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The Importance of Regulatory Compliance for Cannabis Delivery Providers

By Katherine Lehman
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Cannabis retail is becoming more and more commonplace in the United States. According to a consumer trends survey by North Hollywood-based cannabis brand Ganja Goddess Inc., 90% of respondents said they used online ordering and delivery services to purchase cannabis. Around 60% reported that online ordering and delivery would continue to be their preferred method of purchase post-pandemic. The pandemic hugely impacted the delivery market, pushing sales up 300% by the end of 2020. However, in a lot of states, brick-and-mortar stores remain illegal. Delivery services allow cannabis companies to reach customers in areas where dispensaries are not allowed. While cannabis delivery is an incredible opportunity for companies to reach new customers they would not otherwise be able to, following the law can be difficult in an environment with a patchwork of local laws and changing regulations. So, what do you need to know about regulatory adherence to stay ahead of the curve?

Delivery services allow cannabis companies to reach customers in areas where dispensaries are not allowed.

The short answer is it’s complicated. Each state has dramatically different laws regarding cannabis delivery, and laws can vary by jurisdiction. Some states allow full access to adult use cannabis, some only allow medical cannabis and some completely ban delivery, making it tricky to adhere to the law. There are currently 6 states that allow cannabis delivery: California, Colorado, Massachusetts, Michigan, Nevada and Oregon. Others like New York are taking the steps to allow delivery with careful regulation. With more states legalizing cannabis sales every year, delivery laws in existing delivery states are evolving and adapting to licensing changes. California introduced major changes to laws on January 1, 2023. These changes included allowing drivers to carry double the amount of product (up to $10,000 worth), no longer requiring vehicle inventory to be allocated or pre-purchased, and allowing curbside delivery for all licensed retailers. These changes to the largest cannabis market in the world showcase how much delivery is still changing and being regulated, and stresses the value of staying up to date on the latest laws and regulations.

Another aspect of delivery to consider is licensing specifically for delivery. Like regulations, licensing varies state to state and jurisdiction to jurisdiction. For example, in Massachusetts there are two types of licenses. Licensed providers must register as either a Marijuana Courier or as a Marijuana Delivery Operator. Couriers are allowed to earn a fee for delivering cannabis products from licensed retailers to consumers, and operators may buy and sell cannabis products wholesale, as well as deliver them. In Colorado, delivery requires two permits, however, a holder of both permits can still get in trouble if they deliver to an area or jurisdiction that has not affirmatively permitted delivery.

Although highly dependent on local, state and federal laws, the cannabis delivery space shows no signs of slowing down anytime soon.

A big win for delivery services came when Apple allowed cannabis delivery apps on iPhones in June 2021, with downloads restricted to states that allow adult use cannabis. Even then, a lot of individual counties or cities within adult use states still prohibit the delivery of cannabis. This patchwork of regulation makes adherence tricky, and makes certain software features like real-time driver tracking and proof-of-age verification crucial to delivery operations. With competition increasing it’s even more important for cannabis delivery operators to provide an outstanding experience for customers every time. One way they can achieve this is by improving their cannabis delivery software. According to cannabis last mile delivery management software provider Onfleet’s study, 72% of cannabis delivery operators said a delivery management tool was “critical to running delivery operations.” Delivery software also helps companies stay compliant with local regulations. Route planning allows your drivers to stay within legal zones. These platforms can also capture images of state-issued ID for age verification and record customer signatures so drivers can focus on ensuring customers are getting the best experience.

Although highly dependent on local, state and federal laws, the cannabis delivery space shows no signs of slowing down anytime soon. And if (or when) cannabis is legalized on a federal level, it would pave the way for major corporations like Uber and Amazon to enter the space – Uber is already taking steps in Canada. Whether that’s a good thing is up for debate, but delivery certainly isn’t going anywhere anytime soon. Depending on regulations and the market’s next moves, we will see a variety of delivery models and services in the coming years. Delivery services are the future of cannabis, providing customers with ease of access and personalized deliveries as well as benefiting retailers by lowering overhead costs and providing options for easy, quick customer service. Just make sure to check local laws before you confirm a delivery order, even in states where cannabis is legal.

Thinking of Starting a Cannabis Delivery or Transport Business? Here’s What You Need to Know

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Ask any cannabis connoisseur, and they’ll likely tell you that cannabis delivery services have been around for a long, long time. Given the distancing requirements of the COVID years, the increasing number of medical cannabis patients who need or would like cannabis delivered to their door and the surge in recreational adult use sales, cannabis delivery is coming out of the shadows and into the legal cannabis industry.

