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Weed Delivery Market Will Hit Big Revenues in Future | Am...
Digital Journal
·
Dec 8, 2022
The latest study released on the Global Weed Delivery Market by AMA Research evaluates market size, trend, and forecast t...
Problem
Buying cannabis is harder than it should be
The existing brick and mortar cannabis retail infrastructure is inadequate to serve the burgeoning consumer demand
74% of cities in California do not have a dispensary
California has only ~4 retailers for every 100,000 adults
Consumers struggle to find a trusted, convenient, safe, low-friction way to buy cannabis products
Solution
Easy, app-based
cannabis access
CanEx offers an app-based, fast and easy cannabis delivery service, combined with a best-in-class consumer shopping and buying experience.
Product
Quick, smooth ordering and delivery of cannabis
We have created a superior user experience throughout the buyer journey, from the consumer’s first visit to the product arriving at their door. And our loyalty program provides superior value over the life of the customer relationship.
Great value on premium quality products
Simple, easy ordering experience via app or web
Straightforward product assortment is driven by data to simplify the shopping experience, increase conversions, and maximize operational efficiency
Product is delivered in about an hour
Easy, no-hassle returns & exchanges
Traction
$10M revenue and 750K orders from 175K customers
CanEx has developed a solid customer base of loyal, frequent purchasers. Currently serving all of Southern California.
Customers
Reliable demographic with proven CanEx loyalty
—
Young consumers prefer cannabis to alcohol
—
“Cannabis should gain four times the number of consumers as alcohol will gain over the next five years … as younger consumers also take longer breaks from alcohol ...”
—Market Watch, December 2022
Millennials and Gen Z’ers are the heaviest users of cannabis at 48% and 21% respectively.
Key cannabis consumer attributes:
Purchase frequently
75% use it every day
Finding a trusted source means sticking with it
Price/value (vs. brand) leads purchase decision
—
Driving loyalty CanEx through product and service
—
Average customer acquisition cost: $19.20
Average transaction revenue: $65
Nearly 50% of customers purchase more than once, and 12% place 10 or more orders
Business model
Competitive pricing and high operational efficiency
Market
$27.1B US market in 2022, expecting $42B in 2026
Use of cannabis products continues to grow steadily — and brick and mortar retail is not keeping pace.
US sales of $27.1B in 2022, with $42B expected by 2026
The California cannabis industry has grown from under $2B in 2018 to a projected $4.5B in 2022, and is expected to hit $5.4 billion by 2026
Why cannabis now?
Experts predicted an explosion in cannabis when Colorado legalized recreational use of cannabis for adults in 2014, followed by California in 2016. The industry has since faced major challenges that have restricted its growth, but an inflection point is coming.
- There are now 21 states that have legalized recreational cannabis use
- Consumer demand is growing relentlessly and shows no signs of stopping
- Challenging market conditions (such as high taxes, etc) are working to cull out low-quality products and inefficient companies
- The industry is poised to produce better products more efficiently at lower prices to meet demand
- More government resources are being applied to restrain illicit markets
Competition
Prioritizing consumer preference unlike
anyone else
Competitors like Ease, Amuse, and Grassdoor focus on offering a broad selection, emphasizing high profile brands. They pay a premium for brands, and sacrifice the leverage of high volume ordering.
Our data says customers prefer value over brand, and are often overwhelmed by too many choices. They want reliably excellent products at a low price. So we buy fewer products, in larger lots.
Our simplified product assortment delivers value in two ways:
- We buy in large lots at deeply discounted rates, and pass that savings to our customers.
- A streamlined inventory enables predictive modeling for delivery routing. Our drivers carry a base assortment in order to fulfill most orders without making a trip to our warehouse, so we deliver orders fast.
When asked the two most important factors in choosing a cannabis product, 60% selected THC level — a 9% increase from the previous year — and 58% said price."
—Forbes on cannabis consumer insights, December 2022
Vision and strategy
"Customer-first" company culture drives a strong
growth strategy
CanEx takes its cue from the most successful B2C companies by remaining laser-focused on the customer’s needs: excellent quality, great value, and superior service.
Near term
Our short term strategy is to emphasize vertical growth (add customers in existing trading areas). This will require an investment in customer acquisition via SEO/SEM and social media paid/organic channels. Resulting economies from vertical growth will increase margin/profitability and prove out operational scaling, positioning the company to meet the challenges of managed growth.
Long term
In the long term, we envision horizontal growth (expansion into new trading areas) by two methods: direct expansion to adjacent areas, and acquisition of cannabis delivery companies in external trading areas. Acquisition targets will be companies that can immediately benefit from operational efficiencies that will come from adopting CanEx business processes.
In-house brand development
When our customer/revenue base is sufficiently scaled up, we will invest more resources to support our CanEx in-house brands — which already rank among the highest selling brands in California — in order to drive increased customer loyalty, bolster margins, and significantly enhance the value of the company.
Funding
Use of funds: acquisition growth & capacity expansion
- User acquisition
Investment in paid traffic (SEM, paid/organic social media) to drive vertical growth in existing trading areas in order to increase margins - Expansion of capacity
Adding additional resources (cars and drivers, etc) to meet increasing demand
Founders
Jim Damask
& Shannon Bitzer
Jim Damask, CEO
Jim was the Cofounder of lndo-Cali, a cannabis delivery company that was formed in 2018 and merged with CanEx in 2020, at which time he assumed his current role of CEO at CanEx.
Prior to his entry into the cannabis industry, Jim had 20 years of experience building companies equipped to capitalize on highly regulated, non-transparent markets.
In 2000, he started an institutional commodities firm that focused on trading in deregulated energy markets. He grew the firm to over 50 traders and $25 million in annual revenue before it was acquired by a public company.
In 2005, Jim started an institutional brokerage commodities firm focused on the physical and financial trading of agriculture, fuels, and energy. That company grew to over 100 employees with 16 offices worldwide. In that role, he was responsible for maintaining compliance in nine countries by implementing specific accounting standards and authoritative standards for each location. He maintained compliance with agencies such as the Federal Energy Regulation Commission (FERC), Alcohol, Tobacco, and Firearms (ATF), and many others.
Jim is a highly organized, detail-oriented manager who thrives in difficult regulatory and operational environments. His management skills have enabled him to keep CanEX efficient, profitable, and free of debt in a market where much his venture-funded competition has taken on considerable losses and debt in response to economic headwinds.
Shannon Bitzer, COO
Shannon is a Marine Corps veteran who left a position in TV development at Fox Studios to pursue an entrepreneurial opportunity in the cannabis business.
In 2016, when he founded CanEx, Shannon was hands-on with every aspect of managing the company, and CanEx showed impressive growth.
In 2020, he struck an agreement with Jim Damask to merge CanEx with Jim’s company, Indo Cali. Shannon brought a rare combination of industry experience and skills to the newly formed company.
In his current role as COO, he oversees the bulk of the company’s operations, including staffing, purchasing, and market intelligence, among other duties.
Shannon is known for his work ethic, discipline, and highly organized, process-driven approach to management. He attributes these characteristics to his military service, which continues to play a significant role in his success.
Summary
Why CanEX?
CanEx is extremely well positioned to capitalize on market expansion. CanEx has a “customer-first” culture that is focused on providing the best customer experience and building long term, high value relationships directly with consumers.
- DTC business with fast-growing list of loyal customers
- High touch customer service
- Purchasing leverage to keep costs/prices highly competitive
- Data driven operations, including class-leading delivery operations
- Best-in-class technology proven in last-mile delivery operations with brands like Domino's and Papa John's
And of course, our greatest asset is our large and growing list of loyal customers.
