Marijuana could be the future of the ridesharing economy
The Future. The pandemic’s caused growth in the ridesharing economy to stagnate. Yet while Uber continues its race to dominate food (and alcohol) deliveries, it is also eagerly waiting for a potentially more profitable business: marijuana delivery. As of today, federal laws have not allowed it to happen. But will delivering weed one day make Uber more profitable?
The pandemic caused the ridesharing economy to nearly collapse. The gig economy, in general, hit a wall.
- In May 2020, Uber cut 14% of its workforce.
- A week earlier, Lyft had cut 17%.
- At the end of 2020, Uber reported $1.1 billion in revenue losses.
- In August 2020, New York Magazine reported that Uber bookings fell 73%.
Is Uber Eats profitable?
The lockdown made rideshares almost pointless. But because of such lockdowns, there was growth in a different kind of Uber: food deliveries. But food deliveries are hardly profitable.
- When Uber Eats delivers a meal, it pockets around 30% of each order (recording a loss).
- However, Uber says it is experiencing less of a loss than it used to.
The growth in consumer demand for food deliveries has not produced a profit for Uber. So… can cannabis change that?
16 states have legalized recreational marijuana use, but on a federal level, marijuana is still illegal (although that, too, could soon change).
On Monday, Uber CEO Dara Khosrowshahi told CNBC that Uber could start delivering marijuana if federal regulations allow it.
- “When the road is clear for cannabis, when federal laws come into play, we’re absolutely going to take a look at it,” he told Tech Check.
- As of now, cannabis delivery services are expanding into Nevada, California, Oregon, Michigan, and New York.
- New Jersey and Massachusetts will eventually allow weed delivery.
Uber’s stock slowly climbed 2% on Monday, since many analysts seem to believe weed and booze will help grow their business.
- The cannabis delivery business is booming in places like California, where about 44% of medical marijuana users use a delivery service.
- Uber’s competitors in CA include OnFleet and Sava.
- OnFleet saw weed and booze deliveries spike 300% in 2020.
With the marijuana delivery business becoming more crowded in places like California, and Uber Eats already producing a loss, it seems immeasurably hard for Uber to become a category leader in weed delivery and also produce a profit.