By Peter Hecht
The Sacramento Bee
WWR Article Summary (tl;dr) The pot-delivery business is booming in California. Using cars instead of dispensary counters, small marijuana startups have proliferated in recent years, serving a diverse customer base that includes homebound medical patients as well as people in communities where dispensaries are banned or few in number.
The Sacramento Bee
The evening’s first customer emerged sleepy-eyed from the doorway of his apartment near Sacramento State for his marijuana concentrates: 3 grams each of strawberry, banana and pear flavors. He had few words for the delivery driver who handed him a white bag containing the order. Their transaction lasted mere seconds.
“He was already medicated, I assume,” said driver Kody Kolstrup, 20, as he climbed back into the Toyota Prius owned by GramUp, an upstart Sacramento venture delivering marijuana buds, edibles and other cannabis products.
Along with fellow employee Amanda Campos, 18, Kolstrup readied the GPS for another stop: Richard Stein’s home in North Highlands.
A week earlier, Stein, 53, had sent an urgent text for marijuana. He was about to undergo a painful round of chemotherapy for multiple myeloma, a cancer attacking his bone marrow. A GramUp car rushed out with an eighth-ounce of a strain called Space Queen.
“I put a special note in their system — ‘In a large hurry. Need ASAP,’ ” said Stein, a former warehouse manager, after inviting Kolstrup and Campos into the living room of his mobile home, where they filled the same order again. “Bam! It was here in 15 minutes.”
The pot-delivery business is booming in California. Using cars instead of dispensary counters, small marijuana startups have proliferated in recent years, serving a diverse customer base that includes homebound medical patients as well as people in communities where dispensaries are banned or few in number.
The estimated hundreds of mobile services for medical marijuana are operating in a largely unregulated sector of the cannabis economy, and state lawmakers and officials in cities such as Sacramento are scrambling to draft rules for the businesses or seeking ways to close them down.
Sacramento officials this month are to begin considering guidelines for issuing medical-marijuana delivery permits to allow deliveries only from the city’s 30 existing licensed retail dispensaries. Yet the freelance cannabis couriers already streaming on city streets easily dwarf the number of dispensaries.
Two leading online pot-consumer sites, Weed Maps and Wheres Weed?, each list 110 marijuana delivery services in Sacramento and nearby communities, including in Yolo, El Dorado and Placer counties. None of these services is authorized to operate in the city. Furthermore, Sacramento County bans all marijuana businesses.
Medical marijuana advocates say deliveries are an essential service for many patients with serious illnesses or disabilities.
But the businesses also are readying to deliver recreational pot to adults 21 and over should California voters approve November’s Proposition 64. The measure contains language authorizing delivery licenses for “a licensed retailer” or marijuana “micro-business” in addition to permitted nonprofits, but offers few detailed rules.
And while delivery services are explicitly banned in numerous jurisdictions throughout the state, including Folsom, Citrus Heights, Rancho Cordova and Elk Grove, the initiative also includes language restricting local governments from keeping pot couriers off public roads.
Entrepreneurs are seizing opportunity in this ill-defined cannabis business sector. Last year, a Silicon Valley company called Eaze received $12.5 million in venture capital for an app that allows consumers to order medical marijuana from home. Eaze handles no marijuana itself; customers use the application to connect with delivery services in more than 100 California cities. These businesses mostly operate out of warehouses or offices that don’t serve walk-in customers.
“I view delivery in the future as being the dominant source in which patients or consumers receive their medicine,” said Eaze founder Keith McCarty.
Many delivery businesses originate with individual marijuana growers who form patient “collectives” under nebulous state medical-marijuana rules due to be phased out by 2018. They use marijuana social networks to connect with other growers and product manufacturers to expand menu selections for customers who order and receive weed as easily as they get pizza delivery.
“California is generally a progressive state and we like e-commerce,” said Mike Ayers, founder of the Sacramento Area Cannabis Delivery Association, a group lobbying the city and state lawmakers to approve rules permitting mobile dispensaries. “What’s more convenient than sitting at home and ordering whatever and having it arrive at your door?”
