Here’s how technology is changing Arizona’s cannabis industry
Just over one year ago, Arizona voters took to the polls to decide whether to allow the sale of adult-use recreational marijuana in the Grand Canyon State. Proposition 207, which was supported by 60% of voters, has since gone into effect and the cannabis industry has enjoyed a healthy market, with the Arizona Department of Revenue collecting $135,233,902 in taxes through medical and recreational cannabis sales as of August 2021.
From the outside looking in, the cannabis industry seems simple enough — plants are grown, packaged and sold. But like most businesses, technology has introduced greater efficiencies for both consumers and dispensaries.
One such product is Supurb, a Phoenix-based cannabis industry delivery platform.
“The idea behind Supurb was driven by the need for technology in the cannabis sector,” explains Jonathan Ghiz, CEO and cofounder of Supurb. “When we first started the company, around the time when Postmates and DoorDash were taking shape, there weren’t many technology solutions for dispensaries since big corporations viewed cannabis in a negative light. We saw that hesitance as an opportunity to capitalize on a niche within the industry that wasn’t being fulfilled, and that was delivery.”
Supurb began operations in 2017 and now has partnerships with 16 dispensaries across the Valley, with plans to expand into new markets across the country in the coming months.
Currently, only those enrolled in the state’s medical marijuana program can use Supurb due to a provision in Prop 207 that prohibits recreational delivery until 2023. Some patients have debilitating illnesses that prohibit them from leaving their homes.
Users enter their address on the company’s website to generate a list of nearby participating dispensaries. They can shop around for deals before submitting their orders as easily as placing an order for pizza delivery.
The driver, however, won’t arrive with a car topper advertising a dispensary. Ghiz notes that by law, all cars must be unmarked. “The products are packaged discreetly. We want to make sure that when we arrive on location privacy is maintained.”
Even though anonymity is prized, verification is required. When the order is placed, the dispensary must confirm that the customer is a patient and has the available allotment for the purchase he or she is making. Those enrolled in the medical marijuana program can purchase up to 2.5 ounces of cannabis every two weeks.
“When drivers arrive, they verify the patient’s medical card, state identification and that their allotment is still accessible,” Ghiz says.
Prop 207 doesn’t allow for recreational delivery for another 14 months, but Ghiz says that Supurb has ample experience putting out a product under strict compliance. “Taking our technology and applying it toward the recreational consumer will be a frictionless transition for us.”
While Supurb helps patients get cannabis from the comfort of their homes, it doesn’t procure the product itself. Rather, the company acts first as a lead aggregation service.
“A lot of dispensaries are interested in delivery but find that the economics of supporting it internally just aren’t there,” Ghiz explains. “We provide not only the technology to seamlessly transact cannabis delivery orders but also the lead generation and marketing as well. All of those little intangibles coupled together creates a synergistic relationship between us and the dispensary, to a point to where they look at us as trusted partners and advisors.”
Establishments using Supurb pay a commission based on orders facilitated by the platform, with no upfront costs or guaranteed rates. The company offers two levels of services: a managed model and dispensary-run model. In the former, Supurb hires drivers and purchases, maintains and insures vehicles. It also registers drivers as agents of the client dispensary as required by the state.
JARS Cannabis, with three Valley locations and one under development in Payson, utilizes the dispensary-run model for its medical patients.
“We do the deliveries ourselves because we already had that infrastructure in place,” notes Dalyn Oakes, director of growth at JARS Cannabis and a former Supurb employee. “We already had the drivers, the vehicles, the insurance and the liability coverage. There’s an upfront cost to buying the vehicles, but at the end of the day we’re soaking up an extra 8% of total sales from these deliveries.”
Since JARS uses Supurb primarily for generating delivery orders, Oakes says, the company pays a smaller fee per transaction.
“If you want a turnkey solution, Supurb offers that. It’s like DoorDash or GrubHub where they have drivers working with multiple operations,” Oakes notes. “That’s a big value add. If we’re super slammed, we have to stop deliveries and that’s lost revenue. If we’re slow and have multiple drivers on shift, that’s wasted overhead.”
Ultimately, Oakes believes that delivery will constitute a larger portion of cannabis industry sales in the long term, especially as recreational delivery comes online and the novelty of going to a dispensary wears off. “Delivery will be at the minimum 25% of total revenue in the future,” he says. “If you’ve ever had a pizza delivered, you know how convenient that is. Now imagine that someone is coming to your door with cannabis.”