DoorDash, Uber Eats, Dutchie, and Buddi are third-party cannabis delivery services now operating in Canada, giving brick and mortar retailers a way to meet changing consumer expectations without investing in purpose-built technologies. Cannabis delivery took off during the pandemic, and understanding how these services affect retailers is the central question for the industry.
What does the future of delivery look like for cannabis retailers? With more provinces getting on board with the idea, big delivery names like DoorDash and Uber Eats are getting involved. But will these services burden retailers as they have for the restaurant industry?
How COVID-19 Opened the Door to Cannabis Delivery
Delivery of everything took off during the lockdowns. From groceries to alcohol to takeout, consumers quickly pivoted to ordering delivery instead of heading out into a world infected by COVID-19. As a result, food delivery apps doubled their profits during the first year of the pandemic.
Before the pandemic, there was no such thing as cannabis delivery (at least in Canada). Provincial legislation (generally) prohibited cannabis delivery from retailers to at-home consumers. But then COVID struck. Several provincial governments shifted this regulation temporarily to help thwart black market dealers from carving out new customer segments.
The temporary delivery legislation let cannabis retailers stay afloat by continuing sales and ensured cannabis — deemed an essential service — could still reach the consumer. Originally, most cannabis delivery legislation was temporary, set to expire with lockdowns. But, now, many of these legislative changes are here to stay.
More Provinces Are Legalizing Cannabis Delivery
Slowly, more provinces have started changing their anti-delivery laws to adapt to the changing consumer climate. The big delivery experiment, which played out in BC and Ontario during the pandemic, has shown governments that it’s not only safe but also economically beneficial.
In August 2020, BC adopted the temporary cannabis delivery legislation permanently. Ontario followed suit in March 2022.
Alberta, which has notoriously strict online sales protocols, also adopted broader digital sales this year. The change let the licensed retailer or a common carrier (Canada Post or courier) make deliveries. Other provinces also have some form of pot delivery, including Saskatchewan, Manitoba, and Quebec.
DoorDash and Uber Eats Enter Canadian Cannabis Delivery
Cannabis e-commerce platforms like Buddi and Dutchie pivoted to add delivery once bigger markets like Ontario and BC legalized it.
Expanding into delivery made sense because these TechPOS compatible solutions already integrated into real-time inventories and click-and-collect services.
As of 2022, Uber Eats and DoorDash introduced a delivery component to the cannabis market. Both companies got their start delivering restaurant food to at-home customers. Both companies hire contractors through the gig economy rather than employ full- or part-time staff. These delivery companies operate much like Uber and Lyft, which are ridesharing apps.
According to Business Model Analyst, Uber Eats and DoorDash dominate most of the food delivery market. However, these two companies are notoriously competitive. In the past, they have slashed prices and built loss leaders into their marketing strategy, all to grab market share.
This competition gave consumers better prices, but it doesn’t always prove beneficial for retailers — beyond the strategy of serving more customers.
DoorDash and Uber Eats have partnered with specific cannabis retail franchises before launching full force into each legal market. In Ontario, Superette and Starbud partnered with DoorDash, and Uber Eats connected to Tokyo Smoke.
Technically, neither of these global food delivery services has offered delivery options. Instead, these limited partnerships with licensed retailers provide consumers access to an in-app store, where cannabis may be ordered for pick up.
What Cannabis Retailers Should Know About Third-Party Delivery
Many expect DoorDash and Uber Eats to soon introduce full-blown delivery to any cannabis retailer that signs up for their model.
This will inevitably provide consumers with much more convenient access to recreational cannabis — but what will it do for retailers? As Eater described, these apps “subsidized the “true” cost of delivery, making it cheap for consumers while squeezing restaurants with high fees and pocketing courier tips.”
Will these convenient third-party services like DoorDash create the same burdens among cannabis retailers that restaurants have been experiencing?
Cannabis retailers must decide whether to sign up for third-party food delivery companies or incorporate delivery-friendly e-commerce platforms — like Buddi and Dutchie — into their roster of options. As cannabis is a highly regulated substance, it’s difficult to predict how the delivery wars will play out.
Cannabis delivery is here to stay, even if the best service option for retailers remains uncertain.