How to Start a Cannabis Delivery Service in California: An Introduction
Would you like to grow your cannabis business on par with the booming cannabis industry? Now is the time to draw up a solid cannabis delivery business plan. Currently, dispensaries with delivery options are the most popular among consumers and Californian cannabis enthusiasts. With that said, setting up a delivery-enabled cannabis dispensary in California comes with its fair share of necessary homework and to-dos.
From gaining awareness of relative cannabis laws to building a business plan, many factors come into play when starting a cannabis delivery service. In this article, aspiring cannabis business enthusiasts can learn how to successfully launch a cannabis delivery service or delivery-oriented dispensary in California. Without further ado, we start by diving into the costs associated with starting this promising and profitable service.
Shedding Light on the Costs Involved
In this section, we consider the cost of starting a cannabis delivery service in California. First off, you’ll need to pay a non-refundable application fee of $1,000. Then, if approved, there is another licensing fee inherent based on your projected annual gross revenue as follows: You’ll pay $2500 for $500,000 or less annual revenue; $750,000- $1M for a $7,500 fee, while $1.5M- $2M entitles you to a $14,500 fee. As far as particular licensing, go ahead and read up on the section that follows.
Licensing Liaisons
Before starting a cannabis delivery service business in California, you need to obtain a distribution state license from the Bureau of Cannabis Control (BCC). You need a delivery license from your local city or county in addition to the state license. Other licenses required to operate a cannabis delivery business in California include a Cultivation license, Manufacturing license, Testing laboratory license, Retail license, and Event license.
Considering Cannabis Delivery Laws & Regulations
As per the official Californian cannabis law updated in 2021, cannabis delivery drivers are allowed to carry up to $10,000 worth of cannabis goods at one time. Thanks to this glorious rule, businesses get to make more money. Below, we thoroughly consider all relevant cannabis delivery laws and regulations that are applicable in the state of California. By abiding by all of these laws, you are setting your delivery business up for success instead of unwanted stress.
Age Restrictions for Cannabis Delivery in California
As for the general #1 law when it comes to selling cannabis in any manner, recreational cannabis customers must be 21 or over. On the other hand, medical patients must be 18 years or older with a doctor’s prescription or recommendation via a medical marijuana card. Moreover, recreational cannabis delivery drivers must be 21+.
Types of Cannabis Products that Can be Delivered in California
For all intents and purposes here, all cannabis products must pass all testing requirements. Following, products are not allowed to be delivered if they do not meet particular information panel labeling requirements. In this regard, a verbatim caution statement is also essential. This verbatim must contain an outline of cannabis as a controlled substance. This must include details stating that it’s not suitable for children, those operating a vehicle, pregnant women, animals, and teenagers.
Moreover, it’s required to include a statement that says the product is for medical use. Companies must also follow a specific labeling protocol for sub-ingredients. Be sure to list any food allergens on the packaging. This may be applicable to edible products. Last but not least, it’s essential to include the amounts of sodium, sugar, carbs, and fat per serving in all edible products. Then, of course, there are instructions for use to include. The UID and batch number. A statement requiring refrigeration if applicable.
Taxation of Cannabis Delivery in California
In the cannabis industry, like in any other industry, taxes must be paid to the government or state. Learn about the taxes for running a cannabis delivery service in California. Firstly, State and County taxes vary by county. Secondly, Cannabis Excise Tax is applicable to the entire state of California, currently sits at 15%, and is not intent on rising.
Moreover, the Local Cannabis Tax is set as a special tax on cannabis goods. The latter varies between cities and counties. With that being said, cannabis delivery in different counties may pay different local cannabis tax amounts. Note that medical patients don’t pay sales or use taxes on medical cannabis products.
Cultivation Taxes
If you own a dispensary with a delivery service and are growing your own cannabis too, this section is relevant to you. Cultivation taxes aren’t solely for retailers, but cultivators are equally responsible for paying taxes in the case of selling cannabis for public consumption.
Who Can Legally Deliver Cannabis in California?
When choosing delivery employees for your cannabis delivery service, it’s important to choose wisely. Essential requirements include the “over 21+” rule. It also requires that the driver owns a valid driver’s license and a vehicle readily equipped with GPS tracking. Of course, the driver and the vehicle’s documentation needs to be in place.
Additionally, delivery drivers must be open to background checking. To abide by cannabis delivery laws, it’s advised to enhance specific protocols and execute rigorous training among a driving team. These protocols and training programs ensure not only the safety of the drivers but the well-being of customers as well.
Setting boundaries on your delivery radius
Once you have your delivery strategy and regulations in place, it’s time to up your profits. To make your delivery business more profitable, it’s essential to draw a delivery distance boundary. In this regard, it’s important to consider travel distance, delivery staff, insurance, gas pricing, and other expenses.
Penalties for Violating California’s Cannabis Delivery Laws
Legal delivery services in California have their work cut out for them. And by this, we mean that all consumers, dispensaries, and delivery agents are to behave responsibly. This can be achieved by abiding by California’s cannabis delivery laws. As for cannabis consumers, consumption is only allowed in the privacy of one’s own home. As a final note on penalties, It’s not allowed to deliver cannabis to the public. Be sure to abide by the laws outlined in this article to avoid being penalized.
The Ideal Cannabis Delivery Business Model
Now that you’re aware of the legalities involved in this kind of delivery business, we can move on to the fun stuff. In this section, we review and propose two different cannabis delivery business models. But before getting into more detail, the foundational elements of such a business model need to be thoroughly considered. Firstly, the service or business mission/vision/goal objectives need to be in place.