Proponents of cannabis delivery say that creating a legal structure and guidelines that allow cannabis home delivery encourages people to buy from legal sources rather than the legacy market. In some cases, it’s a way to entice legacy cannabis delivery operators to transition to the licensed and regulated market. While many states remain hesitant to allow adult use cannabis delivery, some do, and others have taken the first step, allowing delivery to registered medical cannabis patients and caregivers.

Where is Cannabis Delivery Legal?

According to Cannabis Business Times, states that permit medical cannabis delivery as part of another license type, retail, for example, or with a specific delivery license include: Arizona, Arkansas, California, Colorado, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, New York, Oregon, Rhode Island and Vermont. Complex reports that delivery service is legally available without any restrictions to anyone 21 years or older in California, Nevada and Oregon.

Medical or adult use, there are restrictions on where cannabis can be delivered, even within states that allow it. For instance, you can’t legally deliver cannabis to college or university campuses. Although many people still discreetly deliver and receive cannabis products on campuses, it’s illegal to do so since cannabis is a federally controlled substance and higher education institutions that receive federal funding must prohibit its use and distribution.

It’s noteworthy that some states without legal cannabis delivery regulations have a “loophole” through which some delivery businesses operate. Gifting, for example, is an established, though not entirely legal, delivery practice. According to NJ.com, New Jersey falls into the gifting loophole category:

Licenses to sell legal weed are still months away, but there’s a handful of entrepreneurs coming into the scene through a possible legal loophole — “gifting” cannabis. It’s a scheme popular in other states and particularly in Washington, D.C. A company lets you buy cookies, snacks or brownies that come with sticker shock of $50 or more. But when they make the delivery, it comes with a suggested gift: maybe a cannabis edible or an ounce of flower.

 Although many underground businesses thrive in the Garden State’s “in-between” market, NJ.com also reports that gray market operators have faced legal penalties and even jail time.

Why Are Cannabis Delivery Services Popular? 

Cannabis delivery services have a rich cultural history in the underground market. Rather than making a transaction in public, home delivery provides a more intimate and secure way of selling cannabis to consumers. 

Cannabis delivery has skyrocketed in popularity due to the COVID-19 crisis. MJBizDaily reports that online cannabis orders boomed during the pandemic, increasing the need for cannabis delivery services. 

Historically, cannabis delivery services also help registered medical cannabis patients receive access to their medicine since their disability or chronic condition might prevent them from leaving the house and visiting a dispensary. This can be especially true for seniors, even if they aren’t a registered patient, but live in a state with adult use cannabis.

What’s the Difference Between Cannabis Delivery and Transport Licenses?

There is real confusion surrounding the differences between delivery and transport licenses.  Basically, delivery licenses are B2C (business to consumer), and transport licenses are B2B (business to business).

Cannabis delivery and courier licenses allow licensees to deliver cannabis products directly to patients, caregivers, and in some states, consumers. While the name of the license differs depending on the state in which you seek to operate, delivery licenses tend to allow operators to act as a retailer without a traditional bricks and mortar location. Delivery licensees purchase and store wholesale cannabis products and sell them via the delivery model. Couriers, however, are traditionally hired by retailers as their delivery arm. In this model, the retailer takes the order, and the courier delivers, like Door Dash or Uber Eats. One key difference between a delivery and courier license is the significantly lower cost of entry for couriers as they don’t have facility, inventory, or storage costs, and generally have lower operational expenses.

But what about transport licensees? Rather than delivering to individuals, transport licensees typically deliver cannabis products between licensed cannabis facilities, such as a cultivator or manufacturer to a retail dispensary or testing facility.

In Massachusetts, there are three delivery and transport licenses (courier, delivery operator, and transporter) as well as a delivery endorsement that allows certain licensees to deliver directly from a licensed establishment to consumers.

The first step to operate a cannabis delivery or transport business is determining whether you want to deliver for retail establishments, buy product and deliver directly or transport cannabis between licensed cannabis businesses. Each model has its plusses and minuses, just depends on what you want. It’s important to note that Massachusetts delivery operator licenses are currently reserved for social equity participants, as reported in the Milford Daily News:

“The new “marijuana delivery operator” licenses…will be available exclusively to participants in the CCC’s social equity program and economic empowerment applicants for the first three years.”

Once you decide which type of license you want, the next steps are first to familiarize yourself with your state’s cannabis rules and regulations, and then to complete and submit a license application.

