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Uber Eats to process cannabis deliveries in Toronto through new Leafly partnership

Toronto cannabis shoppers will be able to request cannabis deliveries through Uber Eats starting Monday. The food delivery platform owned by U.S. tech giant Uber Technologies Inc.
Cannabis is shown in a display jar on the first morning of opening for Toronto's "The Hunny Pot," one of the retail stores licensed to sell Cannabis in Ontario, on Monday, April 1, 2019. Toronto cannabis shoppers will soon be able to request cannabis deliveries through Uber Eats. THE CANADIAN PRESS/Chris Young

Toronto cannabis shoppers will be able to request cannabis deliveries through Uber Eats starting Monday.

The food delivery platform owned by U.S. tech giant Uber Technologies Inc. announced a partnership with online marijuana marketplace Leafly on Sunday that will see it process pot orders for retailers Hidden Leaf Cannabis, Minerva Cannabis and Shivaa’s Rose. 

The partnership will mark the first time Uber has facilitated the delivery of marijuana anywhere in the world. 

Consumers, who must be age 19 or older, will place orders on the Uber Eats app, which stores can receive and respond to through Leafly’s software. The retailers then send staff certified under Ontario's cannabis retail education program, CannSell, to drop off purchases to shoppers, whose age and sobriety are checked on delivery.

Uber positioned the partnership as a way to tackle the illicit cannabis market, which licensed pot producers have long blamed for curbing sales. 

“We are partnering with industry leaders like Leafly to help retailers offer safe, convenient options for people in Toronto to purchase legal cannabis for delivery to their homes, which will help combat the illegal market and help reduce impaired driving,” said Lola Kassim, Uber Eats Canada's general manager, in a news release.

Almost 57 per cent of cannabis purchased in Ontario between the start of January and the end of March was bought through legal channels, the Ontario Cannabis Store (OCS) revealed last week. The finding is based on data reported by consumers to Statistics Canada, leading many to caution such numbers could be skewed because shoppers are less likely to admit illicit pot purchases to government bodies.

Uber isn't completely new to the cannabis business. Uber Eats users have been able to order cannabis products for pickup from Tokyo Smoke stores since November, but the partnership did not allow for deliveries like the new Leafly deal does.

Deliveries were made possible when Ontario temporarily allowed cannabis stores to courier orders to customers in 2020 as COVID-19 restrictions closed pot shops.

The policy was made permanent in March and came with several stipulations from the Alcohol and Gaming Commission of Ontario (AGCO), the province’s pot regulator.

Companies operating cannabis delivery businesses cannot operate entirely or predominately through delivery, orders must be placed with and fulfilled by specific stores versus a network of shops and pot can only be dropped off to customers when the shop it originates from is open to customers.

The AGCO does not allow deliveries to be made by third-parties and products can only be couriered by those with a retail store authorization or their employees.

Thus, Uber Eats couriers dropping off munchies won’t be making pot deliveries too. Stores will hire and train their own staff to deliver orders placed through Uber’s software.

Uber refused to share how much of a cut it and Leafly will take for every sale made through Uber Eats. However, Uber takes a commission between 20 and 30 per cent for most restaurant orders delivered through Uber Eats. The industry has long maintained the cut is too high.

Uber’s move to facilitate cannabis deliveries comes as the company has been branching out beyond making deliveries to restaurants. It has couriered products for apparel and housewares retailers like Indigo Books & Music, Dollarama Inc. and the Body Shop and even entered the competitive grocery delivery business.

The cannabis industry is even more fierce. By the OCS’s count, the number of pot shops in the province surged to 1,460 by the end of March, up from 1,333 at the end of 2021.

The growth has pushed companies to slash prices and adopt loyalty programs, seniors' discounts and even price matching incentives to keep up with rivals.

Marissa Taylor, co-owner of Hidden Leaf, wanted to partner with Uber Eats and Leafly because she sees it as another tool she can use to expand the customer base at her North York location, where a loyalty program is already in place.

"We're a small business and really it was just to help be able to get cannabis to a broader number of people," she said.

"Accessibility is not always easy for everyone... and then to expand our reach, e-commerce is definitely the way to go."

This report by The Canadian Press was first published Oct. 16, 2022.

Companies in this story: (TSX:IDG, TSX:DOL)

Tara Deschamps, The Canadian Press