Transport & Delivery For Cannabis
When it comes to shipping and delivery pricing—especially in wholesale logistics—there are a few standard models that dominate the landscape: flat rate, weight-based, and dimensional/density-based pricing. Each one has tradeoffs depending on what you’re moving, how far it’s going, and how streamlined you want your process to be.
Flat Rate Shipping
What it is: A fixed delivery fee charged regardless of weight, volume, or distance. For example, “$25 per delivery anywhere in the metro area” or “$100 for statewide delivery.”
How it works: You define zones or thresholds (e.g., local, regional, statewide) and assign a flat fee to each.
Pros:
Simple to understand and communicate — makes it easy for sales reps and accounts.
Predictable revenue and budgeting — both for you and the customer.
Encourages larger orders — since customers won’t be penalized for weight or volume.
Cons:
You risk losing money on long hauls or heavier loads if you don’t price carefully.
It can feel unfair to smaller customers placing light or local orders.
Best for:
Markets where you want to simplify logistics or incentivize bulk ordering. Also ideal when your routes are fixed and costs are predictable.
Weight-Based Pricing
What it is: Charges are calculated based on how much the product weighs—usually using a cost-per-pound or cost-per-kg model.
How it works: For example: $0.35 per lb, or $10 base fee + $0.25 per lb thereafter.
Pros:
Directly tied to cost of fuel and effort — heavier loads are more expensive to haul.
Fair for customers — small/light orders pay less, big orders pay more.
Can be automated and scaled easily in ERP or POS systems.
Cons:
You need accurate weight data for every product.
Customers may try to game the system by shipping partial orders to save money.
Doesn’t account for space used (a light but bulky item still takes up room).
Best for:
Courier services, heavy product categories (like beverages, flower bulk bags), or when fuel efficiency and payload matter.
Density-Based / Dimensional Weight Pricing (DIM Weight)
What it is: Pricing based on how much space a package takes up in the vehicle, not just how much it weighs. This is how UPS, FedEx, and airlines charge you.
How it works: They use a formula like:DIM Weight = (L × W × H) / 139 (in inches)
Whichever is greater—actual weight or dimensional weight—is what you’re charged on.
Pros:
Great for managing space utilization in a vehicle (especially when shipping low-weight but bulky items).
Encourages customers to optimize packaging and reduce waste.
Helps recoup costs when hauling large, inefficiently packed shipments.
Cons:
Requires accurate measurements of each package.
Can be hard to explain to customers.
Not as effective if your vans aren’t fully loaded or if your deliveries are irregular.
Best for:
3PLs, freight carriers, or operators moving a mix of dense and fluffy products (like pre-rolls vs cases of gummies). Not common in cannabis yet—but it’s coming.
When you’re running a wholesale delivery or distribution program—especially in a highly regulated industry like ours—the sticker price of delivery is just the start. There’s a whole stack of hidden costs and operational fees that can eat into your margins if you’re not accounting for them. Here’s a breakdown of the most common ones that should be factored into your cost model, pricing structure, or minimum order thresholds:
Product Insurance (Cargo Coverage)
What it is: Insurance for the goods being transported—protecting you from theft, accidents, fire, or spoilage.
Why it matters: If you’re carrying thousands of dollars in product (which you are), and something goes wrong during transit, your business is on the hook without cargo insurance.
Typical Cost:
$25–$75/month per vehicle, or
~$0.20–$0.50 per $1,000 in goods moved.
Pro tip: In regulated industries, some insurers charge more or require special riders for flower or extract products due to “high-risk” categorization.
Fuel Surcharges
What it is: A floating fee tied to fuel prices, passed onto customers to account for rising diesel/gas costs.
Why it matters: Fuel spikes (like during summer or supply chain disruptions) can kill margins on longer routes unless you have a way to recoup the extra spend.
Typical Use:
Added as a % fee (e.g., +6% of invoice) or a flat fee (e.g., $10 per order)
Often re-calculated monthly or quarterly based on regional fuel indexes.
Toll and Route Fees
What it is: Costs for toll roads, express lanes, or regional taxes that apply during certain routes.
Why it matters: They’re usually small but add up over the year—especially if your routes cross state lines or use major interstates with frequent tolls.
Typical Cost: $2–$20 per route depending on the region.
Driver Per Diem / Overnight Costs
What it is: If a delivery requires overnight travel, you’re looking at food stipends, hotel costs, and extra labor hours.
Why it matters: This hits hard on southern/eastern runs (Hobbs, Farmington, Sunland Park) that push the limits of a same-day turnaround.
Typical Cost:
Hotel: $75–$150/night
Per diem: $25–$50/day
Extra hours: $20–$30/hr overtime if non-exempt
Vehicle Wear & Tear Escalation
What it is: Additional maintenance costs tied to heavy use—brake jobs, tires, oil changes, DEF fluid, etc.
Why it matters: Cannabis distribution tends to overwork Sprinter vans—especially in rural NM terrain. These costs accelerate with mileage, weight, and road conditions.
Estimated Cost: $0.10–$0.20 per mile in addition to standard depreciation.
Compliance-Related Costs
What it is: Time and tools required for manifests, labeling, camera footage, delivery logs, and audits.
Why it matters: Even if your driver spends 10 minutes per stop dealing with METRC/BioTrack logs or manifest changes, that’s billable labor. Also: any required GPS tracking or mobile audit systems might carry recurring software costs.
Typical Cost:
Labor: $5–$15 per stop
Software (e.g., Onfleet, BioTrack Pro): $25–$100/month per user or vehicle
Packaging/Handling Fees
What it is: Materials and labor required to prepare a wholesale shipment—labels, barcodes, tamper-proof bags, boxes, inserts, etc.
Why it matters: If you're not separating shipping packaging costs from product costs, you’re bleeding money every time you ship “free.”
Estimated Cost: $2–$5 per shipment on supplies alone, more if the customer requires special handling.
Admin & Invoice Processing
What it is: Back office time for generating invoices, tracking payments, and managing delivery schedules.
Why it matters: Especially for net terms accounts, the cost of following up (and chasing down late payments) becomes real overhead.
Typical Cost:
~$2–$7 per invoice in internal admin cost
~3% if using QuickBooks Payments or similar for credit cards
Loss, Damage, and Returns
What it is: Lost or spoiled product due to handling error, temperature issues, or customer refusal.
Why it matters: One lost box of solventless, and you're not just out product—you’re out miles, labor, and goodwill.
Pro Tip: Bake this risk into pricing or require signed SLAs with clients.
