A medical cannabis delivery company is a business that delivers cannabis for medical purposes only to approved organizations, stores, or patients with medical prescriptions. Cannabis which is also referred to as marijuana is a mood-altering drug that can induce calm and is sometimes used medicinally as a form of pain relief.
In the United States, states with medical cannabis laws have some form of patient registry, which may provide some protection against arrest for possession of up to a certain amount of cannabis for personal medicinal use. According to a survey released in the US, 34 percent of entrepreneurs in this field alleged that regulatory compliance was the number one challenge, while 24 percent cited financing as the other challenge.
Statistics show that the Medical Marijuana industry has experienced exponential growth of 34.2 percent in the years between 2010 and 2015. The industry has revenue of $4 billion, with 5,169 businesses employing 74,222 people. Only 23 states and the District of Columbia have laws that permit the use of medical marijuana. 8 of the 23 states, where medical cannabis is legal do not have any dispensaries.
Steps on How to Start a Medical Cannabis Delivery Business
Table of Content
Conduct Market Research
If you are considering starting a medical cannabis delivery business, you would need reliable market research to be able to maximize profits from the business. The first step in the market research process should be to develop market-based research questions in line with your overall business goals and objectives.
In this regard, you should source information that will help you maximize your business, give you reliable data of what your potential market will be looking for from a medical cannabis delivery company, and also help you operate your medical cannabis delivery business with less stress.
a. Who is the Target Market for Medical Cannabis Delivery Business?
- Middle-aged people suffering from stress and insomnia
- Patients with sicknesses that include HIV/AIDS, chronic pain, cancer, glaucoma, multiple sclerosis, severe nausea, epilepsy, and other seizures.
- The aged who might suffer from severe joint pains, and every other age category who suffer from this
- Injured Sports Men and Women.
b. Is Medical Cannabis Delivery a Profitable Business?
Available data shows that the medical cannabis delivery industry is a profitable one. For example, in 2014, more than 1.5 million shoppers purchased legal cannabis from a dispensary, either recreational or medical. Five states have cannabis markets that are larger than $100 million. Plus, medical marijuana (MMJ) is currently legal in 35 US states, with an estimated 3.6 million state-legal medical cannabis patients.
c. Are There Existing Niches in the Industry?
No, there are no existing niches when it comes to the medical cannabis delivery business because medical cannabis delivery is a subset of the marijuana industry.
d. Who are the Major Competitors?
- Aurora Cannabis Inc.
- The Chronic Courier – Marijuana Delivery
- Cannahealth Medical Cannabis Delivery
- Green Door West – Premium Marijuana Delivery
- Supurb Medical Marijuana Delivery
- East Bay Cannabis Delivery
- Diamond Cannabis Direct
- Marijuana Company of America
- Indigo Medical Cannabis Delivery
- Weed On Wheels – Marijuana Delivery Service
- Speed Weed
- Tops Cannabis Delivery
- Medical Marijuana Inc.
- Canopy Growth Corp
- Kushfly Medical Marijuana Delivery
- 800 Buds Delivery
e. Are There County or State Regulations or Zoning Laws for the Medical cannabis delivery business?
Yes, there are county and state regulations for the medical cannabis delivery business. It is important to state that each state has its own requirements for cannabis, CBD, THC levels, cannabis programs, ID cards, and marijuana legalization. As there are different laws and costs per state, it’s important to do your own research.
f. Is There a Franchise for Medical Cannabis Delivery Business?
Yes, there are franchise opportunities for the medical cannabis delivery industry, and here are some of them;
- ONE Cannabis (Investment Range: $750,000 – $2,500,000)
- Miracle Leaf (Total Investment: $75,000 – $100,000)
- Hobo (Capital investment – $300,000 – $500,000 CAD)
- Green Man Cannabis
- WeGrow (Working capital – $166,000).
g. What Do You Need to Start a Medical Cannabis Delivery Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- Delivery Van or Bus
- Source of Supplies
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Operational Capital (For Ongoing Expenses)
Memorable Business Name ideas for Medical Cannabis Delivery
- Safe Hands© Medical Cannabis Delivery, Inc.
- Horse Back® Medical Cannabis Delivery, LLC
- Reliable© Medical Cannabis Delivery, Inc.
- Medic Solutions® Medical Cannabis Delivery, Inc.
- Cana King™ Medical Cannabis Delivery, Inc.
- Green Line™ Medical Cannabis Delivery, LLC.
- Jeffrey Jones© Medical Cannabis Delivery, LLC
- Swift Guys® Medical Cannabis Delivery, Inc.
- Andrew Tyrone© Medical Cannabis Delivery, Inc.
- Bolton Clarkson© Medical Cannabis Delivery, Inc.
- Cana Trans® Medical Cannabis Delivery, LLC
- Noel Line® Medical Cannabis Delivery, LLC
- Convoy™ Medical Cannabis Delivery, LLC
- Brown Williams© Medical Cannabis Delivery, Inc.
- Morning Rise® Medical Cannabis Delivery, Inc.
