Uber Enters Canadian Cannabis
The time has come, Uber has stepped into the cannabis market.
Uber is leveraging its existing ecommerce infrastructure and will now allow users in Ontario to place orders for cannabis on its Uber Eats app.
Tokyo Smoke will be the first retailer to trial the service as part of limited rollout and Uber Eats users can now use the existing Uber Eats app to make an order at the nearest Tokyo Smoke store on its marketplace.
To be clear, users will only be able to order for pickup from store.
This shouldn't come as a surprise as there have been rumors of Uber making its entrance into the cannabis market for some time now. While some believed that the American delivery giant would wait until federal legalization in the U.S. prior to making its entrance, after three years of Canadian legalization it could no longer resist the lucrative move.
The Canadian cannabis sector alone saw CAD $2.6BN in retail product sales by the end of 2020, a 120% increase from the previous year. Sales are expected to increase to $4BN in 2021.
Canada’s 4 largest cannabis markets in order of size are Ontario, Alberta, Quebec, and British Colombia. While Uber has declined to comment on any potential expansion into other provinces... well I'll let you assume the rest.
As of the writing of this article shares of (UBER) were down 5%, there is no certainty that this is correlated to the news.
Uber is a business that was perfectly positioned to take advantage of the convenience ordering that exploded through pandemic-induced measures and lockdowns, it is unlikely that the delivery business will slow down any time soon.
This is the first step in what is sure to be a multi-year plan for Uber to enter the cannabis delivery market.
We all knew this day would come; it was just a matter of time. With the existing infrastructure already in place and the dollar signs apparent Uber has finally decided to dip its toes into the Canadian cannabis market.
Is this good for the cannabis industry?
Well, that depends on who you are.
Perspective molds our reality and for larger operators looking to aggressively expand market share with less of a focus on immediately establishing sustainable margins there are definite benefits to giving up control of your own delivery in order to offer additional services to your customers.
For locally owned, community-oriented operators, this is an additional service that could potentially force you to give up significant margin on your products and lose connection with your community.
There are two-sides to every coin and the locally owned operators are continuously being saddled with opportunities to increase convenience while sacrificing individuality and control.