.
Drivers can accept debit payments if they have mobile debit terminals and a SIM card for wireless activity. At the door, the customer inserts their card, enters their PIN, the transaction is completed, and a receipt is printed.
Drivers can collect cash at the door, then return to the dispensary to drop off the money. The transaction is then completed in the store.
Customers may also be able to pay online when they place a delivery order. This is called pre-payment.
Do I need a license for cannabis delivery?
Some dispensaries may need to apply for additional licensing for delivery. This may include licensing fees.
Delivery licensing is entirely up to the state’s regulations and will vary by legal cannabis business market. Consult your state cannabis regulations for further information.
How do dispensaries verify a customer’s ID for delivery?
To verify a customer’s ID during the cannabis delivery workflow, consumers often have to upload a photo of their ID to the ecommerce website where they place their order. Upon delivery, a driver checks the customer’s ID and can take a photo for further documentation.
Additional delivery considerations
Delivery isn’t the right choice for every dispensary. Your consumers may be itching for cannabis delivery in your market, but you must take a cautious and data-driven approach before diving into the workflow.
The most important things to look at before starting delivery are state and local laws and regulations. Speak with a cannabis compliance specialist or lawyer to find the best way to approach launching a delivery service in your area.
You also must have the proper infrastructure and technology in place before you begin, or else you run the risk of falling out of compliance or losing customers due to a poor delivery experience.
Cannabis delivery is a great way to increase dispensary revenue, but to see a return on investment, you must do it thoughtfully.
Ready for delivery? Flowhub Maui makes it easy
With Flowhub delivery, dispensaries are able to:
Improve efficiency with optimized workflows like automated Metrc manifests and real-time integrations
Reduce risk with compliance safeguards
Centralize fulfillment from multiple ecommerce platforms with clear statuses to know exactly where any delivery is at any point in time
Increase revenue by encouraging higher average order values with minimum order requirements or delivery fees
Enhance the customer experience by offering flexibility and convenience, resulting in loyal repeat business
Schedule a demo today to learn more about delivery in Flowhub Maui.