Secondly, products (cannabis consumables) should be designated for key customers. Make sure your market overview is complete, and you know the target market as well as the competition. The financial projection is also important. Be sure to lay it all out in this business model plan. When it comes to strategy and implementation, make sure to eliminate any online advertising obstacles by having a solid cannabis marketing plan in place. Try listing the service in cannabis directories, for example. You can also try a service that does it all for you, like Client Verge.
When it comes around to promoting your service, it’s best to start thinking about serious advertisements and marketing. You can start by building a brand presence on social media. Also, be sure to use a pre-launch teaser website. The next most important thing to get up and running is a delivery app. This is a great way to extend your reach. Please see the next section for details on running an efficient and user-friendly cannabis delivery app. Below, we offer two different cannabis delivery business models.
Single-Storefront Cannabis Delivery Business Model
This model is recommended for cannabis dispensaries wanting to boost sales by adding an online delivery option to their repertoire. In this regard, it’s advised to incorporate proper delivery software on the dispensary’s home website. With this model, you can make use of your own delivery service, or choose to opt for freelance or third-party delivery services. With this business model, be sure to let your customers order from you using a website and/or app. See more on the essentials when creating an app for your delivery service in the section following the next one. When choosing this business model, be sure to keep track of delivery agents using a delivery management system with live tracking.
Multi-Source Delivery Service / Aggregator
In the case of a multi-source delivery service, you can play the key role of an aggregator between customers, dispensaries, and delivery services. This means that you can act as a platform that connects cannabis businesses directly with consumers. Commissions are charged for each order and delivery completion. The revenue generation in this case depends on the order rates, hence, the more orders are placed, the more your earnings will be.
Affiliated dispensaries are key to an aggregator’s success. They should have access to a larger customer base online, and opportunities to offer a wide range of browsable products. This is to be achieved by keeping a core focus on the delivery value proposition. From a societal and community point of view, the proposition should be useful to the local communities and administrations for managing economic growth equally. For medicinal purposes, this business model can cater to a wide range of communities of patients through user-friendly apps.
Delivery App Checklist
Having a go-to app as part of your business model is essential for starting a cannabis delivery service in California. The app must be customer/user-friendly and the overall UI design is to evoke an eye-catching experience. The browsing experience, online orders, and payments should be easy and hassle-free. Regular app updates, efficient delivery management, advertising features, and multiple work structures for full-time and part-time delivery drivers are mandatory. A good cannabis delivery app needs login and registration, profile verification, browsing, ordering, payment, and order tracking features.
Selecting the Ideal Delivery Model
While all the logistics might be sorted, what’s left is the actual delivery. In this regard, it’s best to set up a delivery business model that will serve your operation best. Some of the most popular delivery models include the classic “pizza style delivery”, the “ice cream truck delivery method”, and taxi-driven deliveries. Pizza-style cannabis delivery setup works exactly like your typical pizza place. The dispensary serves as the location where you receive, package, label, and dispatch cannabis products. Orders must be processed and packaged before leaving the dispensary. Check your state and local regulations for clarification. In each instance, the cannabis is delivered to the customer with a smile.
Instead of delivering one pizza at a time, the ice cream model delivers several orders at once by carrying inventory in the driver’s vehicle. 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.”
Security Considerations Due
To run a successful cannabis delivery service in California, it’s essential to ensure the safety of the product in the first place. This means having security in place at the dispensary itself. Moreover, safety and security of the delivery driver as well as the safety of the product being transported. Security measures for deliveries may include a safe vehicle with locked doors, an alarm system, and GPS tracking. Additionally, the driver should have a valid license, a clean driving record, and receive safety protocol training.
A panic button or other emergency communication system in case of a security breach is another must-have. Background checks for all employees, including delivery drivers are advised. Other security-related in terms of both storage and delivery include the following:
Container Compliance entails that cannabis goods be kept in a locked and secured container while in transit. Who has access to this container? Only the driver.
Sales and Inventory
What’s expected of cannabis delivery drivers in terms of sales and inventory? Firstly, they are expected to accurately record all transactions. They should also keep an updated inventory ledger. The ledge should include the kind of cannabis product, its retail price, brand. Along with this, other information should be collected. For example, the track and trace number, weight, volume, and number of pieces in a package.
Updated Tracking
When starting a cannabis delivery business, it’s essential to incorporate proper tracking system drivers. Along with this, a destination log must be kept. This will serve the purpose of showing where each order led the driver. If the driver has no orders to fulfill within a 30-minute time period, he/she must return to the dispensary.
Extra Stops During the Delivery
Drivers are not allowed to roam around and make a lot of pit stops along their way. They are only allowed to fulfill orders, fill up on gas, and rest intermittently.
Operational Times
Cannabis delivery services are only allowed to operate from 6am to 10pm.
Final Thoughts
Starting a cannabis delivery service in California can be challenging yet rewarding for entrepreneurs looking to enter the rapidly growing cannabis industry. By carefully considering regulations, product strategy, delivery operations, and compliance, you can build a strong foundation for your business and set yourself up for success. Starting a cannabis delivery dispensary in California can be challenging, but with careful planning and execution, it is possible to create a successful business while following regulations.
California Cannabis delivery laws prevent people from abusing the industry to make a quick buck and work to improve safety for both businesses and consumers. Overall, it’s becoming increasingly important to comply with California’s cannabis delivery laws as the government continues to crack down on violators. Whether you’re new to the cannabis delivery space and hoping to establish a business, or you’re concerned about your business’s compliance, we urge you to comply with all California cannabis delivery laws to ensure safety across the entire industry.
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