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Tuesday, August 9, 2022

Denver weed delivery services face major challenges

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When city officials in Denver, Colorado, authorized home delivery of cannabis products in April of last year, licenses for cannabis delivery services were reserved for social justice firms for three years. Under the plan, delivery services owned by entrepreneurs negatively affected by the war on drugs will partner with licensed marijuana dispensaries in the city to complete customer deliveries.

The plan was intended to help create a diversified cannabis industry in the city while giving people affected by marijuana prohibition policies a path to business ownership in the regulated market. To qualify, the owners or a family member had to be arrested or convicted of a marijuana crime, or applicants had to meet certain residency requirements. But more than a year into the program, Denver cannabis delivery service business owners are facing challenges that threaten the viability of their businesses.

Business owners and regulators cite high licensing costs, a saturated cannabis market, and a lack of support from retailers as some of the barriers to success in the industry. Of the 206 licensed cannabis dispensaries in Denver, only nine have chosen to partner with the social equity firm to offer a delivery service to their customers. Many dispensaries may wait for the three-year exclusivity period for social equity delivery services to expire before launching their home delivery programs, Molly Dobelchian, executive director of Denver’s Department of Taxes and Licensing, said.

“What we’ve heard is that some of the current industries may have been waiting for the exclusivity period to expire, or they may have been investing in a social transfer company and then planning to relocate to do their own delivery in a couple of years,” Duplechian said local media.

The high cost of raising people

Some retailers cite high permit fees associated with launching home delivery services while others note exorbitant delivery fees and difficulties in updating existing application software to integrate with delivery partner operations. Others say that with so many weed stores in town, most customers would rather shop in person than pay extra to have it delivered. Whatever the reason, the challenges have become insurmountable for some delivery business owners.

In August 2021, marijuana delivery service Dooba made news when it became The first company to deliver cannabis in Denver Legally. Ari Cohen, the employer, qualifies as a social equity applicant due to a previous marijuana conviction. But less than a year after the initial delivery that grabbed the headlines, Cohen’s business falters and Dooba shuts down.

“About a month before the licenses are due to renew, we have decided not to move forward,” Cohen told Westword. “There were significant costs associated with it, and we had limited and stagnant growth.”

“The more regulations we have to follow and the fees that accumulate, the more difficult it becomes to do business, and the more resources we need to meet those requirements,” Cohen explained. “Cannabis is one of the most regulated industries in Colorado, and that comes at a high cost. Companies are closing because they can’t make ends meet. You see it with the store and farming groups that are already here.”

At least one additional company, Mile High Cargo, is also refusing to renew its license, According to Eric Escudero, the official spokesman for the Department of Excise and Licensing. The fact that Dooba is halting its operations does not bode well for other Denver cannabis delivery services, said Michael Diaz Rivera, social equity owner who runs Denver-based Better Days Delivery.

“[Cohen] The pieces were commercial. … he had more dispensary partners than me,” Diaz Rivera told Politico:. “Am I just throwing money into an endless pit because I sold the dream of a generational fortune that may already be gone?”

Noting that few Denver cannabis dispensaries have partnered with social equality delivery services, Diaz Rivera believes many retailers are waiting for the three-year exclusivity period to expire before launching their own cannabis home delivery services.

“It’s already been a year and a half [with] This exclusivity. “The clinics are just waiting for him,” Diaz Rivera said. “What’s the use of that for us if they know they can just wait?”

Denver proposes expanding social justice exclusivity for cannabis delivery

To help support social justice cannabis delivery services in the city, Denver officials have proposed licensing cannabis delivery services exclusively to social justice companies on a perpetual basis.

“It’s been a year since the delivery was approved, but we’re also certifying our social justice program. Based on the feedback we’ve heard from our carriers and industry, there isn’t a high level of industry involvement,” Molly Dobelchian said:, executive director of the Denver Department of Taxation and Licensing. “So what we want to do is we want to provide certainty to our social justice transmission companies that they have a path forward beyond just the next two years.”

The proposal also includes a reduction in licensing fees for social justice delivery services and retail dispensaries that partner with them to provide home delivery.

“Some of the fees go down from $2,000 to $25. So we’re really trying to reduce and remove any roadblocks that get in the way,” Dobelchian said.

The Department of Excise and Licensing expects to finalize the proposed changes to the Social Justice program before they are presented to the Denver City Council. According to media reports, if the proposal is adopted by the council, it will enter into force in a few weeks.


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