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HIGHLIGHTS
  1. Existing firms say OCS faces logistical challenges in offering same-day delivery
  2. One provincial wholesale warehouse will slow deliveries, companies say
  3. Delivery companies have to compete with other services for a limited pool of drivers 

Randy Rolph wants to deliver weed on behalf of the Ontario government.

His company, Pineapple Express Delivery, is among the bidders for a contract to supply same-day delivery service to Ontario Cannabis Store customers. The OCS is planning to start offering expedited service as soon as March 1, though Mr. Rolph and others in the last-mile delivery space warn the provincially-owned online retailer faces challenges launching a service robust enough to accelerate what sales data shows to be a slow start for legal pot sales in Canada’s largest consumer market.

“This could only really service the [Greater Toronto Area],” said Ryan Dempsey, a former Uber Canada executive who is now CEO of Eddy Cannabis Delivery. Mr. Dempsey is still considering whether to bid on the contract, noting the OCS having just one distribution centre in the Oakville area limits the amount of increased access to products that such a service could provide.

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“We still don’t think this is the ideal solution in terms of where we think things will need to go long-term,” Mr. Dempsey said, arguing Ontario should follow Manitoba and Saskatchewan in allowing delivery services to partner with local retailers to fulfill last-mile delivery of orders placed online.

Ontario law gives the OCS exclusive right to sell recreational cannabis online in the province. Neither the OCS nor several provincial government officials would comment on whether Ontario might allow such partnerships in the future.

Yet same-day delivery “is not a simple space,” said Mr. Rolph. “It is not the same thing as just being in the logistics space, this business is very tedious but can also be very hectic.”

He argues lack of convenient access in Ontario is depressing sales activity and the latest data supports that argument. Ontario residents purchased nearly $21.9-million worth of legal cannabis in the six weeks following legalization on Oct. 17, according to Statistics Canada data published last week.

That figure is barely 12 per cent higher than the $19.4-million in legal pot sales generated over the same time in Alberta, a province home to less than one third as many people as Ontario. Dozens of physical cannabis storefronts have been operating in Alberta since October, however, while Ontario is not due to open its first 25 legal pot stores until April 1.

“I could have already launched in Saskatchewan by now,” said Mr. Rolph, whose company currently offers recreational pot delivery services in Manitoba and medicinal marijuana deliveries in the Toronto area, “but the problem is the stores in Saskatoon, just to name a few, they can’t even open for online delivery right now because they don’t even have enough supply just for the people walking into their stores.”

Even servicing just the GTA with same-day delivery could prove challenging from a logistical standpoint. Many delivery services such as Uber and Lift crowd-source their drivers “but there is only a certain pool and everybody is fighting over the same drivers,” said Mr. Rolph.

“People don’t realize that your driver pool can be very limited especially when you’re fighting over them with Uber, Foodora and Doordash,” he said.

Pineapple Express drivers are employed directly by the company on either an hourly or salaried basis and Eddy’s Mr. Dempsey says it would take roughly two dozen full-time employees to provide same-day delivery for the OCS just to cover the GTA region.

“You’re going to need trucks and warehouses and actual delivery people,” Mr. Dempsey said. “Then the question becomes, can it be done at a low enough cost where it would actually make sense to consumers?”

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