Uncommonly Constrained: the Supply Network for Marijuana

Every business establishes its distribution strategy by reconciling the requirements of the market, and the capabilities of the supply network. That’s normal… but not all businesses are subject to the same constraints.

How about a business where every delivery driver has to be a known drug user?

That’s the unlikely situation in which the people at Eaze find themselves. It’s a San Francisco statup that launched earlier this week, promising to make home deliveries of medical marijuana within minutes.

In order to legally transport marijuana, the drivers (Eaze calls them “care-givers”) must themselves be registered medical marijuana users – although they’re not permitted to drive while under the influence, obviously. Eaze is still working out some form of drug test protocol for its staff…

A registered medical marijuana user is permitted to carry up to eight ounces (227g) of marijuana, and Eaze have set each delivery at an eighth of an ounce (about 3.5g). At $50 a packet, this isn’t a very competitive price, but it seems that Eaze intend to distinguish themselves on reputation, rapid response and convenience. They are currently hoping that Apple will approve an app for buyers, and an Android version is in the works as well.

Cannabis in jars

Don’t expect too much sympathy from your author: I used to work for Her Majesty’s Customs and Excise

Transporting drugs exposes a driver to some personal risk, so Eaze cars will be unmarked. From the news stories to-date (such as this one), it’s unclear whether drivers provide their own car. Quite possibly they do, like mini-cab drivers. There are frequent comparisons to Uber, the mobile app-based vehicle hire service that has done so much to disrupt the taxi business in more than a hundred cities.

In addition to the drug, drivers will have to carry a considerable amount of cash as this is the only means of payment currently available. As this article explains, banks don’t want anything to do with the cannabis industry, even where growers and retailers aren’t breaking the law.

That means not only is the customer unable to pay for the drug by electronic means, but companies are unable to seek loans, or bank their profits. In an industry estimated to be worth billions of dollars in the near future (buoyed by the recreational use of cannabis being legal in Washington and Colorado) it presents a highly unusual – perhaps even unique – set of constraints for a supply network… but a proper supply network it is: Colorado’s regulations demand that a commercial grower must track all their marijuana with care, so RFID tags are the norm.

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