Pot on Wheels Service Forges Ahead Under City's Scrutiny

NEW YORK (MainStreet) — Although the San Francisco Department of Health is reportedly investigating the Uber-like pot delivery app called Eaze, Randall Nixon is undeterred.

The Silicon Valley entrepreneur is moving forward with plans to launch Moio Direct on September 15.

"Moio is different from Eaze, because they are employing their own drivers to carry marijuana products, but we are using the delivery infrastructure that already exists at dispensaries, which reduces our liability," Nixon told MainStreet.

Eaze is under scrutiny for allegedly employing drivers to deliver marijuana to medicinal users at their homes.

"It sounds like Eaze operates as a dispensary and that requires a permit," Nixon said. "Moio is not concerned with permits because instead of delivering marijuana we are taking orders for delivery."

A Department of Health spokeswoman named Rachael Kagan told the San Francisco Chronicle that whether Eaze will need a permit is a developing question the Department is currently reviewing.

"Seed to sale tracking systems have been proven to work from a regulatory standpoint in many of the 23 medical marijuana states and very few states with legal programs allow for off-site delivery," said Christie Lunsford, director of operations at 3D Cannabis Center and board member of the Women's CannaBusiness Network. "Concerns about diversion will need to be addressed before large scale delivery services can work consistently."

Companies like Eaze could face federal or state criminal charges and even forfeiture depending on their business model.

"The process will depend upon the regulations in that particular state if those regulations are even applicable," said Matthew Abel, a lawyer with Cannabis Counsel in Detroit and executive director with the National Organization for the Reform for Marijuana Law (NORML) in Michigan.

The problem is current medical marijuana laws did not foresee delivery without a brick-and-mortar storefront.

"It's a very gray area," said Tae Darnell, cannabis law expert and general counsel with Surna. "It boils down to whether Eaze is transporting or distributing, because a non-patient possessing marijuana can be illegal. Their business could also be defined as distribution by an unlicensed entity among other things."

That's not stopping Nixon's Moio Direct or Eaze, since there's no pending legal case as of today.

"We have found a legal way to do this that upholds HIPPA privacy standards," said Nixon of Moio Direct. "We have agreements in place with our dispensary clients so that medicinal users can pick from their menus and place orders for delivery."

Launched in July, Eaze claims to pay its drivers $45 an hour and will reportedly expand into Southern California, Colorado and Washington state.

"Ultimately, some states allow for delivery in their regulatory model and others don't," Darnell told MainStreet. "I think the issue will remain one of local ordinance and I think that's the way it should be."

Along with Washington and Colorado, California is one of the top three states in the nation with the most relaxed marijuana laws. Possession of less than an ounce is no longer a misdemeanor but merely a $100 infraction similar to a speeding ticket.

"In Colorado, delivery is illegal and does not exist unless it is black market" Lunsford told MainStreet. "In California, there are many, many delivery services. It's unregulated and is truly the wild, wild west but the driver is taking a huge risk. In Washington state, delivery is an illegal gray area."

--Written by Juliette Fairley for MainStreet

More from Personal Finance

The World's Deadliest Volcanoes

The World's Deadliest Volcanoes

How Much Does It Cost To Live In Your City... And Why?

How Much Does It Cost To Live In Your City... And Why?

The Most Expensive Places for Families to live in the U.S.

The Most Expensive Places for Families to live in the U.S.

Should Millennials Buy Stock in Tesla, General Electric and Facebook?

Should Millennials Buy Stock in Tesla, General Electric and Facebook?

Family of Four? Grocery Costs Differ Dramatically Between and Within Each State

Family of Four? Grocery Costs Differ Dramatically Between and Within Each State