- Emmy Bee™ Medical Cannabis Delivery, Inc.
- Cana+ Link™ Medical Cannabis Delivery, Inc.
- Speed Net© Medical Cannabis Delivery, Inc.
- Metropolitan® Medical Cannabis Delivery, LLC
- Rest Well™ Medical Cannabis Delivery, Inc.
Register Your Business
a. What Type of Business Structure is Best for a Medical Cannabis Delivery Company?
When it comes to the best business structure for a medical cannabis delivery business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Medical Cannabis Delivery Business?
- Cannabis Business License
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- Zonal Permits
- Signage Permit
- Sales Tax Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to start a Medical Cannabis Delivery Business?
You don’t need any special certifications to start a medical cannabis delivery business.
e. What Documents are Needed to Open a Medical Cannabis Delivery Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval (Certificate of Occupancy (CO))
- Certificate of Incorporation
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a medical cannabis delivery business, you may not have any need to file for intellectual property protection or trademark.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Medical Cannabis Delivery Business?
The startup cost for a medical cannabis delivery business is not uniform. Factors such as the number of delivery vans and supplies can influence the cost. But basically, a medical cannabis delivery business will cost from $10,000 – over $100,000 to start, and that can easily go higher depending on your overall business goals and objectives.
b. What are the Cost Involved in Starting a Medical Cannabis Delivery Business
- The Fee for registering the business in the United States – $725.
- The budget for legal fees, insurance, permits, and license – $5,000
- The cost of leasing a facility – 50,000
- The amount needed to renovate your Facility (electrical, furnishings, plumbing, painting, and landscaping) – $10,000.
- The Cost of the purchase of furniture and equipment (Flat Screen TVs, computers, printers, and cabins et al) – $10,000
- Stocking up supplies of medical cannabis – $50,000
- Phone and utility deposits – $3,500
- The Cost for the purchase of delivery vans – $25,000.
- Cost for payment of salaries for the first 3 months of operation – $50,000
- Additional Expenditure (Business cards, Signage, Adverts, and Promotions et al) – $5,000
- The cost of launching an official website – $600
- Miscellaneous – $2,500
c. What Factors Determine the Cost of Opening a Medical Cannabis Delivery Business?
- The size of the medical cannabis delivery business (number of delivery vans you intend to start the business with)
- The choice of location
- The required licenses and permits
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the medical cannabis delivery business
- The cost for furnishing and equipping the facility
- The cost for insurance policy covers
- The cost for registering the business
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your medical cannabis delivery business, but, if you have the required finance, it will pay you to build your own parking facility and administrative office.
e. What are the Ongoing Expenses of a Medical Cannabis Delivery Business?
- Gas and lubricants
- Medical cannabis supplies
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
- Delivery vans maintenance
- Marketing and business promotion costs
f. What is the Average Salary of your Staff?
- Chief Operating Officer (Owner) – $68,000 Per Year
- Admin and HR Manager – $48,000 Per Year
- Transport and Logistics Manager – $48,000 Per Year
- Marketing and Sales Executive (Business Developer) – $38,000 Per Year
- Accountant $38,000 Per Year
- Van Drivers (Medical Cannabis Delivery Guys) – $36,800 Per Year
- Customer Service Officer (Receptionist) – $26,100 Per Year
g. How Do You Get Funding to Start a Medical Cannabis Delivery Business
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Spiff Johnsons® Medical Cannabis Delivery Company, LLC is a registered medical cannabis delivery business that will operate in and around Santa Fe – New Mexico. We have been able to lease a facility that can fit into the kind of business we intend launching and the facility is located in the heart of town with an easy delivery network.
Spiff Johnsons® Medical Cannabis Delivery Company, LLC will deliver a wide range of medical cannabis at affordable prices to retailers and consumers.
b. Products and Service
- Delivery of medical cannabis.
c. Mission Statement
Our mission is to ensure that we build a successful medical cannabis delivery company that will operate not just in Santa Fe – New Mexico but in the whole of the United States of America; a company that will boast of having some of the best and reliable medical marijuana delivery guys in the whole of the United States of America.
Our Vision is to become one of the preferred choices of individuals and organizations when it comes to the demand for medical cannabis delivery in the whole of the United States of America.
d. Goals and Objectives
The goals and objectives of a medical cannabis delivery business are to legally supply medical cannabis to dispensaries and individuals that need cannabis-based prescriptions.
e. Organizational Structure
- Chief Operating Officer (Owner)
- Admin and HR Manager
- Transport and Logistics Manager
- Marketing and Sales Executive (Business Developer)
- Delivery Guys (Van Drivers)
- Customer Service Officer (Receptionist)
a. SWOT Analysis
- Excellent operational history
- Attention to detail.
- Accurate estimates with no hidden costs.
- Experience and trained professionals.
- Excellent customer testimonials.
- Reliable and efficient delivery vans and service.
- Not enough existing clientele to run at full capacity immediately
- The owner is new to large scale marketing
- Will need a loan to purchase brand new delivery vans
- Lack of economies of scale.
