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New Jersey cannabis delivery operations are one of the most intriguing parts of the market being mapped out. It might also be the riskiest.
The State of New Jersey’s Cannabis Regulatory Commission (CRC) and, previously, the Department of Health (DOH) have been rolling out delivery regulations slowly over the years.
COVID-19 might have pushed the need for cannabis delivery to the forefront. So now, delivery service offerings are an essential business tool for astute dispensary owners.
Whether it be food, cannabis, or retail goods, convenience is king for today’s tech-savvy consumers. To stay ahead in a dynamic marketplace fueled by on-demand delivery, online providers are offering new and creative ways to differentiate your cannabis brand. Beyond quality products and catchy branding, smooth digital ordering and professional delivery are great ways to capture customers in today’s competitive market.
So, a cannabis delivery service is a great way to stay abreast of digital-first shoppers and expand your revenue streams.
But these complex business ventures have many hidden risks. As such, it’s important to understand exactly how risks impact the profitability of cannabis delivery services.
Risk management in cannabis delivery is directly tied to cost management. Failing to address risks such as regulatory non-compliance, security breaches, or delivery errors can result in steep fines, lost inventory, and damage to your reputation.
So, some risks like cash handling and compliance infractions might be obvious. But other less tangible elements must also be accounted for when developing a cannabis delivery business plan.
Cannabis delivery requires substantial labor, training, vehicles, security, insurance, and technology investments. Every aspect of a new delivery operation adds expenses, from hiring new team members to implementing driver safety training and maintaining reliable vehicles. Additionally, delivery management software, GPS tracking, and e-commerce integration play a critical role in ensuring smooth, compliant, and customer-friendly operations.
Cannabis deliveries occur outside the heavily controlled walls of dispensaries. So, they face many new and unique regulations unseen in traditional retail settings. Once on the road, there are countless ways drivers can break the rules or get in trouble, whether it be their fault or not.
A common mistake delivery drivers make is a failure to adhere to transport manifest requirements. It can lead to a hefty fine.
Since nearly 70% of cannabis businesses still rely solely on cash to conduct business, cash-carrying greatly increases the risks of cannabis delivery. Carrying large amounts of cash puts both your drivers and business at risk while complicating logistics. Tracking cash transactions during the day and reconciling them at night is cumbersome. So, any stolen or missing cash is often difficult or impossible to recover.
Delivering cannabis to a person’s home requires more product handling than seen at retail stores. So, it greatly increases the risk of damaged or lost products.
Keeping tabs on multiple orders can be complicated and cumbersome, especially for newbies. Cargo insurance is available in most states to help recoup lost or damaged products. But it doesn’t help explain lost or confused orders to regulatory agencies.
Running a successful cannabis delivery service requires different skill sets than operating a normal dispensary.
Heading into the field unprepared can lead to problems like delayed deliveries, damaged products, and order errors, which can harm your business’s reputation.
Dissatisfied customers may then leave negative reviews, impacting other areas of your business.
If your delivery driver is involved in an accident, it can create many challenges. While business auto insurance may cover vehicle repairs and damage to another person’s property, accidents often lead to costly premium increases. Similarly, if your driver is injured and unable to work, workers’ compensation insurance rates may also rise due to the associated medical bills and lost wages.
You can take certain steps to maximize the opportunities that come with adding a delivery service while mitigating the risks.
Standard Operating Procedures (SOPs) and employee training are essential for reducing risk with your team members. SOPs establish clear, repeatable protocols for important jobs like product handling, inventory tracking, cash-carrying, and safe driving. A well-crafted cannabis SOP is essential for the long-term success of any cannabis business.
Due to increased efficiency, properly trained employees almost always earn more on average than those without adequate training. Training equips staff with the skills to navigate risky scenarios, such as maintaining accurate delivery records, managing product integrity, and handling theft attempts.
Having the right insurance is vital for mitigating risks in cannabis delivery. Policies tailored to the industry protect against a variety of claims including theft, product loss, and liability.
Coverage for drivers, vehicles, and inventory ensures financial stability and meets regulatory requirements. Before developing a business plan, study what insurance policies are available in your region.
Another great option for mitigating risks with cannabis deliveries is to partner with a 3rd party service to handle the delivery side of your dispensary business. A delivery partner will have the right technology to pair with your Point Of Sales (POS) and seed-to-sale software while also providing licensed, compliant drivers.
Many dispensaries lack the financial resources and expertise to launch a delivery service while effectively managing the risks.
By partnering with a third-party service, you can offer cannabis delivery to your customers and boost your store’s revenue without the high overhead costs of employee training, logistics, and insurance. Additionally, the responsibility and risk of handling products once they leave your store shifts to a third-party partner specializing in cannabis delivery.
Smart business decisions require a certain amount of risk-taking. While accepting risk with new opportunities is part of the picture, the best businesspeople also take every possible measure to mitigate risk. When it comes to cannabis delivery, there are many unique factors like compliance, security, and safety unseen in standard dispensary business models.
With the U.S. cannabis industry expected to gross $40 billion in 2024, it’s tough to ignore the amazing opportunities hidden in plain sight. Yet, success in business requires creativity such as differentiating your brand with top-notch online ordering and delivery options. In any case, pleasing today’s sophisticated cannabis customers while also staying profitable is a difficult balancing act, even for the experts.
Claudia Post is a transportation subject matter expert. Her background includes logistics chain of custody, warehousing, and distribution. Claudia has been in the cannabis industry for 13 years and in logistics for 20-plus years.
Her marketing agency, MOST CONSULTING GROUP, and delivery service SCARLET EXPRESS services clients across the U.S. and Canada. For questions or just to chat, please email her cpost@scarletex.com or call 215-298-1555.
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