While Canada is ahead of the U.S. with federal legalization of cannabis, some Canadian provinces are still in the midst of establishing their delivery and online ordering operations.
Delivery is already available in several provinces, including British Columbia, Saskatchewan, Manitoba, and Ontario—many of which legalized an increase in cannabis ordering options to comply with COVID-19 lockdown demands. Saskatchewan was the first, launching same-day delivery in 2019. Effective March 8 2022, the AGLC (Alberta Gaming, Liquor and Cannabis Commission) will be removing the cannabis online ordering section of their website, enabling private cannabis retailers to conduct online sales and delivery in Alberta.
To understand the differences in ordering cannabis online in Canada, you should familiarize yourself with the market. Historically, to maintain compliance, Alberta’s provincial website was the sole option for online cannabis ordering and pickup (also known as click and collect). This enabled shoppers to receive mailed packages containing their cannabis products in the regular post. The only disadvantage for consumers was prolonged delivery times, which ultimately hurt medical users who couldn’t afford to wait to receive their order.
Now, in an effort to boost the economy, the provincial website is removing itself as a competitor. The possibilities are moving fast with 744 stores in Alberta, second only to Ontario. With the proper licensing, a cannabis retailer will now have the option to deliver outside of their city zone and cover more remote areas, making cannabis more accessible to consumers throughout the province. This should boost the convenience of online orders and increase future revenue. Since delivery is not a matter of if but when, it's better that private retailers drive this evolution.
Now that cannabis ordering is expanding online, Alberta should look out for some key rules to stay compliant and even apply to the AGLC more efficiently as these new opportunities open up. If you are a smaller operation, know that that doesn’t pose a threat, because 3rd-party delivery isn’t allowed yet, and you can thank the little guys. They advocated for this rule because they have trouble competing with chain operators, and it makes the delivery possibilities more fair to all business sizes.
To further clarify, you aren’t allowed to contract out a 3rd-party service to perform it, but you could contract a driver. That individual just needs to have a contract with the licensed store. Mom-and-pop cannabis retailers can even consider sharing the cost of a driver with another local retailer. Delivery is not car-specific either, so if cost is a concern, you could send a driver via bicycle if the route is close. You can also use a car that is privately owned by your staff. (In BC specifically, the delivery vehicle has to be owned by the cannabis retail business.) This is an example of a way for smaller retailers to get creative, but there are other ways to learn the how-tos of delivery from successful provinces like Ontario.
The key to executing a good delivery program is to have great customer service (someone always answering the phone to take phone orders and/or virtual budtending through online live chat), as well as a reliable online ordering platform. Make sure that the online ordering platform integrates into your POS from a compliance and operational efficiency standpoint.
Orders are picked and packed by inventory staff. Have an "expeditor" role to check that what has been picked & packed matches the order placed. The biggest cost issues stem from incorrect orders or dealing with refunds for faulty products (empty containers, leaking vape cartridges).
Organizing and batching out orders based on the delivery route, address, and time window selected is important to ensure that orders are delivered efficiently. Great communication and customer service (text messaging when a customer's order is about to arrive) will also go a long way in terms of promoting a retail business in an industry where traditional marketing and advertising are not allowed. Software systems such as Onfleet can assist with this.
Have delivery orders that are leaving the store be within view of the retailer's security cameras.
Delivery driver safety considerations: train staff to watch mirrors if their windows are rolled down to minimize the risk of someone attempting to steal from them. Also train staff to:
Ensure that orders are kept cool for edibles and beverages (e.g. melted chocolate during a heatwave would not be a good customer experience).
The majority of delivery costs come from software and personnel. Delivery logistics software can cost $500+ per month. Driver wages can range from either providing a minimum hourly wage with a higher per/km rate, or providing a higher hourly wage with a lower per/km rate. The cost of gas also needs to be considered.
Delivery fees can range from $5-$20 per order (or free), depending on the delivery zone. Establishing a minimum cart size in delivery zones that are further away is a way to prevent losing money from the delivery order. Ontario saw that the majority of delivery orders had a larger basket size than in-store orders.
Delivering to municipalities that have opted out of physical cannabis storefronts can be a great way to provide easier access to legal cannabis.
How can you market that your store now offers delivery? Set minimum order amounts, flag that you are offering delivery on your website & social channels, but remember not to associate it with a discount or financial incentive for compliance reasons. You must also hard age-gate your site to be compliant with AGLC’s standards.
Hard age-gating needs to be put in place to limit minors from purchasing or viewing prohibited promotional content. The retailer must verify the customer prior to viewing these materials. Once a customer's age and identity are verified, then that customer can log in and shop all products.
This industry is all about learning from one another and helping one another. If Alberta retailers can learn from Ontario and BC to avoid expensive mistakes and help solve their potential delivery challenges, then everybody wins. With that in mind, what might be next on the horizon in Alberta? At Dutchie we are hearing whispers that consumption lounges may be in the future, along with temporary permits to sell cannabis at events and festivals. This could inspire some future ideas for more economic-boosting creativity for cannabis retailers.
Dutchie is the first and only ecommerce solution to have officially passed the ecommerce audit of AGCO (in Ontario). We built and continue to craft our product roadmap with a compliance-first mentality. At the start of COVID-19, Dutchie was also the first ecommerce solution to provide online payments during Ontario’s emergency order, where licensed cannabis retailers were mandated to only take payments online (in-store payments were not allowed). With solutions that are flexible to regulations and built to scale, Dutchie is here to help your cannabis business start, operate, and grow with confidence.
To learn more about delivery in Alberta, check out our own Canadian whiz and Head of Strategic Growth, Anne Forkutza’s video, What you need to know about Alberta cannabis online ordering and delivery.
Reviewed by the regulatory pros at Diplomat Consulting.
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