Leafly expands cannabis Pickup service to Canada

HIGHLIGHTS

1. Starting with Spiritleaf in Alberta and Saskatchewan, the service is expected to bring on more retailers and expand to other provinces over the next few months
2. Pickup is already available at 400 U.S. cannabis stores in nine states, where the company claims orders made on its service are 20-per-cent larger
3. Ontario and several other provinces prohibit these services, though Leafly says it is actively advocating for those jurisdictions to relax their regulations

Click-and-collect is coming to more of Canada’s legal cannabis market.

Starting Tuesday morning, adult residents of Alberta and Saskatchewan can reserve marijuana products online, then collect them the same day from their local retailer via Leafly Pickup. Seattle-based Leafly is initially partnering with Spiritleaf, which currently has five stores licensed in Alberta and one in Saskatchewan, to launch Pickup in Canada, but is planning to announce more retail partners in the coming weeks and is hoping for a rapid expansion across the country.

“Our long term goal is to really leverage our beginnings in the prairies and other permissible markets to show just how valuable a service like this is in order to move people away from the illegal market and really create a modern ecosystem,” Leafly Canada managing director Jo Vos said in an interview. “Product pricing and availability are the key factors in any purchasing behaviour so by us giving consumers convenient access... we are driving [customers] to legal retail partners and helping the government meet their mandate.”

Edmonton-based Fire & Flower was the first to launch a cannabis click-and-collect service in February, also for its Alberta and Saskatchewan locations, and after its first month of use the company said it was still experiencing “rapid and continuous growth.” The American version of Leafly Pickup launched barely one year ago, in March of 2018, and has already grown to include more than 400 locations in nine states.

Leafly makes money in part through branded content production, Ms. Vos explained, but also by charging retailers tiered monthly subscription fees for access to their platform.

Access to Pickup comes with a higher fee, though Leafly says the average order volume (AOV) of a purchase made using Pickup is 20 per cent above those made in-store.

“This would be bundled into our overall agreement with the retailer when they get onboarded,” Ms. Vos said.

Most Canadians are currently barred from accessing Pickup or any similar service. Provincial laws in Ontario and Quebec, for example, prohibit brick-and-mortar cannabis stores from having an e-commerce presence.

The idea is already catching on beyond the prairies nonetheless. Cannabis NB spokesperson Marie-Andrée Bolduc said the government-owned retailer is already working out the logistics.

“As part of an enhanced convenience offering, Cannabis NB will be offering an in-store pick-up option,” Ms. Bolduc said, adding they "anticipate launching it this summer.”

“Customers will be able to make an online selection from inventory at the store of their choice and then pick up their products at that store within 1-2 hours following the purchase,” she said.

Recent data suggests increasing accessibility of legal cannabis is more effective at convincing existing cannabis consumers to abandon the illegal market. Ontario legal cannabis sales nearly tripled in April, Statistics Canada reported last week, which happened to be when the first group of physical cannabis retail stores opened across the province.

The Ontario Cannabis Store – a government-owned retailer that continues to enjoy a monopoly on digital recreational cannabis sales in the province – abandoned plans to offer same-day deliveries in April, but Ms. Vos says Leafly is “actively advocating with all levels of government” to increase access.

“We know that there is a massive population here and they are hungry for retail and really hungry for access to information and we believe there is a large opportunity to roll this out in Ontario,” Ms. Vos said. “I think it is a very important and compelling case study to bring to Ontario.”