9 Cannabis Startups with Seed-to-Sale Solutions
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We remember the days before Big Marijuana, when buying weed was much easier. We would pull up a block or two away from a seedy house in a rundown neighborhood. The front yard probably hadn’t been mowed since Nixon was president. Our dealer was named Weeda. For $25, she would hand over a quarter-ounce of stem-and-seedy “Mexican dirt weed”. We never bothered to ask about sativa or indica. It was a great system until the day the cops busted the whole operation. We were dry for a couple of weeks before we found a new Weeda. This was Texas, circa late 1980s, around the time the state decided to institute a tax on pot despite the fact it was illegal. That way they could get you for tax evasion and possession a la Al Capone (the law was finally repealed in 2015 after about 25 years on the books). The good old days. Not.
The legalization of recent years, particularly for recreational marijuana, means you don’t have to visit urban areas going to pot for buying your pot. In Denver, there are more dispensaries than Starbucks, and places like Colorado are building a legitimate business environment that is experiencing astronomical growth. With legitimacy comes paperwork and a different set of challenges, especially in such a tightly controlled industry that is illegal and mostly illegitimate in the eyes of the federal government. Cash is still king but even that is changing.
The nine cannabis startups below, identified by the great minds at CB Insights (see the market map above), are providing the tools to turn any Cheech & Chong operation into a tightly rolled business, from seed to sale, a topic we first covered with a company called Baker.
Enterprise, Government and Wholesale Management
Founded in 2010, Denver-based MJ Freeway has raised $11 million in disclosed funding, including a $3 million B series extension back in April. MJ Freeway offers business management software and consulting services to help ganja startups comply with the law and to keep everything from going up in smoke. It claims to have processed $5 billion in cannabis sales transactions, serving clients in 23 states, the District of Columbia, Canada, Europe, and Australia. Its MJ platform does it all: compliance tracking, point of sales (POS) and inventory management, from cultivation to retail sales. The platform also has a customer relationship management (CRM) component that allows retailers to engage and market to patients and customers.
The company says the latest round of investments will also help fund its Leaf Data Systems, a web-based regulatory platform for governments to monitor compliance by cannabis businesses. Customers include the Pennsylvania Department of Health, the state of Nevada and the municipality of Cathedral City, California.
Also founded in 2010, Fort Lauderdale-based BioTrackTHC offers a similar suite of software solutions for businesses and government customers as MJ Freeway. It has raised $5 million in disclosed funding. Its government compliance system is used in seven states, while its seed-to-sales software is located in every state where medical or recreational sales are allowed, as well as Puerto Rico, Jamaica and Canada.
Last year, BioTrackTHC startup partnered with Cannabase, which hosts an online wholesale marketplace for the cannabis industry (not to mention an interactive map to find dispensaries using various filters). Publicly traded HelixTHC, a penny stock company that specializes in security (its CEO is reportedly a West Point graduate who served as a U. S. Army infantry officer) acquired Cannabase last year and also owns a chunk of BioTrackTHC. In another “it’s a small cannabis world after all” moment, HelixTHC also works with MJ Freeway through its Cannabase subsidiary, a key step for moving the industry from user-generated data on wholesale inventory and markets to real-time data.
LA-based KindManage, backed by $3.5 million, is yet another seed-to-sale startup flogging compliance software and business management tools through a software platform called Agrisoft Seed to Sale. It also offers a government version. The data is secured with biometric system logins for staff and everything is tracked using barcodes, and system audit trails. You can manage inventory from the back storage room to the retail shelf, and handle transactions with patients and customers with a simple, touchscreen point-of-sale system. Sounds like it has more built-in tracking features than your standard off-the-shelf POS system.
HR for Cannabis
Founded in 2015, Denver-based Wurk takes the work out of managing all the stoners on your staff. It has raised $3 million, including a $2 million Seed round in April that included MJ venture capital funds like Poseidon Asset Management, Phyto Partners and The Arcview Investor Network. Calling itself a workforce compliance platform, Wurk helps automate tasks associated with hiring, managing and paying employees, especially geared toward meeting pesky regulations related to the federal income tax code, banking and general HR rules like what to do when you discover your employees stealing from your stash. The new funds will help the company expand its business to meet the growing MJ landscape, including adding a couple of execs to the management team, according to a Wurk press release.