How to Apply for a Cannabis Delivery or Transport License

While the delivery and transport license application process looks different in each state that allows them, all states require applicants to be 21 years of age or older and most require operators to be current residents of the state where they intend to operate. There are also required, non-refundable application and licensing fees. While these fees are not insignificant, the good news is that they tend to be lower than the fees required for other cannabis business license applications.

Since compliance with state rules and regulations is a condition of licensure, licenses are awarded to some or all applicants that meet the application and regulatory requirements. Once awarded, cannabis delivery and transport licensees must maintain compliance or risk hefty fines and/or face a temporary or permanent shut down. One regulatory example is that delivery operators must digitally verify any and every customer’s photo ID before and when a cannabis product is delivered to a recipient; missing this critical step can put your businesses at serious risk of legal and financial consequences.

How to Maintain Compliance Once You’re Licensed

Maintaining compliance for any cannabis business can be challenging. There are strict guidelines on marketing and advertising, security, employee training, inventory management and more. Additionally, there are restrictions specific to cannabis delivery services, particularly limits on how much product can be delivered per order/transaction.

What does cannabis compliance specifically look like for cannabis delivery licensees? For one, all merchants must verify ID before an order is fulfilled. In states with medical cannabis, this would require medical card ID verification. Otherwise, for adult use markets, a driver’s license or other state-issued photo ID with a valid birthdate is acceptable. Some states require recipients to sign a manifest or receipt acknowledging that they accepted the cannabis order and for the licensee to maintain a record of that acknowledgement for a specified number of years.

There are many other regulations that delivery operators must adhere to and many ways to stay up to date and compliant. Tasking a staff member to handle all things compliance is one option. Another is hiring a compliance professional to set up and oversee a compliance operating system and/or partnering with a compliance software solution provider.

Cannabis delivery services can be very profitable. In comparison to other cannabis licenses, they don’t require as much finance capital to get started. Once a license is obtained, your priority will turn to maintaining compliance. Too many delivery services exist in a precariously legal gray area; don’t let yours be one of them.

Connecticut Legalizes Cannabis

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Update: Governor Ned Lamont has signed S.B. 1201 into law, officially legalizing cannabis in the state of Connecticut

On June 16, 2021, the Connecticut House of Representatives voted to pass their version of S.B. 1201, a bill that legalizes adult use cannabis. Following the House’s approval of the changes, the bill made its way back to the Senate on June 17, where they approved all changes. It now heads to the Governor’s desk, where Gov. Ned Lamont is expected to sign it into law.

Connecticut Governor Ned Lamont

With Gov. Lamont’s signature, Connecticut will become the 19th state in the country to legalize adult use cannabis. The bill is slated to go into effect on July 1, just a couple of weeks away.

Come July 1, adults in Connecticut can legally possess up to 1.5 ounces of cannabis in public and up to five ounces at their home. The bill allows for adults to grow at home, just not until 2023 unless you are an existing patient registered in the medical program.

According to the Marijuana Policy Project (MPP), the bill will expunge cannabis records for low-level crimes and puts “the bulk of excise tax revenues into a Social Equity and Innovation Fund, which will be used to promote a diverse cannabis industry and reinvest in hard-hit communities.” Half of the cannabis business licenses issued will go to social equity applicants that can receive funding, workforce training and other types of assistance from the program.

Connecticut state flag

DeVaughn Ward, senior legislative counsel at MPP, says the bill includes provisions to repair harm done by the prohibition of cannabis. “The Connecticut Legislature’s commitment to legalizing cannabis through a justice-centered approach is commendable,” says Ward. “For decades, cannabis prohibition and criminalization has harmed some of the state’s most vulnerable communities. This bill not only ends this failed and unjust policy, but it also includes measures that will work to repair the harm that it has caused. This state will be a model for others to follow.”

The bill includes strong protections for employees, tenants and students by limiting discriminatory actions based on positive drug tests. It also dedicates 25% of tax revenue from cannabis to go toward mental health and substance use treatment.

Interestingly, the bill has a THC cap in it. Cannabis flower sold at dispensaries is capped at 30% THC content and concentrates (except for vape carts) are capped at 60% THC. To read more about the nuances of the legislation, the MPP has a helpful summary of the bill you can find here.

Soapbox

Home Office HACCP During COVID-19

By Nathan Libbey
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With much of the world shutting down and many of us forced to take refuge behind our own doors, we have some time to reflect on what actions led to this. There has been, in my opinion, a clear disconnect between our actions and health outcomes. We need to bridge this gap; We now have a moment to build that bridge. We can start by reassessing our endpoint measurement of health and disease and focusing on what leading measures will impact our lagging results. Think of it as HACCP-lite or home office HACCP. Small changes in the way we think and behave can lead to significant change.

