Everyone knows how Uber works. The Uber model reigns supreme as the ultimate freedom for people to work on their own clock and earn money. This model makes working really easy and convenient for anyone who owns a car, has some extra time and wants to make some money on the side.
But has anyone else ordered from a food delivery app, and by the time you get the delivery and look in the bag, you realize that the seal was broken and your fries are missing? I certainly have. With governments cracking down on labour laws and classifications, and with heightened security that comes with cannabis, it’s exactly why gig-economy is just too much of a liability for the cannabis industry.
Gig-economy is a concept where companies focus on bringing on independent part-time contractors instead of hiring a fleet of full-time workers. These contractors work flexibly and really take the strain out of hiring delivery drivers for single establishments. By partnering with software companies who host online ordering, these delivery drivers work wherever there is demand leaving no labour overhead for a single business who wants to include delivery as a service they offer.
This model works really well for restaurants and the taxi industry, but it might not fly for the cannabis space.
The logic makes sense for why it may not work; since cannabis is being given its second chance, it means that many of the laws and decisions around cannabis are in the hands of governing officials, and they’re pulling out every precaution to make sure that there is no negative impact while rolling out legalization.
With the barriers and security measures that currently need to be included, operating a gig-economy delivery business for cannabis is just unrealistic for now.
Gig-Economy is a Big Question Mark to the Government
The government’s Bureau of Labour Statistics (BLS), the standard when it comes to data on employment, has very little insight on the scale that the gig-economy has evolved into, and the government doesn’t like being in the dark about it which makes it an eerie space to try introducing cannabis into.
If we include the majority of people who don’t have conventional 9–5 jobs, the gig-economy workforce could include up to 50% of Americans in the next decade.
BLS noted that, according to their data, since 2005 the volume of gig workers has actually decreased to 10.1% of the population, down from 10.5%, when, back when this survey was first taken, industry giants like Uber, Doordash, Airbnb either didn’t exist or weren’t as huge as they’ve developed to be in the last 15 years.
The figure of 10.1% of the population accounts for those who use contracting, on-call, and temporary work as their primary source of income, which doesn’t encapsulate the majority of gig workers — so the BLS’s data excludes those who are contracted part-time as a supplement for their income.
JPMorgan Chase Institute, who focus their studies on the top 30 major online platforms that service gig-workers including giants like Airbnb and Uber, categorize gig-economy workers as freelance union workers. But even with their definition and classification of the workers, the study only shows that 4.3% of the population are gig, while the total percentage of employees that make up the freelance union is over 35% of the population.
So while the government can roughly piece together the percentage of the population that is working under the ‘gig’ label, there are still plenty of gaps. The issue could be rooted in that there is no single definition of a gig-worker, so the range could be as low as 4%, but also as high as 40%.
With gaps this large, the government is working out ways they can get a more clear number, but until they can do this efficiently, gig is not the way to go for cannabis delivery.
Governments Are Even Putting Gig-Economy At-Risk
Even in California, the gig-space might be starting to change. As governments can’t pin the number of gig-workers currently ‘employed’, they’ve recently established a new bill that seeks to solve issues around employee compensation, incentives for a job well-done, as well as a better definition about how vast the gig-economy, has become.
Assembly Bill 5 just passed in September 2019 pushing app-based companies who primarily work with freelance or contract workers to make them employees. This bill seeks to change the dynamic of gig-workers so that they qualify for basic beneficial necessities such as paid time off and health/medical benefits and even job security.
But aside from the direct benefits to the employees, companies who do go ahead and change employment statuses from contract to full-time could also see better quality employees with incentives backing a job well-done, meanwhile, deterring employees who don’t want to commit to the responsibilities that come with the benefits.
It’s not just California who’s making changes, but states like New Jersey, New York and Illinois could be next to clamp down on gig-workers as independent contractors, continuing the barrier between cannabis delivery and gig-economy.
