PHOTOGRAPH COURTESY OF CALIVAGoing Above the Law
When a new California law made cannabis delivery more difficult, many companies folded.
But Caliva doubled down on delivery—and is winning. by PETER PAGEI
n January, delivering
cannabis in California
became a lot more com-
plicated. That’s when a
series of state regulations
passed, including a
mandate that cannabis
companies employ drivers and
pay them at least minimum
wage—plus benefits. Unlike
most other companies, such as
pizza parlors or laundry services,
contractors would no longer be
allowed.
The law quickly killed off a
lot of delivery businesses. Many
dispensaries couldn’t afford to
pay drivers more. But at the
California company Caliva, a
different conversation happened.
Caliva grows its own cannabis,
makes its own products, whole-
sales them, and operates its ownstore—but it defines its mission
more simply: “ubiquitous access.”
That is the brand’s North Star,
says CEO and president Dennis
O’Malley. Everything it does
must be aimed at expanding
access to cannabis.
So, what about the regula-
tions? Caliva treated them as a
business opportunity. If com-
petitors were going to simply
meet the regulations, Caliva
would exceed them.
“We never considered doing
anything other than growing
[the delivery service],” says
O’Malley. Cannabis retail
sales are banned in 390 of
California’s 481 municipalities,
so delivery is often the only
way to reach people. Many
of Caliva’s users are in senior
homes or have a handicap andare unable to get to a store. As
other companies stopped deliv-
ering, Caliva saw an opening.
The company had tried using
contractors for deliveries in the
past but wasn’t happy with the
results, so it was already employ-
ing its own drivers as well as
partnering with a delivery ser-
vice, Eaze. But now its competi-
tors would also be employing
drivers—which, in a tight labor
market, means recruitment
would become tough. (The San
Francisco Bay Area, for example,
has a scant 2 percent unemploy-
ment rate.) So Caliva upped its
offer. It would start drivers at
between $15 and $17.50 per
hour, well above the state’s $12
minimum wage. Full-time driv-
ers receive health insurance,
vacation time, a 401K, stockoptions, and the chance to pur-
chase more stock during the
company’s investment round.
Some of that would be available
to part-time employees, too.
The benefits package has
helped Caliva hire more than
125 drivers this year, many of
them lured away from gig work
with Uber, Lyft, and DoorDash.
And critically, says O’Malley, it’s
made for happy drivers who are
eager to represent the company.
“We rely on the people who are
delivering our product to be the
face of Caliva,” O’Malley says.
“That’s a very powerful role.”
The downside, of course, is
that delivery now takes a bigger
chunk out of the bottom line—
but O’Malley’s investors get it.
Caliva aspires to reach 70 per-
cent of adults in the state with
same-day delivery, and investors
appreciate the long-term play.
It appears to be working.
This year Caliva saw a more
than 300 percent year-over-
year revenue increase in the
first quarter of 2019, and in
January the company closed
$75 million in funding.
Investors include former Yahoo
and Autodesk CEO Carol Bartz
and former pro quarterback
Joe Montana. Last July, Jay-Z
partnered with the brand to
help with strategy.
With that cash on hand,
O’Malley says, the company
will now amp up the pursuit
of its goal of ubiquitous access.
“People really flock to the mis-
sion of providing a plant-based
solution for health-and-wellness
needs,” he says. “Our drivers
meet a lot of people who always
love to see them at their door.”Regulations
56 / ENTREPRENEUR.COM / September 2019