After finding its own path, Lantern now has its new guide.
Last month, the Boston-based cannabis delivery platform announced the promotion of its president, Meredith Mahoney, to co-founder and CEO. The move comes less than a year after the company was spun off from former parent Drizly, following the alcohol delivery service’s acquisition by Uber in a $1.1 billion deal in February. Lantern, which was incubated at Drizly and which is built on that company’s technology and operational structure, also received a capital injection of $40 million following the transaction.
The company, which launched in May 2020 and serves consumers in Massachusetts, Michigan and Colorado, will also now be a focus for Drizly co-founder Justin Robinson, who is taking on a full-time role. At Lantern, he will oversee the company’s growth operations and product development, develop the platform’s personalized discovery features and guide expansion to new legal markets, along with widening Lantern’s social equity and incubator programs.
“Cannabis is expected to become the final frontier in the e-commerce landscape, and I am thrilled to focus my efforts on fulfilling our company’s long-term vision of bringing transparency, equity, and access to the legal space,” said Robinson in a press release last week. “I am immensely proud of the novel marketplace opportunities that have been introduced through Drizly, and I look forward to working with Meredith and the rest of the Lantern team to help consumers and all industry stakeholders reimagine what is possible for cannabis e-commerce.”
The company has also named Katie Neer, its Head of Industry Affairs, as General Counsel, while Akele Parnell, its Head of Equity Partnerships, was charged with leading Lantern’s social equity incubator program.
Like Drizly has with booze delivery, Lantern is hoping its software-as-service (SaaS) approach will help it to unlock new markets as individual states continue to legalize cannabis — of which U.S. sales will near $31 billion this year, an increase of 41% over 2020, according to market research group BDSA.
In partnership with licensed local dispensaries and courier services, the company provides a curated virtual storefront with thousands of products available for purchase — ranging from flower to vapes to concentrates, edibles and accessories — from multiple dispensaries on a single platform.
In Massachusetts, which approved delivery services for non-medical cannabis users this summer, the company partnered with two local operators from the state cannabis commission’s social equity program — Freshly Baked and We Can Deliver — whose applicants have exclusive delivery rights within the state for a three-year period. But unlike with Drizly, the platform isn’t necessarily trying to add as many partners as possible.
“The reason people like marketplaces is because they have a lot of things to choose from, and they can compare prices and brands,” Mahoney said. “But just like other marketplaces, you don’t need infinite choices. So we will have the best dispensaries in the Boston area on the platform that represent the best brands and a wide range of price and product and selection. But it doesn’t need to be 100%.”
While convenience is a major factor, Mahoney argued that Lantern also offers a superior consumer experience than in-store shopping. Rather than dealing with long lines and relying on the knowledge of an individual budtender, shopping on Lantern encourages users to take their time in learning about and choosing products that fit their needs. Bringing East Coast consumers broader variety, she said, may help stimulate affinity for certain brands and help build name recognition in new markets.
“Another thing that’s really interesting that’s happening is this evolution and growth of brands on the East Coast,” said Mahoney. “It’s kind of a given in California that there are these well known brands that spend a lot of money on marketing and people have loyalty [to]. And that’s just not true yet on the East Coast, and that’s very relevant to what we do.”
Some of that brand traction is beginning to emerge in beverages in the Northeast: Massachusetts-based seltzer maker Levia was acquired by Ayr Wellness in a $60 million deal in September, while Hi-5 recently expanded distribution of its cannabis-infused sparkling waters from the Bay State into Maine, where monthly recreational sales are clocking in at over $10 million less than a year after adult use was approved. Yet despite rapid growth — sales of infused beverages in Massachusetts rose from 0.14% of total cannabis sales in 2020 to 0.64% in 2021 thus far, according to data from Jane Technologies — the segment remains a small piece of the overall pie.
“Flower is still the biggest category by percentage of dollars, but edibles are growing, and infused beverages are the fastest growing kind of subcategory,” Mahoney said. “It’s such an easy way to enter the category that feels really normal, like it’s part of people’s day, and the brands and products out there are really, really good. So I think infused beverages are one of the most exciting things happening right now in cannabis.”
To that end, Lantern’s growth strategy remains centered mainly on the burgeoning East Coast market for now, where New York and New Jersey are the next regions set to open. Much of the company’s new funding will go towards building its engineering division to be responsive to individual local regulations, as well as a bigger marketing team. Yet much like in other areas of CPG, Lantern’s exploration of tech-driven cannabis commerce isn’t meant to come at the expense of established dispensaries.
“We don’t see our goal as to move all of the consumer dollars into delivery — we actually think that there’s a really good role that brick and mortar dispensaries play that should complement what we do,” said Mahoney. “And there’s lots and lots of evidence across other product categories that customers that shop omnichannel have the highest lifetime value. So we’re going into these relationships with the dispensaries like let’s all win dollars together and increase consumer spending and loyalty to both our brands”