Starting a Cannabis Delivery Service in California

Woman reviewing paperwork with two team members

Starting a Cannabis Delivery Service in California

Jan 29 2020, by Jessica McElfresh in Marijuana Business

Starting a cannabis delivery service is one of the best ways to gain a foothold in the fast-paced California cannabis industry. But it’s not without challenges.

Delivery businesses can maximize profits by avoiding the costs associated with running a brick and mortar retail store. However, they also face unique logistical, security, and compliance issues. There are also certain communities that try to restrict cannabis delivery operations.

A successful cannabis delivery service depends upon a robust yet practical business plan, effective implementation, and compliance with legal and regulatory issues.

The tips below might help get your cannabis delivery service in the right direction.

Succeed with A Cannabis Business Plan

The first step in starting any successful business has a viable plan. Developing a concrete and realistic blueprint will help secure financing, avoid liabilities, and move through the state licensing and local permitting processes.

Your business plan should touch on the following areas of operation:

Financing Your Cannabis Business

The structure of your business will depend on how you raise capital. You can use personal funds, take out a loan, or secure investments. Investments always come with strings attached, so be careful about who you bring on board.

Cannabis Delivery Business Licensing and Permitting

Whether you decide to apply for a retailer non-storefront license or a standard retailers business license, submit yours to the Bureau for Cannabis Control.

In addition to your state license application, you will need to get your business permitted at the local level. Each municipality has its process and fees for business permits. You might want to check your city’s website for details.

Cannabis Delivery Business Formation in California

California offers several types of legal entities. You should choose a business entity that gives you and your partners adequate control, shelters you from liability, and provides tax benefits. Most small businesses choose to operate as S Corporations or Limited Liability Corporations.

Hiring Your Team

In addition to your investors, you will want to bring people on board to help manage the day-to-day operations. Making a poor choice at this stage can doom your business, so only hire or work with people who are trustworthy and professional.

Tech Solutions

In the delivery business, success can hinge on how effectively you use technology. You will need to set up a company-wide network and computer systems to manage and dispatch your deliveries.

Additionally, you will want to offer your clients a convenient, secure, and reliable application for ordering your products from their computer or smartphone.

Choosing Your Cannabis Delivery Business Facilities

Delivery businesses save a lot of money by avoiding the costs and burdens associated with running a storefront. Still, you will need secure and accessible real estate to store and manage your product. It may take time to locate the ideal property zoned for a cannabis business.

Market Study

You can have the most innovative delivery business idea in the industry yet still fail if you implement it in the wrong market. You will have competition, so identify your competitor’s market, reach, and potential weakness.

Promoting Your California Marijuana Delivery Business

Once you choose your market, you need to connect with – and retain – your customers. California strictly regulates cannabis-related advertising. A cannabis lawyer can help you understand your rights and responsibilities about advertising your service.

By considering, researching, and writing out these issues, you will already be in a position to get your business off the ground. Once you begin taking action, it’s important to remain nimble, since the laws and regulations that apply to the Cannabis industry are in constant flux.

Stay Compliant & Expect Change

The California cannabis delivery market could change significantly in the next year, posing potential compliance issues for businesses in this sector.

Currently, state law allows a duly licensed delivery business to deliver cannabis anywhere in the state–even within municipalities that have banned adult-use cannabis businesses. Several of these municipalities are now suing the State of California so that they can ban deliveries in their jurisdictions.

Depending on the outcome of these cases, you may need to completely overhaul your delivery business model.

Additional Guidelines to Follow

In addition to these potential restrictions, there are other guidelines your business must follow, including:

  • All drivers or couriers must carry a copy of the business license and an employee badge
  • All drivers must be over the age of 21
  • All vehicles must have a GPS tracking device
  • Drivers cannot carry more than $3,000 of product
  • All transactions are recorded into the METRC track and trace system

These rules remain subject to change on relatively short notice. A compliance failure can result in administrative fines, legal fees, and lost profits. A knowledgeable legal professional helps keep you informed of rule changes and practical strategies for compliance.

Contact a Cannabis Business Lawyer in San Diego

Make sure your cannabis delivery business is ready to make its mark on California. From business formation and development plans to compliance, a cannabis business lawyer is invaluable.

Call McElfresh Law today at 858-756-7107 to schedule a consultation with a San Diego cannabis lawyer.