In this guide, you’ll find the information you need to start and run a successful cannabis delivery service in California, from licensing and regulations to marketing and customer service, so you can hit the ground running with confidence, streamlined workflows and efficient operations.
1. Acquire a License, Educate Yourself on Local Regulations & Tax Structures
Applying and getting approval from the California Department of Cannabis Control (DCC) can be expensive to acquire with many hoops to jump through and delays on approval before you can become fully operational.
California Cannabis Retail license options:
Type 9: non-storefront retailer (delivery only). A non-storefront retailer sells cannabis goods to customers only through delivery.
Type 10: storefront retailer. A storefront retailer has a physical location where cannabis goods are sold. Storefront retailers can also deliver cannabis goods.
Microbusiness licenses: The Type 12 license is for businesses that do at least three of the following activities at one location:
- Cultivation – up to 10,000 total square feet
- Manufacturing – use of non-volatile solvents, mechanical extraction or infusion
- Distribution or distribution transport-only
- Retail – storefront or non-storefront
Be mindful of any regional ordinances that may apply as well. All businesses that are delivering cannabis products must comply with state regulations and obtain licenses from both state and local agencies. It’s important to be familiar with delivery regulations like GPS tracking and other inventory requirements on how products must be secured in the vehicle. Understanding the fine points of these requirements can help you avoid potential legal issues down the line, so it's important to educate yourself on these laws before getting started.
Keep in mind, after January 1, 2023, cannabis retailers are responsible for collecting and paying the cannabis excise tax to the California Department of Tax and Fee Administration (CDTFA). This is a major change to the way cannabis excise taxes are applied and collected, and it’s important you work with a cannabis CPA and choose a point of sale system that will help you properly collect and remit the correct tax payments.
2. Choose Your Delivery Model
Set up one or both of these methods to service your customers: Hub & Spoke Delivery is optimized for wider product preference whereas Dynamic Delivery is optimized for speed and the fastest delivery times. Consider these styles of operation before staffing and creating SOPs.
Hub & Spoke Delivery
Meadow's Hub and Spoke platform provides an advanced toolkit for delivery and pick-up from an inventory hub, like a dispensary storefront. Every step of the process flows together seamlessly, including online ordering, easy dispatching, routing and tracking of vehicles, notifications to customers, and auto-generated receipts and manifests.
In this model, vehicles serve as their own inventory stores, providing retailers with customized menus and campaigns tailored to specific geofenced areas. With just a car, driver and a few clicks of your mouse you can create an on-demand dispensary right in your geographic zones of choice. With the trunk size limits increasing to $10k of retail value, don’t miss out on the opportunity to reduce overhead and increase sales while making deliveries from the road without returning to the central inventory location each time.
Meadow offers both models in our comprehensive and integrated delivery platform, including logistics tracking solutions, customer communication tools and full compliance system provide a seamless experience that will help you expand territorially while reducing labor costs.
Meadow brings together best-in-class Hub & Spoke and Dynamic Cannabis Delivery (aka Ice Cream Truck, Trunk by Trunk) platforms, with logistics, tracking, customer communications, dispatching, geofencing, and full compliance built-in. With Meadow, you can:
- Purchase products based on real-time, accurate data with Insights and Velocity.
- Create purchase orders directly from incoming transfers with our Metrc Integration that keeps you compliant with ease.
- Sell cannabis on every channel and update your online menus everywhere, with just one click. Offer your customers an accurate, online menu for an easy ordering experience from any phone or computer. Integrate with Weedmaps and Leafly for increased sales opportunities and reduced manual labor.
- Create a fulfillment center within your shop where dispatchers can manage, receive and pack orders before delivery.
- Integrate with Onfleet for a streamlined, compliant delivery experience that includes SMS communication, driver tracking, and a full-suite of tools like driver tracking and route optimization.
- Communicate with your customers within Meadow to send a marketing text message reaching all previous shoppers who have opted in, or segmented groups. Send an order update or have a quick text conversation with one customer to ask questions about their order or let them know it's on its way.
- Account for driver sales and cash totals with several reporting options. Generate an in-depth Excel spreadsheet or view an easy to read summary.
3. Integrate Metrc to Maintain Compliance
Metrc is a cloud-based, government-mandated software system that is required for cannabis operators in the state of California. All licensed cannabis businesses must use Metrc, the seed-to-sale tracking system, when submitting sales data. Integrating this into your workflow is essential for success—and maintaining compliance. If you’ve never used Metrc before, you will be given access once your license is approved by the state. When you log in, they have training courses available, but if you’ve never used Metrc before, here’s a quick overview:
When you order a product from a distributor, there is a unique package ID associated with that batch of products. When a customer buys that product, that sale is reported to the state via Metrc. If your point of sale system requires you to manually update your Metrc account or check a cache of non-published sales, that means you are spending less time focusing on what matters most: serving your customers and growing your business. It’s essential to choose software systems that will help you streamline compliance and help you reduce overhead spent on manual labor.
Meadow's dispensary software helps you stay in step with constantly shifting regulations with:
- Built-In Safeguards: Embrace the ease and accuracy of streamlined sales, never worry about overselling, and confidently retain clean inventory data in all channels.
- Reduction in Inventory Discrepancies: With smart tools like cycle counts, our system helps you keep track of your inventory to maintain compliance, reduce loss, and avoid an audit.
- Active Account Monitoring: With daily Metrc monitoring, our team ensures packages are uploaded correctly and any false negatives are rectified.
- Accurate Metrc UID Labeling: Get the most accurate, package-specific labeling for your products with Meadow's proprietary labeling system. Keep track of every inventory item and make sure you're selling Metrc packages correctly—it has never been easier.
