There’s another major shakeup coming in the already-struggling marijuana delivery industry, with the impending closure of one of the largest marketing websites in Massachusetts.

Lantern, a website where consumers can go to order legal cannabis delivered from a local dispensary, announced Wednesday that it will shut down by the end of January, citing regulatory hurdles in other states.

“While our Boston-area business continued to grow and serve the expanding cannabis community with the best selection, lowest prices, and convenient delivery, it proved difficult for Lantern to expand outside of Massachusetts, due to both the speed of legalization and the challenging regulatory framework that affects all cannabis businesses,” Lantern CEO and co-founder Meredith Mahoney wrote on LinkedIn.

Lantern, a spinoff from alcohol delivery company Drizly, does not touch the marijuana itself but is a technology company that connects consumers with dispensaries that offer home delivery. The site operates in Massachusetts, Colorado, and Michigan.

Some states have restricted the use of companies like Lantern. New York’s regulations prohibit the sale of cannabis through a third party, requiring retailers to create their own delivery applications.

Mahoney, who declined a request for an interview, says Lantern facilitates more than half of cannabis deliveries in Massachusetts. It also offers an incubator program that provided assistance to many of the state’s marijuana delivery companies.

Devin Alexander participated in the incubator program and now has a marijuana delivery company that will be considered by state regulators for a final license next week. “If it wasn’t for Lantern, I wouldn’t be doing what I’m doing now,” Alexander said. “They were the first ones to provide education around cannabis delivery.”

Aaron Goines, who is considering getting into the delivery business, said the closure is another blow for already struggling operators because it eliminates opportunities to reach customers. He said delivery companies already have a harder time marketing to customers than dispensaries do. “Lantern was an aggregator,” Goines said. “Someone could go onto the site, see everything available, and choose a delivery operator.”

Goines said he thinks the problem for a company like Lantern is that many states, including Massachusetts, prevent third party technology companies from owning shares of a delivery company. And the market for delivery has grown more slowly than expected.

In Massachusetts, there are around a dozen licensed marijuana delivery companies. But operators say it is challenging to make a profit, given the expenses inherent in running a business. Delivery operators have been lobbying the Cannabis Control Commission to change a rule that requires two drivers per car. “We’re struggling, we’re just trying to stay afloat,” said Chris Fevry, who owns Your Green Package.

Goines said he is not sure if he will open a business, particularly since inflation has increased costs while decreasing demand. As more retailers open, he said, there is less demand for home delivery. “It’s already a complicated enough industry, which is highly regulated with razor thin margins. You do not want to be starting a business in a time like this when you have such great economic headwinds and unconventional inflation levels,” Goines said.

Budzee in Easthampton opened with a flourish in April. Its owners told the Daily Hampshire Gazette they hoped to become the Amazon of cannabis. In May, the company put itself up for sale, seeking $4 million for its office, warehouse, and five vehicles.

Ezra Parzybok, a cannabis consultant and partner at Budzee, said the company was the first of its kind to open so the founders wanted to see how much money they could get for it. “We thought, well just in case someone wants to come and give us gobs of money, we should list it,” Parzybok said.

No one did.

Parzybok said the delivery market has been “disappointing.” Western Massachusetts is saturated with dispensaries and less populous. Eastern Massachusetts is a more appealing market, but Parzybok believes that after consumers spent five years adjusting to buying legal cannabis in brick-and-mortar shops, many people are not yet comfortable with delivery. Those who buy on the black market already have illegal delivery options. Because delivery services lack storefronts, there is no marketing opportunity for customers to recognize them just by driving by.

Parzybok said the markets where consumers have embraced cannabis delivery are in places like San Francisco, Los Angeles, and Seattle, where pot shops have been open for a decade and there are huge population centers in locations where driving is difficult.

One other potential danger for local marijuana delivery operators, though one that is likely a long way off, is federal legalization. “The day Amazon can sell you weed, it’s all over,” Parzybok said. “For everyone.”

SHIRA SCHOENBERG

 

NEW STORIES FROM COMMONWEALTH MAGAZINE

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– She vowed to create a secretariat of housing and pledged tax reform, but provided few details other than expanding the child tax credit.

– She said her first budget would provide money to provide community college for free to anyone over 25 who lacks a college degree and funding for the MBTA to hire 1,000 new employees.

– On climate, she pledged to double offshore wind and solar energy targets, put a million electric vehicles on the road by 2030, triple the budget of the Clean Energy Center, and create a “green bank” to finance climate-related projects. Read more.

Galvin overruled: The Supreme Judicial Court rejected Secretary of State William Galvin’s interpretation of a law barring anyone convicted of state corruption charges from working as a lobbyist for 10 years. Galvin had insisted the law allowed him some flexibility, so he barred former House speaker Sal DiMasi from working as a lobbyist even though DiMasi had been convicted of federal, not state, charges.

– The ruling has little practical impact since DiMasi’s 10-year ban has expired and he had previously started work as a lobbyist after prevailing in a lower court decision. The legal battle had also drawn attention because DiMasi and Galvin were once fairly close colleagues in the House of Representatives. Read more.

COVID mandates: The Supreme Judicial Court hears arguments today in a case challenging the city of Boston’s to impose vaccine mandates without first bargaining the issue with the city’s unions. Read more.

Feds blame T driver: The National Transportation Safety Board finds the driver at fault in a July 2022 Green Line collision, and reveals that installation of an anti-collision system that would have probably prevented the crash has been delayed until 2025. Read more.

OPINION

Where should housing go? Amy Dain, in the fourth installment of her five-part series on the MBTA Communities law, asks where the new multi-family housing being sought under the law should go. She says past history would indicate it will go in out-of-the way spaces away from settled residential areas, but Dain says that may be a mistake. Read more.

Healey’s clean-slate opportunity: Gary Kerr, managing director of real estate firm Greystar and a member Gov. Maura Healey’s housing transition committee, says the new governor has lots of running room to pursue bold policies addressing transportation, housing, and economic competitiveness. Read more.

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BEACON HILL

Gov. Maura Healey and Lt. Gov. Kim Driscoll stress the importance of teamwork at a celebratory inaugural basketball-themed event at TD Garden. (MassLive) Developers, lobbyists, and others she has overseen as attorney general and who have ongoing business with the state helped dump $1.8 million into Healey’s inaugural celebration account. (Boston Globe)

The new “big three” – Gov. Maura Healey, House Speaker Ron Mariano, and Senate President Karen Spilka – seem to have a few shared priority areas in the coming year, including  tackling the cost of living in the state, boosting child care, fixing the MBTA, and addressing economic uncertainty. (MassLive)

MUNICIPAL MATTERS

Salem City Councilor Robert McCarthy takes over as Salem’s acting mayor now that Lt. Gov. Kim Driscoll has vacated the role. (Salem News)

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ENERGY/ENVIRONMENT

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CRIMINAL JUSTICE/COURTS

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