When Brian and Stewie from “Family Guy” sang and danced to the tune of “everything is better with a bag of weed,” little somewhere they know that they were not just insinuating a happy world but also a green P&L statement of businesses operating in the cannabis industry.
According to Grand View Research Report, the global legal marijuana market is set to reach $102.2 billion by 2030, which makes it a highly lucrative space for cannabis enthusiasts.
However, there are some strict regulations that have made it rather complex for individuals to enter the industry as cultivators or dispensary owners. Nevertheless, there are some less-stringent business models that offer opportunities for cannabis enthusiasts to generate profits, and one such business model that entrepreneurs are eyeing in 2023 is the cannabis delivery business.
You can step into the cannabis delivery business model super easily; as it does not require a storefront and much capital to get operated. All you need is just an e-commerce platform to run your cannabis store.
Feeling excited to start your marijuana company? Let us help you comprehend the step by step process to successfully start a cannabis delivery business. But before we start, let’s get a quick insight into its market size and acceptance for a better understanding of your cannabis delivery business growth.
The cannabis market size in the US is valued at $13.2 billion in 2022 and is estimated to grow at a CAGR of 14.2% from 2023 to 2030.
Cannabis is often used in the pharmaceutical, cosmetic, food, and beverage industries. The increasing utilization of cannabis in different sectors is the key factor that drives the growth of the cannabis delivery business.
Furthermore, the medicinal properties of marijuana to treat various medical conditions have led to its enormous growth. They are proven to be effective in treating nausea and chronic pain caused by chemotherapy.
Also, the constant rise in its legitimization across states has led to the cannabis market growth. For instance, the FDA (Food and Drug Administration) has approved the use of drugs containing cannabis for treating seizures.
All these factors indicate the enormous opportunities for the cannabis market growth in the forthcoming years.
Step-by-Step Guidance to Start a Cannabis Delivery Service Business
Because of the presumed taboo around the sector emerging from the impression of it being illegal makes it difficult for entrepreneurs to enter the domain.
However, it is just a matter of making a foolproof cannabis delivery service business plan and taking some systematic steps to emerge as a successful leader in the cannabis delivery market. Know more here how entrepreneurs can thrive in the cannabis market.
Let’s help you get started with the steps for building a cutting-edge cannabis delivery system.
Step 1. Raise Funds for cannabis Delivery Business
Raising funds for your startup is never an easy task, and when it is about raising funds for a cannabis delivery business, it becomes more intimidating. Despite institutions increasingly embracing the idea of cannabis being legalized across nations, they are still wary when it comes to lending credit to entrepreneurs to start their cannabis delivery service business.
So how can you collect funds to fulfill your cannabis delivery business startup costs? Let us show you some ways.
1. Seed Capital
“A seed round is aimed at building a product, service or technology; and getting some early traction, typically in the form of beta or pilot customers,” Viridian Capital Advisors President Scott Greiper explains. “This will help you establish some reference cases. Investors will want references from clients in the future.”
Your seed capital will mainly come from your friends and family or your personal savings. You will not have many options if you choose to take the traditional funding route because banks and other loan organizations would not be willing to get associated with your business.
Not everyone comes from a robust financial background, so for them finding alternatives for seeking funds becomes the need of the hour.
Here are some other ways you can get funding for scaling your cannabis delivery app business.
- Cannabis-specific funds
- High-net-worth individuals
- Angel investors
- Business accelerators and incubators
- Musicians, athletes, and other celebrities
- Industry-specific holding companies
Here are some alternatives of the cannabis industry’s institutional investors you can reach out to when seeking funds for your cannabis business:
Step 2. Choose a Location for Your Cannabis Delivery Business
Choice of location is pivotal to the success of your cannabis business. So, it is imperative to have a clear understanding of which states accept the medical and recreational use of marijuana; and which states lead in cannabis tax collection to gain the maximum benefits of your cannabis delivery service.
