Massachusetts cannabis delivery firms with equity permits face hurdles

(This story has been updated with revised quotes from Christopher Fevry to clarify certain matters. The story also was corrected to note video footage must be kept for up to 90 days.) 

Since launching last July, Christopher Fevry, co-founder and CEO of Boston-based cannabis delivery service Your Green Package, has been busy.

With a Massachusetts courier delivery license – which are reserved for minority entrepreneurs under the state’s social equity program – the company already has 16 delivery vehicles on the road and more than 70 employees.

“We’re creating jobs,” Fevry told MJBizDaily. “Seventy percent of our staff is made up of people of color, women, LGBTQ+ identifying people, veterans with disabilities. … Our entire management team is made up of people of color.”

On April 20, the unofficial cannabis holiday, Fevry and his team delivered a whopping 240 orders.

Despite the company’s successes, several challenges – from onerous state regulations to implications of the COVID-19 pandemic – have made it difficult to stay afloat, much less turn a profit.

With other jurisdictions such as Denver reserving delivery licenses for those in social equity programs, the challenges facing Massachusetts cannabis delivery companies could serve as a warning.

The two-person rule

Massachusetts made headlines in 2020, when it became one of the only states in the nation to set aside marijuana-delivery licenses exclusively for minority entrepreneurs.

But it hasn’t been easy. The costs associated with running a delivery business in the state are high:

• Each vehicle must be commercially insured and owned by the delivery company.
• Cars must be outfitted with both GPS tracking and cameras – the latter must retain up to 90 days’ worth of footage at a time.

And even though the identification of every shopper is uploaded to a computer system when an order is made, delivery employees also must wear body cameras in case something goes awry during a job.

“We recently had to spend $33,000 on new cameras,” Fevry said.

“We’re really grateful to be working with retailers that see what we’re trying to do, and they’re definitely helping us. However, with two drivers the delivery fees end up being really high for consumers and make it difficult for smaller retailers to offer the service”

Fevry hopes that one of the most difficult and expensive regulations – that two employees must be in each delivery vehicle – will change.

If one person could make each delivery, it would reduce payroll by half, from $34 per hour for two people down to $17 an hour for a solo driver.

The two-person rule comes with the added cost of insuring both drivers.

Added risks

And then there are the costs of workers compensation, which are higher for cannabis delivery employees, who are placed in the “risk pool,” along with employees of casinos and strip clubs.

Having two people in each vehicle was extra-difficult through the pandemic.

“Say one driver catches COVID or calls out,” said Fevry. “The other driver has to go home without pay. When they go home without pay we just feel so bad. It also affects staff retention because people need job stability.”

Fevry and other operators applied to the state’s Cannabis Control Commission Massachusetts to have the rule waived.

But all of the businesses received a response rejecting their applications.

Shaleen Title, the CEO of Parabola Center, a drug-policy think tank, served on Cannabis Control Commission Massachusetts between 2017 and 2020.

In an email to MJBizDaily, Title said that she voted against the two-person-per-vehicle rule when the regulations were being written, but that other members’ concerns about employee safety and potential robberies won out.

“I think the delivery rules were based more on a general stigma around marijuana, marijuana users and marijuana businesses than on social equity in particular,” Title wrote.

“And there is some rationality to that stigma, because no regulator wants to be blamed for being too lax if someone gets hurt.”

At the same time, Title said the licensing program didn’t necessarily account for the wide breadth of skills and competency of entrepreneurs coming into the program.

“There may be a tendency to stereotype social equity licensees as a monolith when, in fact, they have a rich diversity of different business backgrounds, acumen, resources and vision — any good licensing and social equity program should account for that,” Title wrote.

Legislation could ease pressure

Updated state cannabis legislation was approved by the Massachusetts Senate in early April and is now being debated in the House.

Much of it contains language designed to assist social equity entrepreneurs, such as reducing high municipal fees and creating a fund to assist with raising capital.

Shawn Collins, the executive director of the state’s Cannabis Control Commission, said that while he is aware of the issues and communicates frequently with operators, it’s too soon to have collected the appropriate data to demonstrate how regulations need to shift.

“It’s really early,” he told MJBizDaily in a telephone interview.

“It’s been less than a year. It’s a small universe right now, and the three-year exclusivity period is not even a month old, as far as the first delivery operator becoming operational. Hopefully, as we get some additional operators in, we can really start to do some data collection around the success they’re hopefully going to find.”

Collins said that in March, the commission discussed what its timeline would be to address further amendments to regulations.

“The timeline is really between now and, let’s say, August-September, just to offer some buffer (between it and the legislation currently in the works),” he said.

“And then there would be analysis, research and putting some work in behind the scenes meeting with stakeholders, and then really starting to put pen to paper on ideas.”

In the meantime, Fevry said he plans to add B2B wholesale transportation to what he has already grown.

“If you’re just a delivery company, you’re not going to survive,” he warned. “After a period of time, you’re just going to get eaten up. So you need to have multiple streams of streams of revenue, and you need to diversify.”