Permit pressures
GramUp’s co-founder, Pedro Rivas, 28, started his business two years ago after becoming frustrated with working long hours as an accountant doing municipal and corporate audits for firms in San Diego, Danville and Sacramento.
“I was too young to hate my job,” he said.
Looking for entry into the cannabis business, he got a marijuana recommendation from a doctor, citing sleeplessness. The idea to launch GramUp came soon after as he set out to create a membership model, hoping to become pot delivery’s “Costco of weed.”
From a North Sacramento dispatch office, GramUp’s six-member workforce fills phone and online requests from customers who pay a $30 monthly fee to order “member-priced” buds, gummy squares and honey oils.
Before heading out in one of the two company Priuses, drivers verify patient identifications, which members upload online. On their cellphones, drivers also have copies of GramUp’s standard tax-registration form and seller’s permit from the California state Board of Equalization, as well as its articles of incorporation as a nonprofit medical marijuana collective. In addition, they carry their own IDs and copies of their personal doctors’ recommendation for marijuana in case they are stopped by police.
For the chance to earn $10 per hour, plus $5 per delivery, GramUp drivers Kolstrup and Campos deferred plans to study art and attend cosmetology school, respectively. They see their jobs as steppingstones to careers in a lucrative industry.
“It’s one of the most influential business out there,” Kolstrup said. “So why not join?”
The pair were greeted warmly when they arrived at a Victorian house in midtown Sacramento, where Oscar Mejia, 24, stepped out of a rear door with his Jindo mix dog, Jack. Over Jack’s excited barking, Mejia led the couriers to his backyard, where he paid cash for three “pre-rolled” joints and a small quantity of marijuana buds.
Mejia, who makes his living playing poker, said, “I have bad anxiety, which isn’t so bad anymore because I smoke pot.”
He said he likes the discreetness of using a delivery service rather than dispensaries, adding: “I can get a half-ounce of good-quality stuff for much cheaper and stay at home.”
Yet Sacramento officials say there is no ordinance to allow businesses to deliver marijuana to Mejia or anyone else in the city.
“All the (delivery services) out there are not legal,” said Brad Wasson, the city’s revenue division manager.
Wasson said California’s medical marijuana regulations allow cities to issue delivery permits only to retail dispensaries with fixed locations. He said the city is contemplating creating delivery-licensing fees for dispensaries, with the fees paying for civil enforcement actions against unlicensed operators.
Kimberly Cargile, who runs A Therapeutic Alternative dispensary in midtown, said every dispensary in the city — they are capped at 30 — is eager to add a delivery service.
“We are happy the city is making a compassionate decision to allow us to offer this for our patients,” she said.
Rivas said the dispensaries can’t handle the demand for home-delivered marijuana and he feels GramUp deserves a permit as well.
“This is going to give the dispensaries a monopoly,” he said of the city’s plans. “It’s like creating another Comcast.”
The debate is unfolding after Gov. Jerry Brown last year signed bills to tax, license and govern California’s robust medical marijuana industry by 2018. But the legislation, designed to track marijuana transactions and diminish black-market sales, largely failed to factor in mobile-pot businesses.
Assemblyman Rob Bonta, D-Alameda, who worked on the regulations, said the new rules only say licensed dispensaries can do deliveries. Without follow-up legislation, “this proliferation (of delivery services) is short-lived,” Bonta said. “They will have an end that is near.”
Bonta recently sponsored Assembly Bill 1575, which would have expanded the definition of marijuana stores to include “non-storefront” dispensaries, such as warehouses or packing centers from which drivers could be dispatched under a state-monitored “track-and-trace” delivery system. It died in committee but is expected to be resurrected next year.
“It is our intent to provide more regulations around deliveries,” Bonta said. “You will need to get a full license as a dispensary. You can’t just get one for your home or your garage. That’s not a dispensary. This is a professional industry. You have to have quality controls … not just this free-for-all.”
