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Often regulations are an entrepreneur’s enemy. They stifle innovation, waste labor by forcing companies through hoops, and frustrate consumers. But sometimes, regulations are necessary, for example restricting the sale of alcohol and marijuana. In those cases when entrepreneurs can align themselves with the law and make the process easier for a consumer, regulations stop becoming a nuisance and become a competitive advantage.
Nestdrop sees it that way. Nestdrop is an alcohol delivery app. While the company doesn’t have much of a logistics advantage over its bigger food and drink delivery app rivals like Amazon Fresh and Instacart, it sees its ability to navigate the regulated goods market as an advantage others can’t easily obtain.
“Choosing liquor was done purposely because it’s highly regulated and tough to get into,” said Roddy Radnia, co-founder of Nestdrop. For larger competitors, “there are so many small nuances that would make their app inefficient or they would have to pass costs onto customers. We have figured out solutions to these nuances.”
Nestdrop connects local liquor stores and consumers, giving users a menu of what alcohol is inventoried locally. When alcohol is ordered the local liquour store delivers it to the consumer within an hour. Liquor stores need special licenses to sell, have to check the age of customers and cannot serve intoxicated customers. To make this whole process work legally Nestdrop has invested a lot in its due-diligence; compliance the startup believes others will have trouble matching.
Bringing pain relief to your front door
And if alcohol delivery is a business fraught with legal difficulty, Nestdrop’s next service, marijuana delivery is even more so. Nestdrop has plans in the next several weeks to begin delivering cannabis to Angelinos with medical marijuana cards.
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Medical marijuana delivery is not as straightforward as alcohol. In addition to needing a medical marijuana card, customers also need to be part of a local medical marijuana collective, a sort of cannabis co-operative. Transactions within medical marijuana collectives are complicated.
“We don’t have prices; we have recommended donations,” said co-founder Michael Pycher of Nestdrop’s medical marijuana listings. By law collectives can’t sell their marijuana, so Nestdrop facilitates donations.
Ultimately, while alcohol delivery fulfills a recreational need Nestdrop sees medical marijuana delivery fulfilling an important public service.
“There are patients that need relief and we are doing the best to get it to them,” said Pycher. “In doing this we see a lot of patients with cancer or various types of other ailments. These people need this product.”
Beyond marijuana’s medical uses, should the drug ever legalize in California- there is an effort underway to legalize cannabis by 2016- it would surely be well regulated. By getting into medical marijuana early, companies like Nestdrop have an important first mover advantage. They also have a familiarity with food and drink regulation that would take others time to learn. Nestdrop’s advantage in alcohol delivery could play out all over again with marijuana.
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