Read more about cannabis compliance software
4. Purchase Initial Inventory
You’ll want to get to know your customers to help you curate a balanced menu. Select your brands and distributors carefully. What are other shops in the area carrying? Who are you serving and where? Understanding your local customer demographics should play a huge role in your buying strategies. Do your research to see what products are already available locally and compare with the demographics you plan to serve.
Look for distribution partners to review the options of what products they stock. Don’t overstock inventory before launching — instead, purchase just enough products for initial orders until your sales start increasing. Once you’ve purchased your initial inventory, monitor sales with analytics and ordering velocity tools to identify out your top performing products. And most importantly, use your data to help ensure you never sell out of them.
For example, a perfectly balanced flower menu contains all strain options in every price range. If your menu primarily focuses on expensive top-shelf products, those bargain deal shoppers are not going to feel empowered to shop with you. The same goes for pre-rolls; you’ll want to carry infused and non-infused options, packs and singles of all strain dominations so you can reach every shopper, and then tailor your inventory strategies based on what moves. Single serve edibles create an opportunity for increased average cart size as a quick add on. How would CBN gummies perform at your store? What about high potency products? See what resonates with your shoppers, and what doesn't, and adjust from there based on data.
5. Map Your Delivery Zones
Where areas are you delivering to? You’ll want to look at local regions, see what other cannabis delivery services exist in those areas, and set up your business to focus on areas with the greatest opportunity. With Meadow, you can easily create customized delivery zones drawn to your exact specifications with their own taxes, operating hours, and delivery fees. With a few adjustments to your settings, you can quickly update delivery time estimates, active service zones, and order minimums by location to respond to changes in demand.
6. Hire Your Team & Set Up SOPs For Operations
Labor is going to be the most expensive cost for your operation besides inventory. It makes sense to start small by staffing only the essential personnel needed while expanding as demand increases over time.
Hiring your staff ultimately depends on the size of your operation. There are different roles you will want to consider for your team. You’ll need a General Manager, dispatcher, and several drivers. Some roles are run by multiple people, some are only one person. What is the model you’re executing? This will affect your hiring and SOPs.
How many deliveries are you making per day? Once you’re up and running with a driver or two, reference real data on order volume per day then per hour. Use that information to schedule appropriately. What is the average size of those orders, and what is the respective margin? How much revenue can you devote to labor? Meadow helps you make important business decisions based on actual data—available within just a few clicks.
Take the time to customize Standard Operating Procedures (SOPs) and make sure every detail is taken care of.
Things to consider:
- Hours of operation and scheduling
- Store policies
- Security measures and theft prevention
- Cash management
- Handling of products
7. Practice Inventory Management Strategies
Make sure there are protocols in place for properly receiving goods from distributors and transferring them into storage or onto shelves quickly—this is important not just from an accuracy standpoint but also from a customer service perspective. Complete regular cycle counts not only to stay compliant with the DCC, but to also create a seamless ordering experience for your customers. There is nothing worse than having a customer order a product that is available online but is not physically at your store; this does not create a good customer experience. By setting up proper inventory management best practices, you’ll reduce inventory loss and delight your customers. Get our guidebook to inventory management best practices.
Be sure you’re following FIFO Best Practices; First In, First Out (FIFO) is an inventory management best practice to ensure that the oldest inventory gets sold first.)
8. Build Data-Driven Marketing & Promotion Strategies
Leverage social media platforms like Weedmaps, Leafly, Instagram or Twitter, create engaging content on YouTube or TikTok; provide strategic discounts & promotions, explore local partnerships or invest in local billboards.
The cost of acquiring customers will always be more expensive than retaining existing customers. If you do not offer a reason for a customer to return to your store, you will be spending more money on first time shoppers. Opportunities for customers to return include offering discounts in a way where customers aren’t always expecting a deal, offering a loyalty program based on dollars spent on previous purchases, and providing consistently excellent customer service.
Once you’ve established your customer acquisition strategy, it’s easy to manage that data in Meadow. Review where orders are coming from what channels. Record where customers are hearing about you, review what they’re buying, consider what you’re spending on that strategy, and make smarter decisions based on real data. Quickly determine what is working and what’s not.
One key to success is having effective marketing strategies in place. You need to find innovative ways to reach new customers, but we can help you keep existing customers coming back for more with our cannabis marketing tools. Put your customer data to work by targeting customers using SMS marketing segments; layer conditions like average order value, customer demographics, and order history to send targeted text campaigns that boost ROI. Tie this in with your loyalty program and watch the orders roll in.
Read more: The Power of Marketing Segments Read more: 7 Effective Ways to Bring New Customers Into Your Dispensary
9. Make It Easy to Sell Online
What is your plan for e-commerce? With Meadow, you can embed your online menu on your own website with a single line of code. Customize the appearance of your menu, create product descriptions and more. Customers can quickly search for the item they want, browse all of your products, review their own order history, and check-out in a breeze. When orders are placed, they will seamlessly flow directly into Meadow to be processed by your team. The menu and inventory is also integrated with other marketplaces like Weedmaps, Jane and more.
10. Understand What Your Customers Want
Always focus on keeping customers happy by understanding what their preferences are; collect feedback regularly and act upon it—this will ultimately result in higher sales numbers & more satisfied clients. Read more: How to Identify Customer Purchasing Trends & Next Steps
Running a successful cannabis delivery service in California requires knowledge of compliance regulations, effective marketing strategies, and a focus on invnentory management, expansion and customer retention. By following these steps, you'll be well on your way towards unlocking success for your cannabis delivery business.
Read more about Meadow’s Cannabis Delivery Software