For instance, California, the first state to legalize the consumption of cannabis, collected more in its sales taxes than any other state in 2022. Accordingly, California can be a profitable state to start your weed delivery business.
Whether you are opening a food store like Domino’s or a cannabis delivery business, always conduct extensive market research before finalizing the location and crafting a complete cannabis delivery business plan. It will help you successfully start cannabis delivery services and generate maximum profits from your cannabis delivery service.
Here is a complete list of US states where the consumption of recreational marijuana is legalized. This list is based on certain metrics like legal environment, ease of market entry, cost of market entry, market opportunity, and tax climate.
Step 3. Get the Necessary License
One of the most important things you should do to get your cannabis delivery business off the ground is to obtain the necessary licenses. While in California, it is legal to deliver cannabis upto a certain weight limit, it is not the same everywhere. So, it is safe to have a business license in place.
When attaining the licenses, you will come across two different scenarios:
- When your marijuana delivery service is affiliated with a storefront dispensary.
- When your marijuana delivery service is not affiliated with any storefront dispensary.
If the cannabis delivery service is not affiliated with any storefront dispensary, you should apply for a retailer non-storefront business license, which requires you to secure a not-open place for public premises. If you have a storefront dispensary, you should apply for a regular retailer business license.
To get the license, you can log in to your state’s cannabis website and fill out all the required forms. The forms you will need to fill out typically include:
- A delivery plan – Details of the vehicles you’ll use and how you intend to transport cannabis.
- A business plan – Details of your cannabis delivery business plan.
- A security plan – Details of how you will protect your drivers and products from theft.
- A tracking plan – Details of how you’ll track and maintain records of all deliveries.
Always remember that different states have different sets of rules and regulations. So, make sure to read your state’s laws closely to stay assured you meet all the required rules and regulations.
Step 4. Partner with Licensed Cannabis Cultivators and Manufacturers.
The prerequisite of running a successful cannabis delivery business is to have an authentic source from where you will get your product to sell. Most of the cannabis dispensaries already have their delivery service partner; so it might be difficult to connect with a dispensary and propose to handle their deliveries.
The best bet you can have to get your product if you don’t cultivate it on your farm is to talk to the cannabis manufacturers or the growers and get it from them upon striking a wholesale discount deal. At this stage, it is essential that you only partner with manufacturers who are legally allowed to grow cannabis and not people who are operating a black market.
Step 5. Understand the Legal Compliance in Your State
Unlike your regular food delivery app business, the cannabis delivery business model is very different that requires you to meet multiple regulations and compliance for a successful weed delivery business.
According to Vangst’s State of the Cannabis Economy report, 52.4% of weed business owners found compliance and regulations as their prime challenge, followed by inflation (50.3%) and federal prohibition (49.7%).
To face the challenges of cannabis delivery compliances, you should ensure your vehicles and drivers meet the required guidelines.
For instance, don’t drive too big vehicles, and also avoid delivering one with words or sketches depicting weed, cannabis, or marijuana to draw unwanted attraction. Also, make sure to deliver only legally permitted amounts of cannabis in a secured and surveillance vehicle that has a GPS tracker installed to it.
Furthermore, make sure that the driver is eligible to drive cannabis and is not driving under any addictive substance like weed, alcohol, etc.
Cannabis delivery regulations are very strict across nations; so be sure to understand them clearly and comply with them in every aspect of your marijuana business.
Step 6. Cannabis Delivery Service Business Payment Options
“Transactions in the US involving the purchase or trade of marijuana are not permitted on the Visa network until such time as federal law allows,” a Visa representative wrote in an email.
No matter how legal cannabis may become in the US, card companies and 90% of the operative banks will not open up to the idea of allowing transactions for buying and selling cannabis.
Until you want to take the offshore route, like opening a Swiss bank account or charging money under false names, you will only have 2 options to take money from your clients and devise your cannabis delivery service business financial model.