For now, Casey Knott, 30, operates his EZ Tree marijuana-delivery service out of a Sacramento-area home office. There, beneath his Board of Equalization tax certificate, he looked on as his dispatchers, Julie Rich, 36, a former bank check fraud investigator, and Michael Caballero, 31, a former Starbucks server, packaged marijuana into bags with the EZ Tree logo.
“There is no guidebook to tell you how to run a delivery service,” said Knott, who left real estate to become a pot entrepreneur. “I feel like one of the pioneers. … We can kind of write the handbook ourselves.”
Knott contracts with growers he meets through Weed Maps, and obtains pot candies, foods and other products from Bay Area manufacturers such as Kiva Confections and Bhang chocolates. He equips drivers with product-filled backpacks to keep in their homes, from where they can dispatch quickly to downtown Sacramento, Citrus Heights, Antelope, Orangevale or beyond. He said the business pays sales taxes to the state.
EZ has big plans if voters pass Proposition 64.
“If it becomes legal recreationally, it’s going to be insane,” Knott said. “If we are allowed to keep delivering, business will triple.”
Delivery issues
Pot deliveries are thriving across California, despite efforts to rein them in. Los Angeles has gone to court to enforce a ban on marijuana deliveries, and yet Weed Maps still lists 90 services operating in the city. Thirty companies advertise in San Jose, which also has a ban.
The services blossomed after federal authorities in late 2011 launched raids on California dispensaries and sent dispensary landlords letters threatening property seizures. The crackdown helped officials in Sacramento County to shutter as many as 100 pot storefronts.
As the brick-and-mortar shops vanished, Knott saw a demand for deliveries. He saw little business risk.
“The startup costs were low and it was extremely safe,” he said.
But as pot delivery has proliferated, safety has become an issue. In February, a medical-marijuana courier was robbed of $8,000 in cannabis products by people in Antioch who brandished a gun and also stole his wallet and car. In December, two Oceanside men were arrested on suspicion of beating a delivery driver, zapping him with a stun gun and taking a pound of marijuana.
Recently one of Knott’s drivers, Caballero, was greeted outside a downtown Sacramento apartment building by a customer. As Caballero looked down at his cellphone to check the order, the man grabbed the bag containing $380 worth of weed products.
“I just froze,” Caballero said. The man fled, locking a security gate behind him. Caballero called Knott, who told him to leave. They said police later took a report.
Sacramento police Sgt. Bryce Heinlein said authorities have seen no significant problems involving marijuana delivery drivers nor an uptick in crime from people targeting them. But, he said, “anytime you have something worth money, people will want it” and may use violence to get it.
Ayers of the Sacramento Area Cannabis Delivery Association said delivery services pool information through email on suspicious or problematic customers. The services’ key defense against crime is having copies of clients’ identification and medical marijuana recommendations. And Ayers said drivers are advised against traveling with more than $60 in cash and $300 in marijuana.
With his delivery business, Ayers calls and interviews customers before sending drivers.
“That’s paramount,” he said. “What is the tone of the customer? Are they angry? Are they inebriated?”
Tom Lake, 27, was neither as Caballero recently rang the bell at the gate to his midtown apartment.
“Hey, Thomas, this is Michael from EZ Tree,” Caballero said as Lake, a tall man with a flowing beard, came out tapping a cane. Lake cheerfully led him inside.
“Certain people don’t want delivery people coming into their house,” Lake said. “My feeling is I don’t want to look like I’m doing a drug deal on the corner.”
Lake uses marijuana to sleep at night, a challenge for many people with blindness. It also calms him on days of navigating downtown streets and light-rail rides, after which “my anxiety can get high and I have to bring it down a notch,” he said.
They settled into his apartment and chatted as Caballero filled his order of three 8-ounce bags of a strain called hashberry. Caballero sounded an upbeat note as he said goodbye. He promised Lake his next delivery was just a voice text or phone call away.
