Emjay CEO on Creating a Class-Leading Cannabis Delivery Service
Ask Emjay CEO Chris Vaughn for the keys to success in cannabis delivery, or any e-commerce business, and he’ll tell you that it always boils down three things: You must offer a great selection of products, at competitive prices, and be able to reliably get them in the hands of consumers quickly.
Vaughn, a serial entrepreneur with knack for scaling startups, has been involved in the tech and CPG industries for about a decade.
He sold his first business, a photo sharing app called Jarvus, to mobile messaging platform textPlus in 2012. He then worked as the director of marketing and business development at textPlus, where he helped oversee user acquisition and creative advertising campaigns.
In late 2013, Vaughn co-founded Saucey, an on-demand alcohol delivery app and logistics platform based in Los Angeles that promises 30-minute service in major cities like Austin, Chicago, LA, Miami, and San Francisco, among many others.
While scaling that business, Vaughn kept a close watch on how the cannabis space was developing. He sat in various community meetings following the passage of Proposition 64 in California, which legalized adult-use cannabis, and paid attention to the concerns of citizens who didn’t want to see dispensaries cropping up on every corner in their neighborhoods.
“I thought it was fascinating because delivery is the solution for that,” he told THCnet during a recent interview.
At the same time, Emjay was being formed by a group of investors and Sherbinskis founder Mario Guzman, and Vaughn was tapped to bring Saucey’s technology and delivery expertise to the cannabis startup.
“We came basically as advisers to the business,” he said. “We helped them set up their technology infrastructure and learning operations.”
In April 2019, Emjay made its soft launch debut in collaboration with luxury department store Barneys New York, which had opened an upscale cannabis shop inside of its Beverly Hills shop and needed a fulfillment partner.
“They wanted to power their ‘high end’ cannabis experience, but they didn’t have a license,” Vaughn said. “So Emjay started quietly in the background as a provider. You’d shop Barneys, see what you want, and someone with an iPad would take in your order cannabis products. Once you left the store, you could have it immediately delivered to your location.”
Emjay then began to broaden its reach throughout LA, touting 30-minute delivery times and promising that a wide selection of products could be purchased for the same price at a dispensary.
The company’s pitch? “All of the weed. None of the markup.”
Currently, the bulk of Emjay’s deliveries are fulfilled out of a bright orange Sherbinskis-branded dispensary on Fairfax, but Vaughn said the company is also planning to expand its footprint to include more of LA and potentially other parts of California. When it does, some of those delivery hubs may not be open to consumers.
“I believe in brick and mortar retail to a degree,” he said. “We have a few stores that will act as flagship locations if somebody wants to come into the store and interreact with us. But we don’t need those everywhere.”
Part of the reason Vaughn doesn’t think he’ll need a ton of dispensaries scattered across the state is because Emjay’s roughly 50 drivers are each able to carry $3,000 worth of cannabis products on them at any given time.
“As long as orders keep getting placed, that driver can go from order, to order, to order,” Vaughn said, noting that certain “Emjay Now” products ordered throughout the day are stocked in every vehicle.
“They effectively are little mobile dispensaries,” he added.
According to Emjay, it offers more than twice the number of SKUs (551) and nearly six times more flower products (149) than its next largest competitor, Eaze.
“Over 60% of cannabis sales in California — and predominantly driving sales at our stores — is flower and pre-rolls,” Vaughn said. “If you want to make money in cannabis today, you need to sell flower products, at good prices, to people who smoke weed. And you need to have all the different varieties that they want — whether it's high THC products, limited drops, or value brands that are basically the cheapest price on the shelf and big, big movers.”
Emjay is backed by a “handful” of investors including The Inception Companies and the One Gun Fund, as well as other angels and individuals who Vaughn said, “believe in taking a plant-touching approach.”
As a plant-touching business that chose to own its own retail and delivery licenses from the onset, instead of trying serve only as a technology layer between retailers and customers, Emjay has been able to focus on building a sustainable long-term business that isn’t dependent on other partners, Vaughn added.
To grow its customer base, the company focuses on a referral program that gives current users $20 toward their next order for introducing the platform to a friend who makes a purchase and also receives a $20 discount.
“You probably have the highest converting customer rate with that form of customer acquisition,” Vaughn explained, adding that Emjay also focuses on constantly communicating with its customers via text and email.
“A lot of people miss that in this industry,” he said. “When I go into a terrific store in LA, and I leave, I never hear from them again. I never get an email. All the table stakes that you see in high performing e-commerce segment, in many ways isn’t here in cannabis yet.”
Vaughn, who took over as CEO of Emjay earlier this year, said the company would continue to focus on expanding in California, specifically Los Angeles, for the foreseeable future.
“California has 40 million people, and I believe it represents roughly 37% of North American cannabis sales,” he said. “If you think about a market that you want to address, you want to address California. We have a long way to go to be a big player in the biggest market in the world.”
Nevertheless, Vaughn said he is watching other markets very closely and would consider bringing the Emjay business outside of California if regulators establish cannabis delivery frameworks that “make sense from a business point of view.”