Cannabis Couriers

On June 30 the Colorado Marijuana Enforcement Divisions issued its very first cannabis transporter licenses. This new type of cannabis business license, which comes in both retail and medical variants, allows independent cannabis transporters, or “couriers,” to transport cannabis and cannabis-infused products between businesses throughout the state and to store products in their own licensed facilities.

Effectively transporting product throughout the supply chain is a vital aspect to any business. Cannabis is no different. However, the regulations in place limited the ability of cannabis businesses to efficiently and cost-effectively distribute their products across the state. The cannabis transporter license seeks to address past inefficiencies and provide cannabis businesses with the flexibility and logistical expertise required to advance distribution practices within the industry.

“This change aligns the licensing of cannabis couriers with other cannabis businesses and subjects the couriers to similar levels of oversight and regulations.”

To appreciate the value of the transporter license, it is important to understand the (brief) history of regulated cannabis transportation in Colorado. Previously, the transportation of cannabis could be performed by anyone holding a valid occupational license. While this approach reduced barriers to market-entry for many couriers (an occupational license costs $75 compared to the $4,900 required for the transporter license), the regulatory structure provided limited oversight of transportation practices and industry participants in comparison to other businesses operating in the regulated cannabis industry.

In addition, deliveries were required to be completed on the same day (within 24 hours) of the initial pickup. If the deliveries could not be completed within this specified window, the product would need to be returned to the originating location, documents would need to be adjusted, and the transport process would start all over. As you can imagine, this time limit proved to be a major challenge for companies doing business outside the greater Denver metro area, especially when accounting for winter weather.

The transporter license and the privileges and obligations associated with it represent a major shift from prior practice in two important respects. First, the transporter license is now required for independent cannabis couriers. This change aligns the licensing of cannabis couriers with other cannabis businesses and subjects the couriers to similar levels of oversight and regulations. For instance, the sources of funding for license applicants are scrutinized by the Marijuana Enforcement Division, and a courier’s facility must meet the same security requirements as a cultivation or dispensary. Critics have argued this license is simply an additional means for the state to generate revenue from the cannabis industry, and while this is true at one level, the increase in regulatory oversight brings an element of transparency and accountability that was not present in cannabis transportation before.

Second, licensed cannabis transporters are given seven days to complete their deliveries and can establish licensed buildings across the state where they can temporarily store their product. This change is huge and has the potential to fundamentally alter cannabis distribution for the better. By giving couriers a longer window of time to complete their deliveries, the couriers have more control over their schedules, which in turn allows them to consolidate driving routes to promote efficiency. More efficient routing results in fewer trips, which over time reduces the costs of distribution. In the words of the CEO of one of the fist couriers to secure the transporter license, this storage capacity finally gives independent courier companies the opportunity to provide their clients with “true logistics services.”

What hasn’t changed as a result of this new license? Cannabis businesses such as a cultivations and infused-product manufacturers can still distribute their own products without obtaining the transporter license. Cannabis is packaged for shipment the same way as before, and the documentation required remains largely unchanged. Finally, the state’s seed-to-sale system is utilized to ensure cannabis is continually tracked and accounted for throughout the distribution process.

At the time of this writing, only three transporter licenses have been issued—a number certain to cause challenges in the short-term. However, this license represents an important step towards professionalizing and regulating cannabis transportation, and in the long run will better align cannabis distribution practices with those of the other consumer goods.