A cannabis delivery service connected to rapper Jay-Z is the latest Sacramento marijuana company to fold amid intense competition for a shrinking slice of the city’s legalized pot industry.
Besides Caliva — Jay-Z is its parent company’s chief visionary officer — at least four more of the city’s 58 cannabis delivery services have closed operations in the last several months. A fifth is restructuring and ending general cannabis deliveries.
More Sacramento companies are expected to shut down because consumer demand for cannabis continues to drop, in part because of inflation eating away discretionary dollars. At least several hundred cannabis jobs have already been lost.
Calivawas advertising discounts of as much as 70% last week on marijuana web sites. Its own site Sunday night said cannabis delivery was no longer available in the Sacramento area.
In his role as chief visionary officer of the Parent Co, which owns Caliva, Jay-Z is in charge of guiding the company’s brand strategy. Parent Co. owns 11 brick and mortar dispensaries in California, though none in Sacramento, and several cultivation facilities throughout the state.
The acclaimed rapper, producer and entrepreneur — in 2103, Time named him one of the 100 most influential people in the world —also introduced his own upper-end cannabis brand, Monogram, with $50 hand-rolled joints in 2020. The products are sold through Caliva and other outlets.
It’s unclear what role, if any, Jay-Z, had in the decisions about the Sacramento delivery.service. When he first joined Caliva in 2019, it was announced the artist would be involved in creative decisions.
Parent Company spokeswoman Colleen Crawford said the company would have no comment.
No stimulus checks plus inflation
Macai Polansky, who owns Cannagram, a Sacramento cannabis delivery company, said the market for legalized cannabis has been shrinking since COVID-19 stimulus checks ended. Inflation, he said, has only accelerated the problem.
“The cost of living has gone up to the point where people don’t have as much disposable income to spend on cannabis,” Polansky said.
He also said there is a lot of competition in the delivery market in Sacramento, so much so, that even a name such as Jay-Z promoting cannabis, is no guarantee of success.
Sacramento city records show 58 delivery service licenses. Another 30 brick and mortar dispensaries hold licenses and 10 more additional licenses are pending. The difference is there is no cap on delivery service licenses like there is on Sacramento on dispensaries.
Polansky said he’s been in business a year and has never made a profit.
“The margins,” he said, “are paper-thin.”
He said he only has been able to stay afloat by not paying himself a salary.
Caliva’s path to closure
For Caliva, the road to business failure in Sacramento. was short.
Less than a year ago, on August 2, 2021, The Parent Co.. paid the delivery service’s former owner Laura Lang $475,000 to acquire Martian Delivery at 8800 Elder Creek Road in Sacramento., according to federal Securities and Exchange Commission filings. The delivery service was re-branded Caliva.
Publicly traded, The Parent Co. did not break down financials for its Sacramento operation, but the company has been struggling. Over the three-month period ending March 31, it reported it lost $32.9 million, almost twice its loss for the same quarter a year earlier
Like other vertically integrated cannabis companies, Parent has also been affected by severe price drops in the cannabis it cultivates and sells to distributors because too much marijuana was grown while demand was slipping.
ICaliva merged in 2020 with several other companies, including, Left Coast Ventures, which owns musician cannabis brands such as Marley Natural and Carlos Santana’s Mirayo, before becoming publicly traded.
Despite its Sacramento setback, and other financial issues, San Jose-based Parent Co. remains one of the largest cannabis companies in California. Caliva branded delivery services still operate in other parts of California.
UnRivaled Brands also struggling
Another company that struggled in the Sacramento cannabis delivery service is UnRivaled Brands, a large West Coast multi-state cannabis operator.
It paid $6 million, show Securities and Exchange Commission filings, to get a foothold in the Sacramento marijuana delivery marketplace in October, 2021, buying up an existing delivery service called SilverStreak Solutions.