Flowing from Seed to Sales
Founded in 2015, FlowHub is yet another Denver-based cannabis startup that raised money in April, the unofficial stoner holiday month. Its $3.25 million Series A brought total disclosed funding to $3.75 million, with top MJ VCs like Poseidon and Phyto Partners in the mix. FlowHub offers two software products, one for growers and one for retailers. The former provides full visibility into the grow room, from tracking the trimmers (no more strip searches!) to minute-by-minute activity using the company’s Nug, an all-in-one handheld device that manages inventory and even comes with a data plan if the WiFi crashes.
At the retail end, FlowHub offers a point-of-sale system (above) that helps keep budtenders compliant with the law, such as adhering to daily purchasing limits. There is also a CRM component, including a customer rewards program and gift cards. Sounds like a great stocking stuffer to us.
Update 10/15/2019: Flowhub has raised $23 million from a consortium of investors to automate the cannabis supply chain, retail and reporting processes and bring to market technology solutions that are shaping the cannabis retail business. This brings the company’s total funding to $26.8 million to date.
Keeping Track of the Stash
Founded in 2015, Seattle-based s2solutions picked up $1 million from a Seed round last year. The company provides a software suite to help cannabis processors “streamline sales, fulfillment, and inventory management”. Its software package comes preloaded with all licensed cannabis facilities in Washington, updating new licenses each week. S2solutions automatically generates purchase orders, manifests, and invoices, and it provides a web-based portal for retailers to order more “product” (i.e., flower) 24 hours a day.
The company says it has plans to go national. Currently, it claims to partner with four of the top five cannabis producers in the state of Washington (and eight of the top ten), among others, processing more than $10 million worth of invoices each month.
The Starbucks of Cannabis Cards
The marijuana industry has been a pretty much cash-only business since well before the days of Reefer Madness. Backed with $1 million in disclosed funding, California-based PayQwick is one startup trying to make cannabis a cashless society. It provides payment platforms for business-to-business transactions and in the retail space. The company reports that it is registered in the states of Washington, Oregon, and Arizona as a money transmitter for businesses. Customers can check out using a pre-loaded card, which can be topped up online or by snail mail, or pay using an app. Here’s how it works:
Customers can load up to $1,000 on the cards and remain anonymous. A rewards program helps loyal customers score goodies from favorite retailers. If they want to get some mad funding, maybe they should integrate some blockchain technology into their solution.
Cannabis Commerce and Compliance
Founded in 2014, Arizona-based Hypur offers financial solutions for the banking-challenged marijuana industry. It has raised about $3.7 million and is part of the VC firm Hypur Ventures’ portfolio. (Not to mention that Hypur founder and CEO Christopher Glavin is also founder and president of Hypur Ventures, as well as director of Dope Magazine, which is also in the Hypur Ventures portfolio. Follow all that?) Hypur’s platform enables banks to automate many of the manual processes associated with cannabis businesses, which involves a whole slew of state and federal regulations. The platforms also afford financial institutions real-time insight into POS transactions to ensure suspicious activity (read money laundering) doesn’t find its way into a bank’s virtual vaults. Hypur also offers cashless solutions via its Hypur Commerce platform for B2B and retails transactions.
Technology for Optimal Growth
We admit that we stole that headline from the tagline of OptiLeaf, a penny stock company out of Wichita, Kansas, that went public in 2015, about a year after it was founded, taking in about $700,000 before the IPO. (We’ll spare you our usual rantings about marijuana penny stocks.) The company, like many on this list, offers a software management suite. Its flagship product, however, is an automated growth management system that is capable of “monitoring and adjusting light, soil moisture, CO2, temperature, ventilation, nutrients, and humidity as needed, in real time and around-the-clock”. The user interface allows growers to monitor, adjust, and manage their facilities from anywhere in the world, most likely from their bong water-stained couch.
Conclusion
Big Marijuana is growing up. Most of us who visit our neighborhood budtender every day once a month or so are happy knowing we don’t have to visit scary neighborhoods to find good bud anymore. But pot is becoming a real business, and that means companies have to get their heads out of the clouds and into cloud-based services that will help them stay on the right side of the law while also making good business decisions based on real data. These startups seem to be selling the real deal.
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Great starter list here guys, keep up the research and writing!
Cheers for that!
Any recommendations for cannabis-specific financial modeling software solutions? Thanks!