Robbery Risks Run High
Just like my scenario where my Uber Eats driver took my fries, the risk is just as real with contractors delivering cannabis. Although some Uber Eats drivers don’t see the harm in swiping a fry here and there, and some don’t steal at all, it’s not something that governments are willing to risk when it comes to cannabis.
And it’s not just about contractors theoretically being able to steal, but cannabis delivery vehicles are also at risk because they can carry vast amounts of products or cash at one time, so we can expect there to be a high risk of attempted robbery when these cars hit the road.
Attempted robbery will continue to be a threat to cannabis delivery drivers, but especially while some credit card companies prohibit processing cannabis transactions due to the state of its legality across North America, forcing some canna-businesses to abide by a cash-on-delivery (COD) protocol.
Many states are playing it safe and going the extra mile to make sure their delivery employees stay safe, that there is no illegal activity going on behind the scenes, and that licensed dispensaries’ products are safe, monitored and tracked right to the customer’s doorstep.
Grey Market Businesses Could be Causing the Hike in Delivery Protocols
Some companies operating throughout California, the wild west of the cannabis industry, have been flagged for doing shady grey market business, where the lines are blurred between what’s legal and illegal. Some platforms go as far as allowing illicit shops to, not only advertise on their site but also deliver the illicit products to the customer’s door. In an effort to stop these services, California’s Bureau of Marijuana Control has issued almost 4,000 cease and desist letters to illegal dispensaries and illicit delivery services. Compare that to a total of 939 legal retailers… Dispensaries aren’t being enforced against, or if they are, they aren’t afraid to open shop again somewhere else the very next day because the penalties are so low it doesn’t dissuade them from violating the law.
California is often looked at as the state to learn from in terms of marijuana. Other states looking to legalize cannabis look at California, what they did for laws and regulations, and use what worked to their advantage, and avoid what didn’t.
This could be linked to why delivery regulations are so heavily enforced. Governments want control, and the gig-space may be too much of a liability for now, which is why they turn to the extreme precautions.
Take Massachusetts For Example
As cannabis home delivery regulations were recently approved by the government and Cannabis Control Commission (CCC), details regarding how exactly they’re going to get drivers on the road is the next question with safety and security at the top of their mind. The government has outlined some prerequisites that these drivers are going to need to abide by in order to start delivering:
- Licenses for the first two years are issued to social equity or economic empowerment applicants, giving these individuals who’ve had a cannabis business in the past a second chance for success, or those who are in a minority group a chance to participate in the industry while it’s still early!
- Every delivery vehicle needs to have a minimum of two drivers. One to go to the door and deliver, and one to remain in the vehicle for security reasons.
- Every delivery person needs to be wearing a body camera to record the process of getting marijuana to the customer who ordered it.
- ID verification needs to be completed before you buy and before you receive your deliveries to ensure that the individual who ordered it is the one receiving the package.
- Surveillance needs to be inside of the delivery vehicle as well. No merchandise can be left on board the delivery vehicle without a live cloud-based stream of the product at all times.
- The delivery vehicle will be equipped with a live GPS feed to ensure the car is going directly to the address and either remaining on route or coming back to the dispensary.
- The delivery window is between 8 am and 9 pm. No earlier. No later.
- The drivers will be required to have locked compartments to help prevent robberies since most marijuana transactions have to be in cash
Delivery is going to be a tight and highly observed segment of the cannabis market while regulations are ironed out. We expect that because delivery regulations vary from region to region, it might take time for stigma to decrease and regulatory bodies to loosen their grip on the substance.
With so many barriers, it might take some time before marijuana delivery truly rolls out, even if it’s legalized in your province/state.
Verda offers an e-commerce portal, where dispensaries can offer online ordering and same-day home delivery where it applies. If recreational marijuana is legal in your state or province, and you want to be on Verda’s platform and start offering online ordering and/or home delivery, contact us and we can begin setting your dispensary up for success!
Miss our latest blog? Learn major tips and tricks that you’ll want to know when you launch your very own licensed dispensary. Check out how you can improve your dispensary’s customer journey here!