🔒Cannabis delivery services could help jump-start CT adult-use sales

When John “Jack” Cochran visited the Virginia home of his former player and retired NFL star Jordan Reed several years ago for a birthday party, he had no idea he’d leave with a business idea and entrepreneurial mindset.

But that’s exactly what happened.

Cochran — who coached high school football across Connecticut for two decades, winning eight state championships along the way — recently launched cannabis delivery service Green Coach Delivery, serving the towns of Manchester, East Hartford, Glastonbury, South Windsor and Vernon.

Cochran coached Reed, a New Britain native, at New London High School, and the two have since become friends.

Reed’s NFL career — including stints with the Washington Commanders and San Francisco 49ers — ended in 2020, due to concussion-related health issues, and the former tight end has been public about how cannabis helped him cope with head injuries.

Cochran and Reed discussed starting up a delivery service company to serve the growing adult-use industry.

“I was pretty intrigued by it,” Cochran said in a recent interview.

A collaboration between the two eventually fell through, but Cochran decided there was a business opportunity in Connecticut once his home state legalized recreational marijuana use in 2021.

Green Coach became the first cannabis delivery company to launch in Connecticut on June 9, and now other competitors are readying to enter the market in the coming weeks and months.

“It’s a unique license type in that it’s a very low barrier to entry, but the upside is pretty large,” said Hartford-based attorney DeVaughn Ward, who plans to open a delivery service company called CannaCart with his uncle. “We are a delivery society now — we get everything from liquor to pharmaceuticals to food delivered to us.”

How delivery works

Adults who want to use the service can view menus and place orders directly through a delivery company’s website or phone application. Customers can only choose cannabis products from Connecticut licensed adult-use and medical cannabis dispensaries.

So far, Green Coach only handles deliveries for a Manchester dispensary owned by Fine Fettle, a Connecticut-based retailer with four in-state locations and two Massachusetts pot shops. Green Coach hasn’t expanded to other retailers yet, but that will come with time, Cochran said.

Delivery companies earn revenue by placing a surcharge on orders. Ward said his business, which he expects to launch in the next several months, will utilize similar fleet software used by large companies like UberEats and Amazon.

Ward, a senior legislative counsel for the Marijuana Policy Project advocacy group, predicts 15% of retail cannabis sales will be made online once the market matures and more delivery companies begin operations.

“Folks enjoy delivery, it’s just the reality,” Ward said. “People like the convenience of stuff delivered to their doorstep, and cannabis is no different.”

The retail industry could use the potential sales boost. Connecticut has collected about $3.2 million in taxes through four months of adult-use cannabis sales, according to data from the state Department of Revenue Services.

That’s a far cry from the $20.4 million in tax revenue the Office of Fiscal Analysis projected would be generated during the first year of recreational sales.

Since the adult-use market debuted on Jan. 10, through May 31, recreational sales totaled $43.4 million.

Sarah Westby, a partner at law firm Shipman & Goodwin and chair of its cannabis practice, said it’s hard to predict how much of the market online delivery sales will make up, but she agreed it will likely be a popular service.

“I think if we’ve learned anything from the pandemic, it’s that everyone likes the convenience of door-to-door delivery, and we’re all willing to pay a premium for that,” Westby said.

Westby said 11 provisional licenses have been issued to companies looking to establish delivery services in Connecticut. Green Coach is the only one to become operational with a full license.

These companies will compete for customers, and Westby said their geographical location and delivery area range could be keys to their success. There is a high concentration of companies with addresses in Hartford and New Haven counties, but fewer players are eyeing some of the more rural corners of the state, Westby said.

“A lot of it depends on how many retail stores open up and where they’re located, and how many delivery businesses are up and running to work with them,” Westby said. “If you’re delivering to Torrington from a store that’s in Norwalk, that’s probably not going to be a feasible delivery range.”

While the amount of capital needed to start a delivery service company is much less than what’s needed for other cannabis businesses, like retailers and cultivators, Westby said the margins are also thinner, and the market opportunity is less clear.

Tremendous upside

Ward, a former member of Hartford Mayor Luke Bronin’s administration, was a major player in pushing state lawmakers to legalize recreational cannabis. But his entrance into the delivery service market was partly luck.

He said his 70-year-old uncle, Guy Clements, approached him about pursuing a delivery license, but he only submitted one general lottery application, which cost $250.

Overall, there were nearly 1,200 applications filed in the delivery service lotteries vying for just five general and five social equity licenses.

“I know other cannabis entrepreneurs who submitted multiple slots to try to win one of the delivery licenses. I submitted one and didn’t think anything of it,” Ward said of his unlikely lottery win. “I didn’t originally have plans to operate a cannabis delivery business. I’m a lawyer and a lobbyist.”

After spending the past six-plus months learning the ins and outs of delivery service operations, Ward said his company, CannaCart, expects to be fully licensed and operational by Labor Day weekend.

He said his team is working to finalize a lease for a Bloomfield headquarters.

“With anything there’s going to be growing pains, but I think the upside is tremendous,” Ward said.

Statewide ambitions

Cochran was a social equity applicant, which means he met criteria that includes having an average household income of less than 300% of the state median household income over the last three tax years, and living in an area disproportionately impacted by drug-related criminal convictions.

Green Coach is backed by Massachusetts-based multistate operator Curaleaf as an equity joint venture, which allowed it to bypass the lottery process. In addition, a Massachusetts limited liability company — The Collective — founded by former Curaleaf executive Patrik Jonsson, is listed as a Green Coach principal.

An equity joint venture is a business in which a social equity applicant partners with an existing medical cannabis retailer or cultivator to establish a new company. That business must be majority owned by the social equity applicant.

“Patrik Jonsson was tremendous in helping us get going with a business plan — a lot of us are very new to this industry,” Cochran said.

Cochran said his company has plans to hire at least 25 employees and three to four support staff during its first year. The goal is to eventually expand statewide.

He said he wants to hire a majority of his employees from places disproportionately impacted by the war on drugs, and help with the state’s community reinvestment efforts.

“I think a lot of states missed the bull’s-eye on delivery,” Cochran said. “Massachusetts and other states have had a hard time setting up social equity delivery companies.”