Online cannabis merchant Ganja Goddess credits the COVID-19 pandemic—and the stress of living through it—with super-charging its sales in 2020. Now, it’s looking to expand.
The retailer, which delivers cannabis within California, ended the year with 100% year-over-year revenue growth. That includes a 635% increase in sales of cannabis products marketed to support sleep, says Ganja Goddess CEO Zachary Pitts.
Pitts says the retailer’s research shows that ecommerce is consumers’ preferred channel for cannabis purchases. So, Ganja Goddess tries to make the process of buying it as seamless as possible for consumers already familiar with buying online, he says.
“We’re trying to make it very similar, from a customer perspective, to what they’re familiar with in ecommerce,” Pitts says. “We try to do as much as possible to make it easy.”
Pitts says the retailer’s delivery service, launched in 2011, offers more than 500 cannabis products from a variety of manufacturers. Ganja Goddess also operates a standalone physical cannabis dispensary in Seattle and a separate ecommerce business called CBD Goddess. The CBD operation sells about 80 kinds of cannabidiol (CBD) oil and products infused with the oil. CBD products do not contain tetrahydrocannabinol (THC), the chemical that causes users to feel “high.” The retailer ships its CBD products nationwide, but the online cannabis operation makes deliveries only in California due to regulations.
Different rules for online cannabis sellers
Because it sells cannabis and products containing it, Ganja Goddess cannot operate the same way other online retailers can. “There are certain things that we have to do because of compliance,” Pitts says.
For example, California laws require Ganja Goddess to verify the identities and ages of its customers. Regulations also require certain practices regarding the logistics of delivering, packaging and storing the products it sells. For example, he says, cannabis manufacturers Ganja Goddess deals with must meet specific standards, including childproofing.
For retailers, Pitts says, the most significant difference between selling cannabis and other products is that cannabis retailers cannot use third-party shipper carriers such as United Parcel Service or the United States Postal service. Instead, Ganja Goddess must make all deliveries in unmarked vehicles, using drivers it employs directly.
Beyond that, the retailer must report cannabis products to the California Cannabis Track-and-Trace (CCTT) system. California uses CCTT to record cannabis and cannabis products’ inventory and movement through its commercial cannabis supply chain. Pitts says the CCTT system is “a huge headache to deal with.” The system, which Pitts describes as “not user friendly,” requires cannabis retailers to record every cannabis product it receives and make another record when it sells those products.
Ganja Goddess’ goal is to navigate that and all the other restrictions smoothly, so consumers’ buying experience is like making different kinds of ecommerce purchases. “People don’t want to… learn a new way to buy cannabis,” Pitts says.
Why sell online?
Pitts says Ganga Goddess’ research indicates consumers like buying cannabis products online. According to its September 2020 survey of 850 California cannabis users, 89% of respondents now buy cannabis primarily via delivery services. Of those using delivery, the two most cited reasons were convenience (52%) and safety (32%).
The preference for delivery services is not surprising, Pitts says. Because of the pandemic, many consumers are reluctant to leave their homes and are more apt to use contact-free fulfillment services for much of what they buy. Also, he says some consumers are uncomfortable with or intimidated by the process of purchasing cannabis in person and prefer the privacy of buying online.
While many cannabis delivery services exist in California, Pitts says Ganja Goddess is different than most in two ways. First, while most services deliver locally, Ganja Goddess provides next-day delivery virtually state-wide, except for some remote areas of the state and federal land. That’s important, he says, because roughly half of state residents live in communities that don’t have local dispensaries The few exceptions to Ganja Goddess’ delivery. Secondly, Pitts says the retailer consciously seeks to make the buying experience approachable and accessible, compared with the early days, when the state allowed cannabis sales only for medical purposes.
“There was a certain kind of cannabis culture that just wasn’t very welcoming to women [and] older adults,” Pitts says.
He says Ganja Goddess tries to be welcoming to consumers who might benefit from cannabis but don’t know much about it. The retailer’s website includes information about the various cannabis strains. It allows consumers to filter products by the percentage of THC, price or the desired effect, such as esophoria, calmness or rest. The site also includes a blog that discusses cannabis-related topics, offers recipes (including one for a cannabis mocktail) and detailed information about cannabinoids and how shoppers might use them.
The COVID-19 effect on cannabis use
In Ganja Goddess’ survey, most respondents (55%) stated they used more cannabis than they did at the beginning of the pandemic. The most-cited reasons were managing sleep (69%) and managing anxiety (68%). Also, 48% were managing pain, 43% cited “lifestyle” and 32% manage chronic and acute conditions.
Other research also shows cannabis sales grew during the COVID-19 pandemic, driven by changes in consumer behavior.
A report released in December by New Frontier Data, a research firm specializing in the cannabis industry, says the legal market for the substance (online and offline) would exceed $20 billion in 2020, up about 44% from $13.9 billion in 2019. By 2025, researchers expect legal U.S. sales to exceed $41 billion. The data does not break out online sales.
New Frontier found average monthly spending by consumers reached $233 by Q3 2020, up 42.9% from $163 in Q4 2019, before the start of the pandemic in the United States. In a New Frontier survey of 4,601 cannabis consumers fielded in September 2020, 18% said their cannabis consumption increased “a lot,” while 25% responded that consumption was up “a little.” 42% said consumption remained the same, while 16% decreased overall cannabis use.
Pitts says Ganja Goddess is speaking with possible investors to fund expansion. That could include launching operations in other states, but it will continue to focus primarily on California, Pitts says. Opening additional stores is not in the plan, he says. But he sees a lot of opportunities for selling online because only about 15% of California adults currently use cannabis. Many more Californians might benefit from the substance if they knew more about it, he says.
“All of our operations from the beginning was a very kind of bootstrapped operation,” Pitts says. Now, he says the retailer wants to expand its customer base faster than it otherwise could if it had to do so using only its own resources. Ganja Goddess would use the additional capital to expand its fulfillment capacity and reach more customers, Pitts says, without providing details.Favorite