A handful of cannabis brands have begun selling products directly to customers through their websites, effectively bypassing the traditional brick-and-mortar retail shops and delivery companies that have become gatekeepers for legal marijuana.
The direct-to-consumer approach is being employed by some of the biggest marijuana brands in California, including CannaCraft, Cann Social Tonic, Kiva Confections, Old Pal and Roach.
While the trend appears to be taking place primarily in California—the largest U.S. marijuana market and the one with the most established delivery infrastructure—insiders expect the practice to spread quickly to other states that allow home delivery.
“The (COVID-19) pandemic made (cannabis delivery) practically a necessity. As people use Amazon more and more … direct-to-consumer made a lot more sense,” said Kenny Morrison, president of the California Cannabis Manufacturers Association and CEO of marijuana manufacturing company VCC Brands.
“When the pandemic hit, it was like, ‘We’d better step on it.’”
Different Options
Brands have several options to set up direct-to-consumer infrastructure, including obtaining delivery licenses or partnering with existing marijuana delivery businesses. But Morrison said the key selling point for brands is twofold:
- It allows consumers to shop the brand’s entire line of products—not just what retailers or independent delivery businesses choose to carry.
- Brands can collect and retain customer data, providing valuable business intelligence for product development.
“There are different ways of achieving direct-to-consumer (sales) that are compliant,” Morrison said.
Oakland, California-based edibles brand Kiva, for example, is reportedly contracting with licensed delivery company Grass Door to fulfill customer orders placed through Kiva’s website.
Others, including Venice, California-based cannabis brand Old Pal, have partnered with delivery businesses such as Amuse to create brand-specific websites for “super fans,” as Old Pal CEO Rusty Wilenkin referred to the company’s loyal customers.
“A store might not carry all of your SKUs, whereas your online experience carries all of your SKUs,” Morrison said. “People who are big devotees may go: ‘I had no idea they had all these flavors. I’ve got to try them all.’”
Reaching super fans has been a primary driver for Old Pal, which specializes in white-label flower, pre-rolls and vape cartridges.
Wilenkin said Old Pal’s online ordering function went live in late June, and he believes it will increase sales by giving consumers more options that are brand-specific.
‘Everyone Is Doing It’
One person navigating the direct-to-consumer trend is Roie Edery, co-founder of California marijuana delivery giant Eaze.
Edery launched Ginger, a direct-to-consumer platform and delivery service for marijuana brands, in June. One of the company’s selling points is that brands will be the sole owners of all consumer data obtained through online transactions.
“I’ve pitched close to 30-40 brands in the past month, and nobody has said, ‘Yeah, no, not interested.’ Everyone is like, ‘Hey, great timing, we just started thinking about this,’” he told MJBizDaily. “It’s truly an open field right now. Out of the top 100 brands in California, only about 5% are doing (direct-to-consumer sales), and the other 95% are thinking hard about it.”
NEXT: Cannabis retailers share lessons learned during transition from medical to adult-use sales
