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 equity businesses for a period of 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.
The goal of the plan was to help create a diverse cannabis industry in the city while giving people who had been harmed by marijuana prohibition policies a path to business ownership in the regulated market. To qualify, owners or a family member had to have an arrest or conviction for a marijuana offense, or applicants had to meet certain residency requirements. But more than a year into the program, the social equity cannabis delivery service business owners in Denver are facing challenges that threaten the viability of their enterprises.
The 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 opted to partner with a social equity business to provide delivery service for their customers. Molly Duplechian, the executive director of the Denver Department of Excise and Licenses, said that many dispensaries might be waiting for the three-year exclusivity period for social equity delivery services to expire before launching 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.
The High Cost of Getting People High
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. Others say with so many weed shops in town, most customers would rather shop in person than pay extra to have it delivered. Whatever the reason, the challenges have become unsurmountable for some delivery business owners.
In August 2021, the marijuana delivery service Dooba made news when it became the first company to deliver cannabis in Denver legally. Ari Cohen, the owner of the business, qualified as a social equity applicant because of a past 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.”
At least one additional business, Mile High Cargo, is also declining to renew its license, according to Eric Escudero, a spokesperson for the Excise and Licenses Department. Michael Diaz-Rivera, a social equity owner who operates the Denver-based Better Days Delivery, said that the fact that Dooba is ceasing operations does not bode well for other cannabis delivery services in Denver.
“[Cohen] had the business chops. … 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?”
Noting how few cannabis dispensaries in Denver have partnered with social equity delivery services, Diaz-Rivera believes that many retailers are waiting for the three-year exclusivity period to end before they launch their own cannabis home delivery services.
“A year and a half has already gone up [with] this exclusivity. 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 Social Equity Exclusivity for 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.”
The proposal also includes a reduction in licensing fees for social equity delivery services and the retail dispensaries that partner with them to provide 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.
The Excise and Licenses Department expects to finalize its proposed changes to the social equity program before presenting them to the Denver City Council. If the proposal is adopted by the council, it would go into effect within a few weeks, according to media reports.
