All retailers have peaks and valleys on their calendars, but cannabis dispensaries may be the only retailers gearing up for their biggest weekend of the year now: April 20 (also colloquially known as 420) is, for lack of a better description, a cannabis holiday.
In the nine states and District of Columbia where recreational use of the plant is legal, the celebration presents a particularly tough challenge as the industry matures and customers expect more of the perks they are used to getting from traditional retailers. Same-day delivery is essential, said Robert Braun, senior operations manager of retail and delivery for Caliva, a San Francisco Bay area dispensary.
"Delivery has become such a crucial part of consumers' mindset these days — not only with cannabis but in retail as well," Braun told Supply Chain Dive.
Braun said two key elements of a successful 420 are proactively planning for and managing demand and actively tracking deliveries.
"We do some demand planning, we do some hiring, we take a look in the mirror and make sure best practices are in place," said Braun of its 420 preparations.
Caliva works with Onfleet, a last-mile software provider, on route planning and smart digital processes, seeking to shave off minutes for each delivery.
Cannabis dispensaries were early adopters of the software, Onfleet CEO Khaled Naim told Supply Chain Dive, in part, because of the compliance burden around delivering cannabis.
Onfleet suggests dispensaries up their delivery capacity by 120% during the holiday. "Obviously that's a tricky thing to do," said Naim.
Boosting delivery capacity to meet higher than usual Friday night demand isn’t a matter of using a crowdsourcing app or hiring contractors. California law requires anyone transporting cannabis to be fully employed by the dispensary.
State and city regulations also dictate vehicles that can be used and how the cannabis must be stored en route and while being carried from the vehicle to the delivery. The product must be under lock and key and in a childproof bag until the identification of the buyer is verified (sometimes visually, sometimes with an ID scan) and the envelope is unlocked so the product can be handed over.
Caliva not only sells its own brand of cannabis flower, vapes and oils, but also handles deliveries in the Bay Area for Eaze, a major cannabis online marketplace. Roughly 180 of Caliva’s 500 employees are on the delivery team.
Caliva uses extended delivery hours, marketing and discounts to try to spread demand throughout the week. Friday will likely still see the heaviest delivery volume, but Onfleet data shows cannabis retailers on the whole are getting better at spreading demand throughout the week, and consumers are taking the hint, ordering earlier in the week and creating a duller 2- or 3-day spike leading up to 420.
For traditional retailers, a network of third-party delivery partners tends to be the most cost-effective choice for same-day delivery. This model provides the flexibility to increase deliveries to meet demand without paying for unused capacity during slower times.
Since cannabis companies are required to keep their delivery drivers on staff, one might conclude the financial burden would be prohibitive in slow times. Braun emphatically explained this is not the case.
When asked if delivery capacity ever exceeds need, he laughed and said, "We are always in the market for more drivers."
Although the industry is maturing quickly, Caliva at four years old is considered a veteran organization. Every 420 since legalization offers dispensaries another step toward more advanced data analysis.
"It's going to be a few years before we have really, really solid numbers to be able to do traditional demand planning," said Braun.