The struggles of Massachusetts’ growing delivery market is well documented, even before gas prices spiked earlier this year.
About 15 months after the first legal delivery of adult use cannabis was made in the Bay State, a group of delivery operators and advocates are petitioning the state’s Cannabis Control Commission to change existing requirements for delivery as the Commission approaches a new regulatory review process.
In Massachusetts, delivery of adult use cannabis is covered under two separate types of licenses. A courier’s license, which allows independent companies to facilitate purchases from a retail business and deliver those purchases to the customer, and delivery, which allows operators to obtain cannabis wholesale and store in their own facility for delivery to customers. Meanwhile, the state’s vertically-integrated medical licenses have always allowed delivery.
“While we appreciate the original thinking that went into the regulations that govern delivery in Mass., they’re quite onerous as they stand today,” said Meredith Mahoney, CEO of Lantern, an online cannabis delivery service where users can order deliveries from licensed couriers or delivery operators.
The operators argue that delivery and courier businesses are burdened by the requirements, which include no less than two employees to a vehicle, body cams, GPS, and other security measures.
“The second employee is supposed to prevent a robbery from taking place, but in reality, all this does is significantly increase our operating costs,” said Ruben Seyde, co-founder of Delivered.
The current security rules were intended to protect workers that could theoretically be targeted for robberies, while also making it more difficult for delivery workers to divert product to the illicit market. After over a year, there have been little to know examples of attempts at either scenario.
“We’re seeing very little to no concern on the public safety side and a real struggle on the part of the delivery couriers to create profitable businesses,” said Mahoney. “It’s also passing expenses onto consumers which make delivery almost untenable in this state.”
These measures make it difficult for these businesses to survive. Couriers are already at a disadvantage because they deliver product that are purchased at full price, with taxes from dispensaries. Any profits have to come from additional delivery fees. Delivery businesses can rely on the same margins between wholesale and retail that a dispensary might enjoy, but there are only so many sales they can make in a day.
“Nearly all of the licensees are struggling and some have already experienced layoffs,” wrote Christopher Fevry, CEO of Your Green Package. “Delivery licensees have even applied for waivers only to be rejected because not enough financial hardship was shown. All of the warnings that delivery licensees, retails, and other stakeholders told the Commission are coming true.”
The petition also calls for a change that would allow delivery to customers that live in municipalities that have opted out of allowing adult use cannabis retail. The petitioners note that Connecticut and New Jersey currently restrict municipalities from blocking the delivery of cannabis, even if the town or city formally opts out of adult use retail.
The petition lists a few lesser demands that include, allowing delivery to hotels, eliminating body cams for third party transporters and allowing universal agent registration.
“[Access to hotels] will expand our market to tourist and business travelers who are visiting the state,” said Seyde. “Unfortunately we can’t deliver to people like this today, which I’m sure is just as disappointing to us as it is to tourists, who are here to have a good time.”
Another concern from operators is that if they are unable to maintain, the state’s entire delivery market could be swallowed up by just a few operators. That outcome would be a far cry from the commission’s stated intention to ensure that social equity candidates, who have a three-year exclusive access to deliver licenses, can establish successful businesses.
“We just want to see these operators have the ability to create profitable, sustainable businesses. Right now, it’s really difficult,” said Mahoney. “I think if we can get ahead of the regs and right size them. We now can see the real problems there are to solve. I think we can get ahead of it and avoid that one or two main player situation.”
Mahoney said she was optimistic about convincing the commission to reconsider some of the delivery rules.
“It’s all a work in progress,” she said. “For the most part the regulators are listening.”
The petition had 457 signers as of Sept. 28.
Will the petition be successful in swaying the Cannabis Control Commission? The commission is preparing to start a new regulatory review session in coming months, which will bring public hearings. Getting a jump start on the conversation could push delivery regulations to the forefront of those upcoming hearings.
