Business

Why Denver's First Marijuana Delivery Service Shut Down

Doobba co-founder Ari Cohen (right) makes Denver's first marijuana delivery on August 19. 2021.
Doobba co-founder Ari Cohen (right) makes Denver's first marijuana delivery on August 19. 2021. Courtesy of Doobba
Cannabis delivery has been legal in Aurora and Denver for nearly a year now, but the ripple effect has been minimal. No other cities in the metro area have approved cannabis delivery since then, and fewer than thirty dispensaries between Aurora and Denver combined have partnered with delivery drivers.

Local rules in Denver mandate that delivery licenses must involve social equity business owners, with the programs in both cities intended to help entrepreneurs who were directly or indirectly harmed by the drug war. However, it hasn't turned out that way so far. Doobba, Denver's first cannabis delivery service, announced last month that it was shutting down after less than a year in business.

Doobba founder Ari Cohen had been vocal about the challenges to cannabis delivery, including a lack of dispensaries opting in and burdensome regulations. Despite the tough road, Cohen is proud to have been Denver's first legal cannabis delivery service. We caught up with him to learn why Doobba quit burning and where he sees pot delivery heading in the future.

Westword: When did you decide that a delivery service wasn't worth the resources anymore?

Ari Cohen: About a month before licenses were due for renewal, we decided not to go forward. There were significant costs associated with it, and we've had limited and stagnant growth. One of the things connected to that was limited jurisdictions in which we could deliver. Most of the calls we got on a daily basis were outside of Denver: Englewood, Lakewood, Golden, Parker, Arvada, Lone Tree. All of the community surrounding Denver and places where people had to come into Denver to purchase [cannabis] had people reaching out to us for delivery, as well as people with accessibility issues in those towns.

There's been no movement toward cannabis delivery in any of those towns? Some of them have dispensaries.

Some of those towns have dispensaries, but some don't. The drier the town is in regard to marijuana, the more desire there was for delivery, based on my experience. The movement has been very slow. Marijuana delivery is pretty political in those communities, and it has to be approved on the city and county level, so it's going to take a while in those towns.

Did it ever get off the ground in Denver or Aurora?

Not the way we would have liked, or we would have continued with it.

If you were able to keep going for six more months or another year, do you think anything would have improved?

If we thought it would, we would've held on to it. It would've been incremental improvements, and we probably would be still looking at this in a similar way and finding ourselves a year out. The results weren't anything near the growth we anticipated, but sometimes you have to try it out to learn that. If it works, great, and if it doesn't, then you move on. That was always our approach to this.

It's been almost a year since delivery began, and only a handful of stores have signed up for it so far. Do you think dispensaries approached this in good faith?

I think it depends on the individual dispensary. A lot of people involved in creating these rules at the city and state levels had good intent, I believe. I think they wanted to create a good program with these rules, but there are a lot of forces at play in the cannabis industry pushing this in different directions.

Now that you've been through it, what did you think of the delivery rules in Colorado, Aurora and Denver?

I think the cannabis industry is going through a difficult time in Colorado, and it has been for an extended time. The crash in wholesale pricing makes it a difficult time to do business, and the regulatory environment is pretty stiff. If the rules could be eased up on cannabis businesses — not just social equity, but all businesses — then they'd have a better chance of surviving.

You're writing about businesses shutting down. With some regulatory relief, maybe they wouldn't be. The cannabis industry has been paying taxes for years now, and there should be a little giveback to the industry when it's struggling. The government will lend a hand to other industries during rough patches, but I don't see that happening here.

What would you like the state or local governments to do?

The more regulations we have to follow and fees that pile up, the harder it is for businesses, and the more resources it takes to meet those requirements. Cannabis is one of Colorado's most highly regulated industries, and that comes with a lot of high costs. Businesses are closing down because they can't make ends meet. You're seeing it with store groups and cultivations out here already.

What were some other obstacles that you dealt with over the past year? Did inflation or rising gas prices play a role in your decision?

Gas prices, sure. We also limited our minimum order amount because of the gas prices, which might've hurt our overall sales. We thought it was better than raising prices or adding a surcharge, but it didn't help. Limited ability to deliver hurt, too. We can't deliver to hotels or commercial businesses, where we got a lot of calls from. That's not the case in California, where the delivery model works a lot better.

Newer states to retail sales, like Massachusetts, are coming to scale faster because delivery begins around the same time stores open. Here there has been an entrenched retail model for over ten years, and the majority of people in Denver live within walking or easy driving distance to a dispensary. The delivery model would've worked better here if the whole state was open to it.

Sounds like there were a lot of factors, but what do you think you overestimated the most about cannabis delivery?

The demand for delivery within Denver. I also underestimated how long it would take for other jurisdictions to open up to it. I incorrectly assumed other politicians would want those tax dollars. I've talked with some of them, and they do want that money, but it'll probably take years to happen. There are just other political priorities right now. It'll open, but it will just take time. Years.

What's next for you?

We'll see. I'm looking to stay inside the cannabis industry and do some consulting, and lend a hand to the social equity community as much as I can. Giving advice on operations and innovations, helping people inside and outside of Colorado — things like that. We get calls from new businesses asking for advice around the country.

Any advice for someone who's starting their own cannabis delivery service?

It's a really tough time to start. There's a big downturn in the market, part of which is fueled by the economy, so be careful what you wish for. We did a lot of homework, research and financial planning around this. We had numbers where we thought we should be at different moments in time. We had some momentum at the beginning, but the numbers never were where we thought they should be. That planning made it very clear that we shouldn't proceed.
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Thomas Mitchell has written about all things cannabis for Westword since 2014, covering sports, real estate and general news along the way for publications such as the Arizona Republic, Inman and Fox Sports. He's currently the cannabis editor for westword.com.
Contact: Thomas Mitchell