Lagging measures – Lagging measures make great headlines and typically measure an outcome. These are easily quantifiable and therefore receive a good deal of the focus.

Leading measures – Leading measures are inputs that happen during the process and in advance of an outcome.  Leading measures are often difficult to quantify.

This week, Nathan started a “Germ Jar” activity with his kids to track washing.

We are currently focused on the lagging measures for a communicable disease, COVID-19. Illness and death numbers stemming from the pandemic continue to rise, as is expected with more available testing. It is easy for us to dwell on these numbers as they climb and dominate the news. A study in Australia last decade indicated that just over 1% of those experiencing flu like symptoms sought treatment and eventually got tested. I’m not going to use the tip of the iceberg cliché, but there it is. Focusing on the rapidly rising rates of COVID may be easy to do, but it won’t help our future selves.

What we should be doing during this time, however, is looking at our own leading behaviors and how changing them can help prevent this situation from reoccurring.

Here are some inputs we can rethink:

  • Hand washing – The average American uses the restroom 6-7 times per day. This week I started a “Germ Jar” activity with my kids (spring break week!) to track washing. If we wash our hands every time we use the restroom and every time we eat, that’s roughly 10X per day. Our leading indicator of household health, then, is 10 hand washes per day. This principle can, and should be applied to workplaces, including schools, airports and hospitals. What if we had mandatory handwashing prior to airport security and boarding? My estimation is that data would indicate a sharp decline in illness and transmission rates.
  • Disinfecting/Sanitizing – Similar to hand washing, cleaning surfaces serves as a vital indicator of future health. Examples, such as this District in Freeport, Il, indicate that increasing frequency of disinfecting can lead to a dramatic decrease in numbers sick. In my new office setting, we have set a goal via the Germ Jar of 3 times per day wiping down high touch surfaces. As we reenter close-proximity society, we need to have a better understanding of what high touch surfaces are, both for those who are tasked to clean them, as well as those that are doing the touching. Reduction of touches coupled with above washing behaviors post-touch can help prevent disease transmission.

    Nathan’s daughter adding to the Germ Jar
  • Monitoring – Lastly, we need to do a better job at monitoring ourselves and our environments. In my new office, we have enacted a temperature check every morning and night. If we practiced symptom reporting (coughing, sneezing, chills) and monitored temperature in other settings, such as offices and schools, could we start to see pockets of infection and trends? Taking it a step farther, while we invest a tremendous amount of time and money into protecting our food supply from foodborne illness, we rarely discuss preventive monitoring for other diseases, such as influenza and now COVID-19. Technologies are rapidly coming available that will allow us to perform quick diagnostics of both individuals and environments. If we were to monitor the air and surfaces of a school nurse’s office, would we find data that could prevent transmission of disease? Can we transfer HACCP-lite to additional (all) settings?

Over the next weeks and months, we are going to be inundated by the spike in COVID illnesses and deaths. During this time, it is on each of us to realize how our past behaviors led to the state we are in. When we return, viruses will not be absent from the world, our hospitals, schools, offices or our bodies. We can, starting now, begin to measure and change our leading behaviors and begin to shape a healthier future.

Biros' Blog

Regulate Marijuana Like Alcohol? Not So Fast

By Aaron G. Biros
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You’ve heard it in a lot of campaigns to legalize cannabis on a state level and even as the name of a bill in Congress for legalization on the federal level. The Marijuana Policy Project through their campaigns in several states, along with activists, politicians and lobbyists, have used the phrase “Regulate Marijuana Like Alcohol” as a rallying cry to pass legislation reforming cannabis laws. This isn’t an attack on them; those campaign names serve the cause well, moreover it was the name of successful campaigns in Massachusetts, Maine, California, Alaska and Colorado among others. It is a relatable and fair comparison, helping to normalize the concept of adults using cannabis in a legal environment.

But that feeling of validation is short-lived after lawmakers write the actual regulations. In reality, I don’t think a single state can confidently say they actually regulate cannabis like alcohol. Most states do not allow public or social consumption of cannabis; many people that would like to enjoy cannabis in a social setting are restricted to the confines of their home.

