Operating as a tech overlay may work well for, say, a travel or hospitality start-up, but in the funeral business, it brings its own headaches. In almost every state, consumers can buy cremations only from a licensed funeral home. That means every one of these start-ups needs a brick-and-mortar shop in each state where it offers services. Eirene has a small office for regulatory reasons, but Ms. Greene said no customer had ever asked to visit it. Mr. Crawford said Solace had small offices in Seattle, Portland and Los Angeles that the funeral directors on his staff “work from occasionally,” but most of his team is remote.
Other states have requirements so rigorous that it’s hard to imagine this business would even be possible in them. Alabama, for instance, requires funeral homes to have a conference room, a display area with at least “eight different adult size caskets” and a viewing area that can hold at least 100 people.
“Nearly all states have licensure requirements that were established without contemplating this type of business model,” said Mr. Doyle of Tulip. “As we continue to grow, there are certainly regulatory frictions that are slowing down the process a little bit.”
Victoria J. Haneman, a law professor at Creighton University who studies the funeral business, said that “many of the state-by-state regulations are outdated and completely unnecessary.” While consumers benefit from federal regulation around price disclosure, some of these state-level rules protect the companies already operating and create a disincentive for new operators, she said.
Tulip, for example, might be in the best position to make those economics work. Its parent company, Foundation Partners Group, already owns over 170 funeral homes, crematories and cemeteries across 22 states, and Tulip is using that infrastructure to serve its online customers. Unlike its competitors, it doesn’t have to sink money into empty storefronts.
Smart Cremation, which has been active for over a decade, has the same perk: Its owner is NorthStar Memorial Group, a company with over 75 funeral home and cemetery locations.
Some old-school funeral homes have offered a version of this service for decades. Barbara Kemmis, the executive director of the Cremation Association of North America, recalled that when her brother died at a college in Wisconsin in the 1990s, the funeral director shipped his cremated remains to her parents in Texas.