software Archives - Green Market Report

Debra BorchardtDebra BorchardtJanuary 26, 2018
Seed-1280x720.jpg

3min26230

Kyle Sherman, the founder of cannabis software company Flowhub knew he wanted to be a part of the cannabis industry. His personal experience with anti-depressants and his desire to rid himself of those drugs led to experimentation with medical marijuana. His success with that withdrawal gave him an intense passion to work towards legalizing cannabis so others could benefit as he had.

In 2014, he headed to Denver, Colorado as the legal cannabis market was blossoming. He worked with Dixie Elixirs, WeedMaps and ultimately ended up as a compliance officer. Through this work, he realized that there was no way to report to the seed-to-sale tracking software Metrc through an API (application program interface).

“I started to investigate and look for something that would work. Instead, I built a prototype,” said Sherman. He closed on a seed round of funding in 2015 for Flowhub and was the first to integrate with Metrc’s API. For the business owner, it provides automatic compliance with state regulators by sending back information directly. Flowhub also has a handheld device that cultivators can use to scan barcodes and track plant movement. It can track employee productivity as well, saving employers money and headaches.

On the retail side, Flowhub has a point-of-sale technology and can manage inventory. The company partnered with CannaPay for cashless payments. “We track everything,” said Sherman, noting that all of this tracking protects the business owner.

The California Challenge

His latest challenge is the California market. The state just began legal sales of adult-use marijuana on January 1, but the Metrc system is not in place yet and many businesses are operating with a temporary license. Sherman said he believes that companies will receive permanent licenses when Metrc goes live. “I also think some of the companies with temporary licenses won’t get permanent ones,” he said.

While the Denver market has embraced the regulatory environment, some Californians have been reluctant. “You’ve got folks who are open-minded to this shift and then you have other groups that are operating in the grey market and are resistant to change,” he said. “They don’t want to report to Metrc.” Sherman found this was a tough conversation to have with a lot of long-time cannabis businesses. “A lot of folks are not willing to look at solutions,’ he said.

Of course, at some point, these business rebels will have to capitulate and join the regulatory landscape or face getting shut down. Sherman noted that the savvier business owners realize they have to do this and aren’t fighting it.

 


Jack SmithJack SmithDecember 15, 2017
Baker1.png

3min18290

Marketing automation platform Baker, the self-described “Salesforce of Cannabis,” has received $8 million in a new Series A funding round.

The new funding will let the Colorado-based Baker keep growing, particularly in California and Washington, where it recently acquired Seattle-based Grassworks, the second-largest customer relationship management platform in the cannabis industry. It will also use the funds to open an office in Los Angeles, starting next year.

“We’ve built the industry’s leading CRM product, and now we’re truly focused on providing a platform to allow Baker and our partners to offer best-of-breed solutions to our massive retail network,” Joel Milton, CEO of Baker said in a statement. “This funding will allow us to continue to execute on our platform strategy, and help all of our clients grow their businesses — including those in California gearing up for adult use.”

The funding round was led by Poseidon Asset Management and includes other venture capital firms, such as Panther Opportunity Fund and Phyto Partners. It also included participation from previous investors. The $8 million in funding is on top of $3.75 million the company has previously raised.

Keeping Dispensaries Happy

Baker uses what it describes as unique “data-driven approach” to help cannabis dispensaries keep customers happy and boost revenue. The company boasts that its clients see a 40% boost in order size and a 300% return on investment in just six weeks. Its software is used by over 700 dispensaries across the country, helping the company attract the new funding.

Baker has also created a robust customer loyalty program that dispensaries are using to tap repeat business. Loyalty programs are relatively new to cannabis retailers but are quickly becoming a favorite way to communicate with customers.

“Baker has continued to grow at an impressive rate, and is breaking away from the pack in a big way,” said Morgan Paxhia, Co-founder and Managing Director at Poseidon Asset Management. “Unlike anyone else in the space, the team continues to cultivate and craft unique solutions for its customers and scale at a remarkable rate.”


Catherine GoldbergCatherine GoldbergSeptember 15, 2017
Seed-1280x720.jpg

20min54623

Very few people have heard of seed-to-sale management systems, but as the backbone of perhaps the most disruptive plant in modern times, the management of cannabis sales is having a profound impact on federal, state and local laws, including the all-important realms of law enforcement and tax revenue collections.

