The pandemic has altered the face of businesses and changed consumer behavior beyond recognition all over the world. It has razed some industries to the ground and brought immense growth to others. But, what it has done for the cannabis industry in the US is truly incredible. Cannabis dispensaries and delivery has hit record sales with a 67% increase in consumption in 2020 alone with legal sales in the US hitting a whopping 17.6 billion dollars.
Who benefits from it? The economy, of course! Legalization has brought a new influx of money and creating revenue for urban and rural communities alike, helping refurbish apartments in the latter.
The legalization of cannabis across the country over and restriction being lifted in the last three years is the reason for this. As of March 2021, 14 states have made the drug fully legal while 36 permit medical sales. Nebraska and Idaho are the only states that prohibit possession of weed. This means that if you’re an American living in California, your stash can be delivered to your doorstep almost as fast as that pizza you ordered.
Ease has been a big part of cannabis consumption in the US where it has been sold in ‘dispensaries’ that are government regulated. As countries went into lockdown last year, these businesses were seen as essential, leading to a rise in both demand and consumption. Early trends saw consumers stocking up cannabis in a panic but the numbers have only gone up since. According to a report released by the BDSA, which is a marketing research community that provides solutions for the cannabinoid community, showed that the annual marijuana dispensary sales are expected to go up to $41 billion by 2026.
Weed at Your Doorstep
What has changed for the industry apart from sales then? A couple of things. The first is a shift from inhalable to edible due to an increased threat of respiratory issues. Edibles remain the most popular product category among both young and old followed by flowers and vapes. The second is the rise in demand for the home delivery option—the leg of the cannabis supply chain that wasn’t paid much heed to in the past. Home delivery, along with online ordering as well as curbside pickups, showed up as the most popular trends in the pandemic year that choose to persist.
Challenges in Cannabis Same-day Delivery
It is clear, then, that the customer is really after convenience. BDSA reports suggest a 40% increase in curbside pickups and home deliveries. The average customer is spending more but also expecting the order to be fulfilled within 90 minutes. The cannabis supply chain is quick to adapt to new changes but it doesn’t come without its challenges:
- Operational inefficiencies: Since this is still a growing industry, for many businesses inventory and purchasing are still carried out on an ad hoc basis. Often, operations are carried out manually, which makes the delivery process time-consuming, tedious, and susceptible to error.
- You cannot ship it across states: Cannabis delivery is still illegal at the federal level which creates complications in its transportation. Cannabis must be cultivated, sourced, and produced within the state and this hits small businesses especially hard.
- Increased on-ground mishaps: Due to high demand and the fact that these products are quite expensive, the safety of delivery agents becomes a matter of concern. Robberies are common as well vehicle downtimes due to poor visibility in the supply chain.
With the coming of the pandemic, innumerable businesses have had to amp up their online and delivery game. The cannabis industry is no exception. Even more tricky is cracking the same-day-delivery code as the consumer demands rise. Wrong addresses, manual route planning, and lack of standardization in everyday planning can turn same-day delivery into a chaotic affair. Here are some of the ways that logistics tech will change the face of the cannabis supply chain:
- Smart planning – Automated end-to-end solutions can not only save time and resources but also streamline processes and increase efficiency. This covers everything from planning dispatches to delivery routes and optimizing last-mile delivery. DispatchIQ, Locus’s Route optimization engine, takes into account real-time issues such as traffic and zone restrictions.
- Better supply chain visibility: By taking better real-time decisions on-ground, accidents, and late deliveries can be avoided. Accurate geocoding can help with this by locating even the fuzziest addresses on the map, thus increasing the First Attempt Delivery Rate (FADR). Transparency can be ensured by making use of TrackIQ, that shows the Estimated Time of Arrival (ETAs) based on dynamic on-ground condition. This is a win-win for both the business and the customer as the latter gets a real-time update of their order.
- Better decisions: Data acquired by enabling these processes can shine a light on patterns and behaviors and can help businesses take necessary steps. Market trends, delivery preferences, and customers’ historical information, all contribute to making smarter decisions around sales, planning, and distribution, thus contributing to the well-being of the company.
- Time slot-based deliveries – Time slot-based deliveries enable logistics managers to plan hourly dispatches and stay ahead of their game. This leads to quicker on-ground operations, better utilization of vehicles, and reduced inventory costs.
- Smooth Same-Day Delivery Process: Locus’s NodeIQ, with its highly intuitive interface, comes up with the optimal network design to ensure the seamless flow of cannabis in the supply chain.
Covid-19 is not going anywhere, at least for the foreseeable future, and what is being touted as a customer trend right now is slowly, but certainly, turning into a permanent shift in consumer behavior. Smart logistics is no longer an option but an essential for companies to thrive.
Locus automates real-world decision-making in supply chain & logistics with its proprietary algorithmic models and acts as the digital supply chain officer for enterprises. Check out our products here.
Infographic by Locus
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