This interview was conducted with Brian Fitzpatrick, chief executive officer of cannabis fintech firm Qredible. It has been edited for length and clarity.
The hemp and cannabis industries are still like the “Wild, Wild West” in many ways – particularly when it comes to quality information.
Qredible CEO Brian Fitzpatrick recently spoke with Green Market Report about how the AI blockchain startup platform aims to verify, validate, and assure compliance in the cannabis and hemp/CBD industry.
The consequences of workarounds can pose real threats not just to the businesses, but to the people that consume these products.
Tell me briefly about yourself and your company?
Fitzpatrick: I created a software company pretty much right on the heels of (the housing collapse) and started automating quality and transparency around the lending process to reduce fraud and increase the quality of manufactured loans that were being originated into the secondary market.
The good news is that nobody’s ever died or gotten sick from a bad mortgage. But I can tell you, obviously, in this industry, the stakes are a lot higher because we’re messing with people’s health. What I saw going on in this industry was sort of the Wild Wild West.
Qredible is a software company that is the industry’s only digital registry. And what that basically means is that we monitor everything going on about the companies and their products. So, we validate and verify their licenses, their certifications. We issue those certificates with a smart contract ID into a blockchain. So, in that digital registry of that blockchain, it all becomes immutable.
We’ve just recently launched … a very, very cool system that’s going to help this industry become safer and allow companies on the B2B side within the supply chain to do their research – treating us as the single source of truth for what’s happening out there.
Then eventually, next year, we will release this for free to consumers. So, consumers will know what the products are that they’re putting in their body and know what company makes them and have full transparency as to their legalization and the status of all their certifications as well.
How would it look to a consumer? What’s the vision?
Fitzpatrick: Basically, we’re going to be the Carfax of cannabis. So, before you buy a used car, you’re going to put in the VIN, you’re going to check on that vehicle – make sure it wasn’t in any accidents. You’re gonna do your research via that platform as well.
So, the way it will really look to the consumer is that they’ll be able to take a picture of the label. We’ve developed artificial intelligence that will identify and associate those labels to particular brands. They’ll be able to find that this particular product is distributed through XYZ company tied to these manufacturers, and they’ll be able to essentially do research on the company based on that product.
We monitor today over 36,000 licensed companies throughout the country. It will be a QR code that will take you to a report which is able to tell the consumer everything about that company.
Now, from the company perspective, that company is able to basically say “Yes, we’re aware of these lawsuits. We’re aware of these things. Here’s the things we’re doing to address them. Here’s, you know, our action.”
Can you talk about how this platform can act in spaces outside the supply chain, like a company’s website or social media posts?
Fitzpatrick: So, across the entire country, our compliance department has assembled all of the rules and regulations that apply to labels and marketing, and we built it in a machine learning system.
The first thing we do is electronically comb through the website. The technology reads the lines, and then it applies it against the artificial intelligence that understands what these rules and regulations are.
Then it will find all the places in your website and your social media that you’ve got no-nos, the areas where you’re saying stuff you’re not supposed to be saying. And it will provide that alert. So, instead of paying an attorney $750 an hour to actually review the site, the technology does that for a fraction of the cost and a fraction of the time.
We’re not only trying to secure the supply chain, we’re trying to help these companies not get themselves in trouble by reducing the cost of compliance, because that’s the big headache for them.
Talk about how this platform would benefit small business owners or small cultivators trying to make it in a ruthless industry.
Fitzpatrick: Sure. From a cultivator perspective, one of the challenges that I saw particularly in the CBD field in 2019, on the heels of the 2018 Farm Bill, every single tobacco farmer said, “Hey, I’m going to start growing CBD and hemp, and I’m going to sell it to these cultivators.”
First of all there was a glut and oversupply on the industry, and secondly, the farmers that cultivators that were lucky enough to sell product, they didn’t know who they were selling to.
I mean, they’re farmers. They don’t necessarily know who’s on the other end of that transaction.
And the people that were essentially buying product, they didn’t know whether they could trust the cultivator. So, the farmer ends up shipping free samples all over the country and still don’t know whether they’re dealing with a qualified buyer.
What Qredible does is it helps the buyer and the seller to identify the legitimacy of the other party, so the buyer knows that they’re dealing with a credible COA that’s been blockchained and hasn’t been monkeyed with by the farmer.
What would this mean for, let’s say, the Delta-8 loopholes and issues with other hemp derivatives?
Fitzpatrick: That’s a big issue out in the industry right now. As a matter of fact, I have a personal experience with a family member who was sent to the emergency room because of a batch. He’s in the business and was sent by a manufacturer a bunch of delta-8 samples, and he landed in the emergency room as a result. We’re starting to see a lot of people really getting ill and sick because of these loopholes that exist.
We’re monitoring very closely what the states are doing about this and the recalls and the safety parameters that are now starting to be looked at to start to be in place. Because time is of the essence with a lot of these products.
I was talking to a CBD manufacturer back at MJBizCon, and he was telling me that the majority of his orders right now are all around this delta-8 distillate. And that’s the hot thing on the market right now. Because it’s basically, “Oh, I get to be in the cannabis business without getting a license to sell marijuana.” And that’s a very dangerous thing for the industry.
So, what we’re doing is we’re electronically monitoring that very closely, and we’re notifying the supply chain of changes to that. And this is why I’m really anxious to get this out to consumers, because consumers don’t know any better, right? I mean, they’re just jumping on these products.
There’s not a lot of education on the consumer side. The B2B side has gotten smart, understands it, but they also know what sells, so they’re just jumping all over it. And it’s not the best thing for the consumers.
I wanted to talk about New York really quick before I before I let you go.
Fitzpatrick: Yeah, so think about this. We’re tracking and validating and blockchaining and issuing smart contract IDs for all of these licenses.
Imagine a consumer standing outside of a dispensary in New York and basically using their phone and seeing the Qredible ‘Q’ with a QR code, scanning that, and it saying, “You’re standing at Fifth and Broadway right now, and this is XYZ dispensary; this is a properly licensed dispensary by the state of New York. Here’s their certificate from Qredible and here’s all the information about this company.”
So, the state of New York could basically say, if you don’t see the Qredible seal, and you’re not getting this validation electronically while you’re at that dispensary, you’re not dealing with a properly licensed dispensary. Therefore the state of New York cannot claim that they’re following all legal safety guidelines and boundaries.
Could you just remind me of the timeline of this rollout? And if you had to ballpark when a situation like New York could start benefiting from the service?
Fitzpatrick: The technology is live today. So, we are offering this to cannabis brands and hemp CBD manufacturers and distributors. And they’re signing up. These companies are all signing up.
Our first rollout is to go after the B2B side. Phase two of that, which we’re entering right now, is we are starting to work with various states. But obviously, that’s a process, because you have to get approved to do business with the state, and then the state has to incorporate you into their process and workflows.
Honestly, what I’m trying to do right now is get the attention of every single state in the country that has these legalized programs. California is a great example. The illicit market in California is three times bigger than the legal market. How do we change that? Well, SAFE banking is going to help, right?
But being able (to have) a consumer identify that this is an illegal dispensary and buyer beware, this could be dangerous to you. Educating the consumer on that is very, very important.
So, the technology is all there. There’s nothing stopping us from doing business with the state or anyone else. It’s just, we’re building right now.