- Take Cash Payments
- Use e-Wallet Apps
We don’t recommend “Cash Payment” as it has its own set of challenges. “e-Wallet Apps” is a worth considering payment mode as you will be able to get access to the amount in a more expedited and safe manner.
You May Like Reading: How IT is Fueling the Budding Cannabis Industry?
Step 7. Develop a Website and Application for Cannabis Delivery
By having a cannabis delivery website and mobile application, you can easily educate people about your business. It can help you promote your business and find the right customers in comparatively less time. To set up robust software for your cannabis delivery business, you should first contact a cannabis delivery app development company to develop an application or website, and then create a product inventory, write engaging content that ranks well on SERPs, and use eye-catching CTAs to drive more traffic to your online marijuana delivery business.
Your cannabis delivery business software (website/app) should have the following features.
- The ability to create delivery orders
- An integrated ID scanner
- A tracking app to track the shipment on the go
- Integration with the state tracking system
Related Article: How To Bring Your Cannabis Business Online: Cost And Technology Perspective
Step 8. Get Cannabis Delivery App Approved on the App Stores
While the world is opening up with the idea of legalizing Cannabis, the App Store and Play Store are still taking cautious steps to approve CBD applications.
There are a number of cannabis-specific apps that have seen resistance in the stores for the presumed nature of the service. While some said that words like “recreational,” “retail,” “adult use,” or “21-plus” instigated their app rejection, others don’t have any answers as to why their cannabis delivery apps were rejected.
Also, there are cannabis delivery applications like Eaze, High Tide, WeedMaps, PotBot, etc., that are widely accepted in the app stores, offering customers the highest quality products for so long.
So, before you submit your app to the app store, make sure it is fully licensed by your state for both medicinal and recreational cannabis delivery. Ultimately, the cannabis delivery approval process comes down to the context your app description is portraying to the stores.
Partner with Appinventiv for Your Cannabis App Development Requirements
The process of finding the best app development company is pretty similar across genres. But one thing that sets a cannabis delivery app development company apart from the other agencies is their in-depth knowledge of the industry and the rules and regulations that prevail in it.
A mobile app development company that has worked on a cannabis delivery app project before has a good understanding of how to develop an app that gets approved in the store. So, if you are looking for a cannabis delivery software development company that holds expertise in developing a CBD delivery app or software, we at Appinventiv would love to help you out.
Our efficient team will mix your business idea with proven industry-driven practices to build on-demand delivery apps that will help you start and scale your cannabis delivery business in the US.
Start your cannabis delivery business with us and witness the transformation in your CBD delivery drive. Get in touch with us now.
Q. How to start a cannabis delivery business?
A. Starting a cannabis delivery business involves a few essential steps:
- Get the required fund and do market research.
- Understand the legal compliance and regulations in your state.
- Obtain the necessary licenses for cannabis delivery.
- Partner with licensed cannabis manufacturers and cultivators,
- Develop a user-friendly website and application for customers to browse through your online store.
- Finally, hire a reliable app development company.
Q. How to start a cannabis delivery service?
A. To successfully start a cannabis delivery service, you must do in-depth market research and have a solid grasp of the legal requirements in your state. Once you have done your research, follow the steps mentioned above in this blog post to get started with your cannabis delivery service.
Here, it is vital to prioritize safety and security measures by integrating essential cannabis delivery software into the system, such as ID verification, proper product packaging, and secure payment options. Employing marketing and maintenance strategies can also help establish a loyal customer base.
Q. What licensing is needed to start a medical cannabis delivery business?
A. The licensing requirements for a cannabis delivery business significantly vary depending on the rules and regulations applicable in a particular state. Hence, it is imperative to research the specific requirements of the state in which you are going to operate and comply with all regulations before starting operations. In general, the cannabis delivery business should be licensed as a dispensary or delivery service by the state regulatory agency.