Recreational marijuana delivery is off to a slow start in Aurora, as the pot industry focuses on bigger opportunities. Aurora was the first Colorado town with dispensaries to opt in to recreational marijuana delivery, issuing the first permit in February. Deliveries began in March, and several of the state's larger dispensary chains with stores in Aurora have since obtained their permits for delivery.
Obtaining a delivery permit requires a lot of work by a dispensary or transporter service, which have to outfit their vehicles with tracking and security measures before training their drivers according to state law. Successfully marketing delivery might be a bigger obstacle, however, even with 23 recreational dispensaries and a population of nearly 400,000 in Aurora.
"It's not competitive at this point. The competition is just getting the word out there," explains Tim Cullen, CEO of Colorado Harvest Company." So far, it's been testing a proof of a concept and seeing if this can work in Denver."
A local chain with two stores in Denver and one in Aurora, Colorado Harvest Company was the first business to obtain an Aurora delivery permit. Seven more were subsequently issued according to the state Marijuana Enforcement Division. Yet nearly four months in, there have been just 2,000 pot deliveries in Aurora, accounting for approximately $187,000 in sales, according to the Aurora Finance Department. That averages out to about seventeen deliveries a day for a total of $1,600 in sales per day — a sliver in a city that averaged over $1.2 million per month in local marijuana sales taxes alone last year.
Marijuana deliveries involve several more steps than sales at the store, Cullen explains, including two to three ordering and processing platforms, as well as the state's seed-to-sale tracking system, a location verifier and payment software to avoid cash. "There are all these pieces going on. We started this idea thinking it'd be straightforward, but it's pretty complex. There is a method to the madness now, though," he adds.
Operating procedures and pricing are still both evolving, but payment may be the biggest challenge, says Sally Vander Veer, CEO of Medicine Man, a dispensary chain with a store in Aurora and one in Thornton, another Colorado town that recently approved recreational pot delivery but has yet to implement it.
"It's starting slower than I thought it would be. We're doing some internal testing to see if the delivery price is too high or low," Vander Veer says. "The limiting factor is the payment, because we don't want our drivers to take cash."
Paying for marijuana orders online is banned in Colorado, and the plant's federal prohibition scares away the majority of banks, so delivery and pre-order services have to get creative. Medicine Man and most of the marijuana businesses that accept electronic payments use third-party platforms that connect to customer bank accounts. In Medicine Man's case, customers have to deposit a minimum of $50 to set up their delivery account, which is another limiting factor, Vander Veer says.
Denver just began accepting delivery applications in late June. With fewer than half of Aurora's dispensaries using delivery, the companies that offer it there see the smaller city as more of a testing ground, and are spending relatively little on external advertising.
Lantern, a marijuana delivery application that provides third-party software to dispensaries and delivery drivers, doesn't view markets outside of Denver as thirsty for delivery, according to president Meredith Mahoney. "Aurora's a great city, and we're excited to be there, but that city doesn't necessarily need delivery the way Denver does." she notes. "There are more people driving [in Aurora], it's easier to get to a dispensary, and there's more parking."
And if the third-party platform feels that way, then the marijuana businesses may be stuck. Most local governments ban licensed marijuana businesses from advertising on billboards, but third-party websites like Lantern and Weedmaps don't face the same restrictions. Until they decide to advertise heavily in Aurora — or momentum from Denver's market eventually spills over — the delivery sector could continue moving slowly.
There's another factor at play: The Green Solution, one of the state's largest dispensary networks, with five locations in Aurora, hasn't begun delivery operations yet, despite having an agreement in place with Lantern to do so. While Mahoney wouldn't comment on when the Green Solution would begin deliveries in Aurora, she did say that Lantern would someday offer Green Solution deliveries in Denver, as well.
"We always like to move slowly...but we always see the business ramp up," she says. "It doesn't just hit, and [then] it's huge."