Cannabis-related e-commerce websites are growing in the U.S., but online sales of marijuana remain out of reach for now.
Online purchasing, payment, shipping and delivery of the plant is illegal, however many cannabis dispensaries are setting up shop online to allow shoppers to peruse inventory before coming into a store.
Laws vary by state, but eight states and the District of Columbia have laws that allow for recreational use of marijuana and 29 states as well as D.C., Puerto Rico and Guam have laws allowing medical marijuana use, according to the Marijuana Policy Project, a pro-legalization organization.
There is no law that explicitly prohibits online sales, but most states have laws that restrict selling and buying to specific licensed locations, says Taylor West, deputy director at the National Cannabis Industry Association. West estimates that the majority of its 1,200 members have some type of online presence despite not being able to sell online.
Dispensary Diego Pellicer Washington, for example, lists its location, hours and pricing online, and it sells cannabis-related products online, including pipes in which to smoke marijuana. Diego Pellicer started selling medical and recreational cannabis in its Seattle dispensary in the fourth quarter of 2016 and expects to generate $10 million in sales in its first year of operation, says co-founder Alejandro Canto. The retailer is ahead of schedule on meeting that goal, he says. If online cannabis sales were permitted, Canto estimates that its sales could increase 10-35%.
“When federal law changes, this will change the game entirely,” Canto says. “At that point, the distribution side of the industry will come out and flourish.” Federal law still prohibits marijuana sales.
The patchwork of marijuana laws, however, doesn’t stop the growers and sellers from sharing information about their products. Cannabis sellers can market their products online via marketplaces such as MassRoots. The cannabis portal has more than 1.5 million app downloads and its website has hundreds of thousands of page views each month, says a MassRoots spokeswoman. Consumers can see prices, find dispensaries near them, read reviews on different cannabis strains, and read which symptoms the plant aids, such as back pain, nausea or epilepsy.
“If it were legal to sell cannabis online and ship it, it would open up an entire new revenue channel and likely significantly accelerate our growth,” the MassRoots spokeswoman says.
While the National Cannabis Industry Association’s West is sure businesses would love to sell products directly to consumers online, the cannabis industry is extremely regulated and most of the association’s clients are focused on other priorities. Those priorities include legalization, taxation easement, open banking access for proceeds—as currently there is no law protecting financial service businesses that provide services to marijuana-related legitimate business and many cannabis sellers have trouble receiving and maintaining access to bank accounts—and clear digital marketing rules, she says.
Because cannabis is not legal under federal law, cannabis sellers inhabit a gray area with unpublished rules that are enforced sporadically when it comes to advertising their products online, West says. For example, a cannabis retailer may have a Facebook page for its business, but it can’t make sales offers to consumer. However, Facebook Inc. has not clearly defined what a sales offer is, and some National Cannabis Industry Association members have had their pages rejected by the social media network because they listed their store locations, West says.
Search giant Google Inc. took MassRoots’ app, which it has had for four years, off of app store Google Play for four months as a part of a compliance review, the MassRoots spokeswoman says.
“It’s never quite clear what is crossing a line, which makes it difficult for businesses to play by the rules,” West says.
Legal cannabis use in the U.S. is a growing market. Legal marijuana sales hit $6.6 billion in 2016, according to New Frontier, a research company that analyzes the marijuana industry. Medical marijuana accounted for $4.7 billion with recreational pot accounting for $1.9 billion in sales. New Frontier projects the industry will exceed $24 billion by 2025, with a compound annual growth rate of 16%.
Many consumers are in favor of legalization too. A CBS News poll released Thursday shows that 61% of U.S. consumers think marijuana use should be legal, up five percentage points from a year ago and the highest percentage recorded in the poll on this topic. For medical marijuana use, 88% of U.S. consumers favor legalization. The poll was done via phone April 11-15 among a random sample of U.S. adults.
Former President Barack Obama said the federal government would not interfere in states where non-medical use of marijuana was legalized. President Donald Trump is on record saying during his campaign in 2015 that recreational pot use was “bad,” but later that year said it was an issue for states to decide. He’s on record supporting medical use of the plant.
However, Trump’s top law enforcement official, Attorney General Jeff Sessions, may have a different perspective. In a speech in March, Sessions said “I reject the idea that America will be a better place if marijuana is sold in every corner store. And I am astonished to hear people suggest that we can solve our heroin crisis by legalizing marijuana—so people can trade one life-wrecking dependency for another that’s only slightly less awful. Our nation needs to say clearly once again that using drugs will destroy your life.”
With legalization as the current focus for the industry, determining the logistics of online cannabis sales will likely not come for years, West says. “I would not anticipate [online sales] being a high priority in the near future, but states have changed dramatically in the last 10 years, so it’s hard to say what will happen in 10 years,” she says. “It has certainly evolved quicker than I anticipated.”