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Denver Weed Delivery Services Face Mile-High Challenges

Denver’s officials approved home delivery of cannabis products last April. Licenses to deliver cannabis were then reserved for social enterprises for three years. Under the plan, delivery services owned by entrepreneurs who have been negatively impacted by the War on Drugs would partner with the city’s licensed marijuana dispensaries to complete customer deliveries.

This plan had two goals: to create an urban cannabis industry and to give people who have been affected by prohibition laws a pathway to ownership of regulated markets. The applicant had to satisfy certain residency criteria or have to be an owner or family member who was convicted of a marijuana offense. However, Denver’s social equity cannabis delivery services business owners are now facing serious challenges.

Regulators and business owners cite high licensing fees, a saturated market for cannabis and lack of retail support as barriers to industry success. Only nine of the 206 Denver-licensed cannabis dispensaries have chosen to work with social equity businesses to deliver their customers’ products. Molly Duplechian (executive director of Denver Department of Excise and Licenses) said many dispensaries are waiting for the 3-year exclusive period for social-equity delivery services to end before starting their own home delivery programs.

“What we’ve heard is that some of the existing industry may have been waiting the exclusivity period out, or they could have been investing in a social equity transporter and then planning to move to do their own delivery in two years,” Duplechian told local media.

How expensive it is to recruit people

Some retailers cite the high permitting fees associated with launching home delivery services while others note steep delivery fees and difficulties updating existing software for placing orders to integrate with the delivery partners’ operations. Many others say that there are too many marijuana shops around town and customers will rather buy their marijuana in person, than to pay more for delivery. Regardless of the reason, some delivery businesses have found it difficult to overcome the obstacles.

Dooba was first legal marijuana delivery service in Denver. Ari Cohen, who is the founder of Dooba, was able to apply for social equity because he had a previous marijuana conviction. But less than a year after the initial headline-grabbing delivery, Cohen’s business is faltering and he is shutting Dooba down.

“About a month before licenses were due for renewal, we decided not to go forward,” Cohen told Westword. “There were significant costs associated with it, and we’ve had limited and stagnant growth.”

“The more regulations we have to follow and fees that pile up, the harder it is for businesses, and the more resources it takes to meet those requirements,” explained Cohen. “Cannabis is one of Colorado’s most highly regulated industries, and that comes with a lot of high costs. Businesses are closing down because they can’t make ends meet. You’re seeing it with store groups and cultivations out here already.”

According to Eric Escudero (a spokesperson from the Excise and Licenses Department), Mile High Cargo is one of several businesses that has declined to renew their license. Michael Diaz Rivera (a social equity owner and operator of Better Days Delivery in Denver) said that Dooba’s closure does not bode well on other Denver marijuana delivery services.

“[Cohen]He had business skills. … He had more dispensary partners than me,” Diaz-Rivera told Politico. “Am I just throwing money into a bottomless pit because I’ve been sold this dream of generational wealth that might already be gone?”

Diaz Rivera noted that very few Denver cannabis dispensaries have been partnered with social-equity delivery services. Diaz Rivera thinks many retailers wait for the 3-year exclusivity to run out before they can launch their own cannabis delivery service.

“A year and a half has already gone up [with]It is a rare privilege. And the dispensaries are just waiting it out,” Diaz-Rivera said. “What good does it do for us if they know that they can just wait?”

Denver Proposes Extending the Social Equity Exclusivity of Cannabis Delivery

To help support the city’s social equity cannabis delivery services, Denver officials have proposed making licenses for cannabis delivery services exclusive to social equity businesses on a permanent basis.

“We’re one year into one adopting delivery, but also adopting our social equity program. And based on feedback we’ve heard from our transporters and the industry, there’s just not a high level of industry participation,” said Molly Duplechian, Denver Department of Excise and Licenses executive director. “So what we want to do is we want to provide certainty to our social equity transporters that they have a path going forward beyond just the next two years.”

Additionally, the proposal includes a decrease in licensing fees for both social equity delivery service providers and retail dispensaries who partner with them to offer home delivery.

“Some fees are going from $2,000 all the way down to $25. So we’re really trying to reduce and remove any barrier that stands in the way,” Duplechian said.

After finalizing its changes to social equity, the Excise and Licenses Department is expected to present them to Denver City Council. According to media reports, if the proposal is approved by the council it will be in effect in a matter of weeks.