Uber Launches Marijuana Offering in Ontario Through UberEats

Uber has launched a new branch of its brand in Canada. Now, the company is offering marijuana for pickup through its UberEats platform. The Uber weed offering shows the company's attempt at expanding beyond its ride-hailing and food-delivery offerings. Instead, it's dabbling in a sector that raked in about $2.08 billion in Canada in 2020.

Here's the rundown of Uber's marijuana ordering system and what Canadians, marijuana enthusiasts, and investors can expect from the brand moving forward.

On Nov. 28, Uber will add marijuana to its list of available purchases on the UberEats app. The offering will only be available for pickup for users in Ontario. The time frame for pickup is about an hour, which means that users can hop on over to their favorite dispensary and pick up a prepaid order quickly and easily.

All of the program's marijuana sales will go through Tokyo Smoke, a Toronto-based dispensary chain that has 50+ locations in Ontario. Consumers will have to verify age on the app and show identification at the time of pickup.

Dispensaries in the U.S. and Canada are already saddled with software that lets users go online, search inventory, and reserve stock. Since marijuana is federally legal for recreational use in Canada, Uber was able to attach a weed ordering tool to its existing UberEats app. This expansion into the marijuana market is the first of its kind for food delivery apps, even though the marijuana itself must be picked up by the consumer.

According to a source at Uber, "Uber’s in-house payments specialists, working with our trusted external banking and payments partners, implemented proprietary measures to ensure full payments compliance."

Marijuana remains a Schedule I substance in the U.S., which means that it's classified alongside drugs like heroin, which killed more than 14,000 people in 2019 alone. Marijuana usage doesn't result in a physical overdose or addiction.

Until marijuana is federally legal in the U.S., Uber will likely have to stay away from offering marijuana ordering services in the U.S. However, the company is eyeing looser regulations in the marijuana space, especially considering 18 states have recreationally legalized it and at least 37 have medically legalized it.

If Uber did decide to pursue a marijuana service somewhere in the U.S., it would need approval from the SEC, the FTC, and its own banking services. Many banks don't handle marijuana money in the U.S., even when it's through legal channels (which is why patients usually have to pay with cash for their products).

In an interview earlier this year, Uber CEO Dara Khosrowshahi discussed pursuing the marijuana business in the U.S. and said, "When the road is clear for cannabis, when federal laws come into play, we’re absolutely going to take a look at it."

Right now, U.S.-based marijuana companies are trading on the OTC (over-the-counter) markets, while Canadian marijuana companies can trade on major U.S. exchanges like the NYSE. Federal legalization would make a huge shift in the market, not just for Uber (NYSE:UBER) stock, but for the marijuana and marijuana-adjacent sectors as a whole.