CNBC reports

Uber’s first acquisition of substance

For now, Uber is focused on food, with UberEats, and with its Drizly acquisition, its first foray into regulated substances: alcohol.

Drizly sister company Lantern handles cannabis delivery. Lantern was incubated within Drizly, but when the Uber-Drizly deal closes, the cannabis delivery app will become an independent subsidiary. Lantern was the first to launch adult-use cannabis delivery in Colorado in March.

Lantern president Meredith Mahoney told CNBC via email, “We’re excited that the march toward federal legalization is accelerating, and that big delivery players like Uber are taking notice.”

If M&A was Uber’s answer to a booming alcohol delivery market, could consolidation be on the cannabis menu? Perhaps, says Eaze spokesman David Mack, but regulation will still prove to be a significant challenge. One snag for consolidation could be laws limiting delivery of cannabis alongside alcohol or food. California, a template for marijuana policy across the rest of the country, prohibits delivery of cannabis with food, or with alcohol.

Entering the U.S. cannabis economy also means getting into a business tied to a drug steeped in racial inequality. With Black Americans 3.6 times more likely to get arrested for marijuana-related offenses than their white counterparts, the playing field for legal cannabis is far from level. In fact, rapper and mogul Jay-Z created a $10 million fund to support minority entrepreneurs in cannabis who may otherwise be left behind by the marijuana boom. Delivery apps could eliminate costs associated with setting up storefronts and simultaneously offer exposure for women- and minority-owned brands. Eaze offers a “social equity” menu for Black-owned local stores and dispensaries, and claims the feature helps boost interest and revenue for brands that appear there.

Plenty of delivery apps and logistics companies could enter the cannabis delivery space. Logistics and delivery app Gopuff, despite its name and its origins ferrying snacks and supplies across a college campus, does not deliver marijuana. The app-based company, which ranked No. 36 on this year’s Disruptor 50 list, delivers alcohol and smoking accessories like rolling trays and papers in over 600 American cities, but Gopuff has no plans to add cannabis products to its platform, according to the company. It did buy BevMo!, a chain of 300 bricks-and-mortar liquor stores on the West Coast late last year. And Uber and Gopuff recently announced a delivery partnership for “essential” items.

Read more at  https://www.cnbc.com/2021/05/30/weedshare-uber-and-the-hazy-economics-of-cannabis-delivery.html