420 Rally at Civic Center Park, Denver, CO.
Photo: Cannabis Destiny

Voters in Colorado passed Amendment 64 in 2012 with this language in the very beginning of the bill: “In the interest of the health and public safety of our citizenry, the people of the State of Colorado further find and declare that marijuana should be regulated in a manner similar to alcohol.” If you look closely, you can see how important phrasing is when it comes to the specific regulations. The key words here are “a manner similar to alcohol,” not exactly like alcohol. That language is critical to understanding how regulators address the double standard.

The most obvious way lawmakers regulate cannabis like alcohol is through a tiered system of license holders: manufacturers, distributors or wholesalers and retailers. Many states might set a limit on potency, just like they do with alcohol, according to Pamela S. Erickson, former executive director of the Oregon Liquor Control Commission. Both of the drugs are taxed and there are usually regulations for both governing the advertising of products, such as preventing targeting youth or encouraging high consumption. Regulators might limit the store hours or locations for both cannabis and alcohol. Beyond those similarities, there are a number of areas where cannabis is over-regulated and alcohol is seemingly under-regulated. It is very possible that much of this has to do with the power of the alcohol lobby. In 2016, the alcohol industry spent over $26 million on lobbying efforts, according to the Center for Responsive Politics, a non-profit, nonpartisan group that tracks lobbying efforts. During election season, the alcohol industry spent more than $11 million on campaign contributions. There are several examples of the alcohol industry actively fighting legalization efforts, including paying for anti-cannabis ads in a Politico newsletter and even funding opposition campaigns. While this doesn’t exactly pertain to the regulation of cannabis versus alcohol, it gives you a glimpse of how deep their coffers go and the amount of influence they have on politics.

Last year, the city of Denver passed a ballot measure, Initiative 300, which will legalize the social consumption of cannabis in permitted venues. The Denver Social Consumption Advisory Committee met for the final time last week. That committee designed two styles of permits: one for events and one for established businesses, which would receive a designated consumption area permit (DCA). Those permitted venues must be 1,000 feet from schools, child-care centers or drug rehabilitation centers. They need a waste plan, compliance with the Indoor Air Quality Act and they cannot sell cannabis products. Rachel Gillette, attorney in the cannabis law group and shareholder at Greenspoon Marder, says the legal implications of the initiative are still up in the air. “This was a step in the right direction,” says Gillette. “You can’t pass a law to regulate marijuana like alcohol and then say people can only use it in their home. You are going to run into problems like people smoking on the street. This is why this initiative was introduced.”

Rachel K. Gillette, Esq., practicing at the cannabis law group in Greenspoon Marder

The general idea here is B.Y.O.P.- bring your own pot. They cannot have a liquor license, the location cannot be accessible to the general public, they have to submit a detailed security plan and patrons have to sign a waiver to get in, according to Westword. Signing a waiver to get into a bar should seem asinine to anyone, but I have been to some dive bars where a waiver could’ve definitely been useful. The point is that cannabis doesn’t lead to violence or destructive behavior, alcohol is the drug that does that. There is plenty of evidence to support that, including a comparative risk assessment of the drugs, which found alcohol’s danger to be strongly underestimated previously.

Senate Bill 63 in the Colorado State legislature would have been very similar, issuing licenses for “marijuana consumption clubs.” However that bill was voted down last Thursday, largely due to the uncertainty of federal policy, according to ABC News.

Amendment 64 also has specific language saying you cannot consume cannabis in a public space, but that is not exactly the case with liquor, even when you consider open container and public intoxication laws. “In my previous interactions with the state and particularly the liquor licensing authority, they consider liquor-licensed premises to be de facto public spaces but you can’t consume cannabis there, which is why hotels, bars and restaurants explicitly prohibit cannabis consumption, they have a liquor license,” says Gillette. “There is a bit of conflict in the law here.”

Yet other rules, such as mandatory childproof containers for cannabis retailers, seem a bit draconian compared with buying a bottle of twist-off wine from the grocery store. “Childproof packaging isn’t required in liquor stores anywhere,” says Gillette. “Why cant responsible adults be trusted to keep it out of a child’s reach? Unfortunately there is a lot of trepidation to allow responsible adults to be responsible when it comes to cannabis.” In some ways, we are seeing states begin to regulate cannabis very closely to how they would alcohol, yet there is a long way to go. “There is still this nanny state mentality where we run the risk of regulating it to the point of absurdity,” says Gillette. For now at least, we need to be cognizant of the age-old stigma and work to normalize social cannabis use in a legal sense. Until that time comes, we will have to tolerate lawmakers regulating cannabis in a manner similar to alcohol, not exactly like alcohol.