Multistate operator’s cannabis delivery partnership convinces executives to expand

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Image of residential delivery service

MariMed partners with Little Dog Delivery to offer cannabis-delivery services. (Photo by Little Dog Delivery)

(This story is part of the cover package in the October issue of MJBizMagazine.)

When Massachusetts-based multistate operator MariMed decided to launch a delivery service in its home state two years ago, company executives started studying other cannabis carrier services to become experts on the subject.

They considered launching a distribution service from scratch and also looked at acquiring a delivery company in Massachusetts before deciding to invest in Little Dog Delivery.

The state had granted a social equity delivery license to Sebastian Pollack, a senior production manufacturing administrator at MariMed, and the two businesses decided to create a strategic partnership.

According to U.S. Securities and Exchange Commission filings, Pollack owns 51% of the company and MariMed owns 49%.

MariMed’s hope for the partnership was for Little Dog to be an extension of Panacea Wellness, the three retail stores MariMed operates in eastern Massachusetts.

Today, Little Dog has three delivery vans – one operating out of each Panacea Wellness store – and does business as Panacea Delivery Powered by Little Dog.

“We want customers to understand that it’s an extension of Panacea and give credit to the underlying service,” said Ryan Crandall, chief revenue officer at MariMed.

The vans deliver within a 25-mile radius of MariMed’s three stores, which allows them to cover eastern Massachusetts from the New Hampshire border to Cape Cod. The delivery fee of $10 is waived for orders of more than $200.

Costs of operating the delivery business include outfitting and maintaining the vehicles.

For example, Massachusetts requires cannabis delivery vehicles to have GPS and a cage that separates the marijuana products in the back from the driver in front. The state also requires that the driver be accompanied by a second employee in the passenger seat.

Has the investment been worth it?

“We’re still seeing, every month, transactions go up. … We see the delivery consumer as a high-value consumer,” Crandall said. “Typically, the average order value is higher for the delivery consumer.

“We also believe that they’re a pretty sticky consumer, and we believe that if we provide a high level of service to these folks that we’re going to potentially create a stickier consumer than somebody who comes into the retail store.”

To promote the delivery business, MariMed partnered with yoga studios and other local businesses, providing them with discount codes to share with their own employees.

Keys to success in marijuana delivery include being on time, providing good communication, discounts and loyalty points, Crandall said.

The Massachusetts experiment went well enough that MariMed launched delivery in Delaware, another market where it operates.

Unlike in Massachusetts, MariMed launched the Delaware delivery service from scratch as part of its existing medical retail model rather than partnering with or investing in an existing delivery business. Delaware lawmakers legalized recreational marijuana earlier this year.

Crandall said that while MariMed tries to keep standard operating procedures (SOPs) between the delivery services similar – each dispensary in Delaware also has one vehicle that delivers within a 25-mile radius – there are some differences.

For example, Delaware requires only one employee per delivery vehicle rather than a driver and second person, as Massachusetts does.

MariMed doesn’t yet have delivery in Illinois, the third state in which it operates. Crandall believes MariMed will eventually offer delivery for Illinois consumers, and he wants to be ready when that happens.

“We have created a delivery organization within retail and have subject matter experts for delivery” who are tasked with studying regulations, implementing timelines and gauging profitability, Crandall said.

“We look at all of those things and then decide whether or not it makes sense for delivery in a given state,” he said.

“I think it’s going to be a growing piece of the cannabis business.”