- A growing number of disadvantaged Medicaid recipients, the elderly, or those who have form or disability or the other who would need medical cannabis in the United States.
- Growing acceptance of medical cannabis as an alternate painkiller
- Build upon existing clientele
- Online market, new services, new technology, and of course the opening of new markets.
- Increase in the services offered by hospitals due to the current coronavirus pandemic
- The first year will be financially tight while we gain customers and pay off loans
- Competition in the area could increase
- Management of employees requires time, money, and efforts
- The transport department could change its regulatory status and decide to enforce strict regulations that can strangulate our business.
b. How Do Medical Cannabis Delivery Companies Make Money?
Medical cannabis delivery companies make money by delivering medical cannabis to customers as requested.
- Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
c. Sales & Advertising Strategies
- Introduce Your medical cannabis delivery business by sending introductory letters alongside your brochure to dispensaries, hospitals, clinical labs, medical facilities, households, and key stakeholders in and around your city and state
- Print out fliers and business cards and strategically drop them in offices, libraries, public facilities, train stations et al.
- Use friends and family to spread the word about your business
- Post information about your company and the services you offer on bulletin boards
- Place a small or classified advertisement in the newspaper, or local publication about your company and the services you offer
- Leverage on referral networks such as agencies that will attract clients who would need your services
- Advertise our business in relevant health magazines, newspapers, TV and radio stations.
- Attend relevant expos, seminars, and business fairs et al to market your services
- Engage in direct marketing approach
a. How Much Should You Charge for your Product/Service?
Most medical cannabis delivery companies charge based on the size and quantity of medical cannabis delivered or purchased. For example, a production cost of $40 means that a pack of the good stuff could cost the consumer up to $70-80 at retail. Premium marijuana could run up to $120, while you could grab a pack of 50-50 marijuana-tobacco cigarettes for about $40.
b. How Much Profit Do Medical Cannabis Delivery Business Owners Make a Year?
It depends, but the available report shows that on average, a medical cannabis delivery company owner should net between $400,000 to over $900,000 per year assuming they have a steady clientele.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the medical cannabis delivery company
- The location the medical cannabis delivery company is covering
- The management style of the medical cannabis delivery company
- The business approach of the medical cannabis delivery company
- The advertising and marketing strategies adopted by the medical cannabis delivery company.
- The number of years the medical cannabis delivery company is in business
d. What is the Profit Margin of a Medical Cannabis Delivery Company?
The profit margin of a medical cannabis delivery business is not fixed. It could range from 40 percent to 75 percent depending on the distance to be transported.
e. What is the Sales Forecast?
- First Fiscal Year (FY1): $350,000
- Second Fiscal Year (FY2): $500,000
- Third Fiscal Year (FY3): $1,200,000
Set Up your Office
a. How Do You Choose a Perfect Location for Medical Cannabis Delivery Business?
- The demography of the location especially as it relates to the number of Medicaid recipients, the elderly, those with a disability, HIV/AIDS, chronic pain, cancer, glaucoma, multiple sclerosis, severe nausea, epilepsy, and other seizures.
- The demand for the products and services offered by medical cannabis delivery companies in the location
- The purchasing power of businesses in the location
- Accessibility of the location
- The number of medical cannabis delivery companies in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Medical Cannabis Delivery Business?
- Los Angeles, California
- Las Vegas, Nevada
- Cambridge, Massachusetts
- Lewiston, Maine
- Grand Rapids, Michigan
- Badger, Alaska
- Chandler, Arizona
- Seatle, Washington
- Colorado Springs, Colorado
- Gresham, Oregon
c. What Equipment is Needed to Operate a Medical Cannabis Delivery Business?
You will need delivery software and delivery vans. You will also need computers or laptops, internet facility, telephone, fax machine, and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
When it comes to hiring employees for a standard medical cannabis delivery business, you should make plans to hire a competent chief executive officer (you can occupy this position), admin and HR manager, transport and logistics manager, marketing and sales executive (business developer), accountant, delivery van drivers, and customer service officer (receptionist).
Launch the Business Proper
You can decide to organize an opening party to officially launch your business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party. With a proper launching of the medical cannabis delivery business, you will be able to officially inform people in your city that your medical cannabis delivery company is open for business.
a. What Makes a Medical Cannabis Delivery Company Successful?
- Choose a good location and reliable delivery vans
- Partner with cannabis growers and importers
- Hire only competent, hardworking, and trustworthy staff
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your business
- Leverage all available online and offline platforms to promote your medical cannabis delivery business.
b. What Happens During a Typical Day at a Medical Cannabis Delivery Business?
- The business is open for the day’s work
- The vans are ready
- Customer’s requests are taken and deliveries are made
- Scheduled maintenance and servicing of vans are carried out
- Marketing/website upkeep
- Administrative duties
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Medical Cannabis Delivery Business?
- Good driving skills
- Good marketing and sales skills
- Customer services skills
- Interpersonal skill
- Business management skills
- Bargaining skill
- Work experience in the medical cannabis delivery industry
- Experience in managing people
- Experience in business administration
- Experience in handling logistics and transportation software.