Dear Cannabis Operator,
I’d like to welcome you to the world of fleet. The reason for this open letter is to explain to you that this part of your business is more important than you think, and that we’re here to help.
As marijuana has only been legal in some form for a couple of years in most states, I realize your businesses are pretty new. Yet you’re processing massive growth: The industry earned $8.3 billion in 2017, which will grow to $23 billion to $30 billion by 2025. (For perspective, the entire auto rental industry in the U.S. generated $30 billion last year.)
Being so young and with such fast growth, you’re putting the needed brainpower into big-picture challenges: Should you vertically integrate or outsource? Should you adopt an alcohol or pharmaceutical industry supply chain model?
But when talking about total cost of ownership (TCO) for your fleet, you’re kind of clueless. That’s okay, because your fleet learning curve is steeper than the Splash Mountain drop at Disney World. You’re new. We’ve all been there.
It’s time you start investigating TCO and the eight factors that define it: depreciation, financing, fees and taxes, fuel, insurance, maintenance, opportunity cost, and repairs. You’ll learn how much vehicle selection can affect your holding costs.
It’s time to understand that certain dealerships are better at selling vans and trucks than others. The good ones will weigh the right finance or lease programs for you, help you spec your vehicles, deliver them to you, pick them up for priority servicing, and dispose of them at the right time. The fleet managers at those dealerships are wells of knowledge — use them.
When you get a little bigger, you’ll be able to deal directly with fleet representatives from the auto manufacturers who will give you fleet discounts and ordering tools. And there are fleet management companies that will introduce you to a suite of outsourced services so you can concentrate on your core mission.
For those in fleet, let me introduce you to the cannabis industry:
First, let’s dispel the stereotype of the pot grower in Birkenstocks and the Ben & Jerry’s Cherry Garcia tie-dye. This off-the-grid mentality has given way to startups with millions venture capital. You’re dealing with professionals.
Cannabis fleets must navigate extraordinary circumstances, which has forced them to become better operators in a shorter timeframe.
Federal illegality means they can’t cross state lines, and must even avoid federal checkpoints near our nation’s borders.
This fact has also created an all-cash industry unprecedented for its size, which forces operators to move hundreds of thousands of dollars in hard currency daily. (Imagine having to deliver your federal tax payment in a duffel bag full of cash pushed through a window at a regional tax office.)
Combined with the fact that marijuana is one of the most “fence-able” products on the planet, operators have had to develop and implement their own best practices for safe and efficient transport. These include stringent safety protocols for deliveries, extra scrutiny for driver hiring, training and management, and implementing state-of-the-art security technology.
Remember your learning curve on telematics? California regulations specify that cannabis transport must be tracked via GPS.
That rule is turning these new cannabis fleets operators into “telematics natives,” adopters from Day One. And while they’re not yet getting the full benefit of all that telematics has to offer (sound familiar?), they view their systems as essential, regulation or not.
Owing to the obvious security concerns — as well as being alerted to accidents immediately — cannabis operators are also willful adopters of event-triggered dashcams and live streaming camera systems around their cargo vans.
You sweated your contractor’s package on your three-quarter-ton dually? These guys sweat over armoring just the cab or the full body, whether they should get the five- or nine-camera surveillance system, type of material for steel caging, and how to fit 20 programmable lockboxes into a dual-zone refrigerated body. On the outside, it better look like any old white cargo van.
So cannabis operators, the fleet industry now understands the vast expanse of opportunity before you, along with a sample of your challenges. You may not know it yet, but there are a myriad of ways to save money and make your fleet and routing more efficient. There is an industry waiting to help you.