Private-sector BC cannabis delivery launches, bringing new opportunities, challenges for retailers

New rules in British Columbia allowing privately owned cannabis retailers to offer home delivery take effect Thursday.

Industry sources say the move could help level the playing field between legal retailers and B.C.’s entrenched illicit market, which until Thursday enjoyed limited competition for home delivery.

However, several retailers said they’ve been scrambling to find solutions in the face of a short timeline, after the announcement of the new regulations was made less than one month ago.

Previously, only the government-run BC Cannabis Stores was allowed to offer home delivery.

British Columbia is the first large market in Canada to allow privately owned stores to offer delivery on a permanent basis. (Ontario has temporarily allowed privately owned stores to offer delivery as part of its COVID-19 protocols, but that measure has not been made permanent.)

Roughly 347 privately owned cannabis stores were licensed to open across British Columbia as of June 1.

Competing with B.C.’s illicit industry

Opening delivery to potentially hundreds of legal retailers will allow regulated businesses to compete more effectively with the illicit market, industry sources say, although some warned that delivery alone won’t get the job done.

The West Coast province has been a longtime hub of illicit cannabis activity in Canada. For example, B.C.’s biggest city, Vancouver, tends to lag behind other major Canadian cities in sales of legal cannabis.

“This is a tool we can give our sector to help compete with the unregulated market,” said Jaclynn Pehota, executive director of the Vancouver-based industry group Association of Canadian Cannabis Retailers (ACCRES).

ACCRES was consulted over the creation of the new rules.

Pehota said illicit sellers have migrated online after most gray-market storefronts were shut down.

“From an optics and public-perception perspective, this is a very important normalization step for the legal market,” she said.

“When you’re plugging in ‘cannabis delivery’ in Google and the only delivery results coming up are unregulated options, changing that experience at a very fundamental consumer level makes a big difference in B.C.”

Mike Babins, co-owner of Evergreen Cannabis in Vancouver, was originally opposed to allowing cannabis store delivery, partly because he’s worried a lack of restrictions on delivery distances could allow bigger retail chains with large delivery fleets to undercut independent retailers like himself.

Now that delivery has arrived in B.C., however, Babins plans to participate with a delivery service within a 20-minute radius of his store.

“We can’t be the only store not doing it,” he said.

Still, Babins warned that delivery, on its own, won’t be a magic bullet to defeat British Columbia’s longstanding illicit cannabis market.

“The black market’s going to disappear when enough people who continue to purchase on the black market try out legal products and realize that there’s been a lot of lies and it’s good product for a good price,” he said.

“It’s going to take years to do that.”

Short runway to delivery launch

Several B.C. retailers told MJBizDaily that the policy change allowing delivery came as a surprise, particularly because the announcement meant retailers had less than a month until the service could commence.

“We are absolutely all over delivery,” said Eleanor Lynch, chief operating officer at Kiaro, a retail chain with five stores open in B.C.

“But, of course, a three-week, four-week timeline is just not reasonable to bring anything of any kind of quality to customers in British Columbia.”

Lynch said Kiaro is waiting until fall to launch delivery, which will give the company time to design a service that’s “convenient, consistent and safe.”

Andrea Dobbs, co-owner of independent Vancouver cannabis store Village Bloomery, sees delivery as a good opportunity.

Like Babins, she expects the largest retailers to take advantage of the delivery regime.

Even so, Dobbs said, “people still buy delivery food from lots of little mom-and-pop cafes.”

“I’m not worried about being squeezed out, necessarily,” she added. “I’m not going to put all my eggs in one basket, but I’m going to do our best to serve the people who are close enough to us that it makes sense, and then we’ll grow that as we can.”

With so little time to prepare, Dobbs told MJBizDaily in late June, Village Bloomery was working to make key decisions about its delivery service, such as what kind of vehicle to use, whether to charge fees and how to approach security concerns.

Logistical challenges

Licensed B.C. cannabis retailers are not allowed to rely on third-party delivery services, a decision that Dobbs believes was “a little bit shortsighted.”

“If we really want to keep this organized and tidy and streamlined,” she said, “I think it’s best that we use a third party that’s designed for this kind of service.

Dobbs’ spouse and Village Bloomery co-owner, Jeremy Jacob, agrees, pointing out that the province’s own BC Cannabis Stores retailer uses expedited shipping via Canada Post and illicit sellers also ship through the mail.

Jacob is concerned that after retailers scramble to create their own delivery services, British Columbia might eventually relax the rules and permit third-party delivery.

“And then we’re going to be going, ‘Well, what do we do with all the infrastructure we created?'”

In a statement to MJBizDaily, B.C.’s Ministry of Public Safety and Solicitor General said requiring cannabis deliveries to be made by licensed retail stores’ own employees “provides accountability” in the context of one of the government’s key policy goals, preventing youth access to cannabis.

“The licensee will ultimately be accountable for ensuring that the driver follows all legislation, regulations and license requirements and is subject to the same requirements as all other cannabis retail store employees, including mandatory Selling it Right certification,” the statement noted.

For stores looking to offer delivery, Pehota expects getting insurance to be a big hurdle.

“The insurance sector wasn’t expecting this move, so they weren’t prepared with any cannabis (business) products for insuring the transportation of that good. That’s a big problem,” she said.

Kyle Mons, an insurance broker with Hub International Insurance Brokers in Victoria, British Columbia, doesn’t believe insurance will be a deciding factor for stores weighing whether to offer home delivery.

“In theory, (insurance) could prevent someone from doing delivery on July 15 if that conversation hasn’t been started yet,” Mons said.

“It’s not really the insurance side of things that’s making it a ‘yes’ or a ‘no’ as far as retailers wanting to deliver. It’s more the logistics of doing something like that, and the manpower to make it happen.”

Mons warns retailers to be aware of gaps in coverage where they could potentially be exposed, whether it be a liability claim or property loss.

Solomon Israel can be reached at [email protected].

Matt Lamers can be reached at [email protected].