The cannabis industry’s impact on the nation’s law, business and culture is both profound and dynamic. Cannabis is now decriminalized in 26 states and the District of Columbia and is expected to generate about $28 billion in tax revenues for federal, state, and local governments, including $7 billion in federal revenue: $5.5 billion from business taxes and $1.5 billion from income and payroll taxes, according to the Tax Foundation.

Yet as both a relatively new recreational and medical product (cannabis for medical purposes was first legalized in California in 1996), this highly-regulated industry is subject to strict, state and local laws that have caused the industry to develop its own internal tracking systems, called seed-to-sale. These detailed, multi-purpose tracking systems prevent product abuse, while also assuring cannabis industry standards in regards to such key issues as product safety, supply chain management, medicinal quality, and restricted access by certain groups, such as people who are under age or have criminal records.

At the same time, these tracking systems hold sensitive information about patients, plant, inventory, and financial data. In a dynamic financially and regulatory marketplace, this information has to be secure and redundant. Any system outages can push states and businesses into noncompliance, which could trigger federal law enforcement intervention.

To meet this high bar of new and evolving standards, the cannabis industry has adopted the latest systems management technology offered by a variety of specialized vendors to implement what the industry calls a “seed-to-sale” system that tracks products as they are grown, sold and distributed through both medical and recreational channels. In short, these systems are the most sophisticated tracking and monitoring inventions ever developed for a plant in history.

A typical seed-to-sale software system can be used by growers, producers, dispensaries, state and local governments to track and regulate the activities and location of cannabis anywhere in its supply and distribution route, from cultivation to consumption. Commercial versions of these systems are used by dispensary owners, cultivators, manufacturers, processors, and other licensed cannabis business owners to improve inventory management, chain of custody, sales, pilferage, and point of sale tracking.

According to BioTrack THC, a seed-to-sale software developer, the systems are primarily used by growers, producers and dispensaries to help assist in day to day operations, streamlining their businesses while at the same time keeping them in compliance with their local and state laws with regards to production, processing, sales, and taxation.

These systems can produce accurate records related to assure product quality from the time of planting to medical process; detecting product pilferage, theft and product distribution and sales.

Daniel Sparks, Director of Government Affairs with BioTrackTHC, said that in some states, business owners are required to affix a barcode to each plant and a separate tag to each sell-able product. When a cannabis product is being transported, the transporter is required to notify the state and have proper documentation during the transport. BioTrackTHC allows users to create barcodes as well as transportation manifests that reflect the information that is required by the state. “We are being used in every state that allows for commercial cannabis businesses. No matter what state your business is located in, our system will allow you to comply with the laws and regulations for cannabis tracking,” Sparks said.

Seed-to-sale systems are used by regulators to detect when and where violations occur. This data can then be used to detect supply chain irregularities, so they can be investigated and corrected.

There is also the critical issue of tax revenue monitoring and collection. While most patients and customers will never need to know the details of any seed-to-sale system, states are keenly interested since they are the backbone of compliance and tax collection activities. If industry projections are even close, cannabis sales are estimated to be $24 billion by 2025.

Currently, the tax revenues from cannabis production and sales have become a welcome addition to state budgets. In Washington, $256 million in excise taxes were collected in 2016 from retail, processor and producer sales. In 2016, Colorado received $199 million in tax and fee revenues from cannabis sales.

Making Systems Secure in the Cloud

These systems also need to be secure. As a result, some firms have begun using the cloud environment authorized by the Federal Risk and Authorization Management Program. Known as “FedRAMP,” this system offers highest level of data security available and is also expected to increase the speed of any state’s seed-to-sale trace system. FedRAMP is a government-wide program to deliver a standardized approach to security assessment, authorization, and continuous monitoring for cloud products and services. To date, FedRAMP is being used by BioTrackTHC State Traceability System, while Kind Financial’s Agrisoft Seed to Sale is hosted on Microsoft’s Azure Government platform.

Adam Orens, an economist and policy analyst with the Marijuana Policy Group, Denver, said the origins of the seed-to-sale systems can be traced to the Cole Memorandum and its law enforcement guidance issued to federal prosecutors of cannabis under the Controlled Substances Act. The memo, authored by Deputy Attorney General James M. Cole, lists eight priorities that effectively gave enforcement control to states where medical and recreational cannabis was legalized provided they could monitor and enforce the key guidelines. As stated in the memo, states should have “strong and effective regulatory enforcement systems” that “contain robust controls and procedures on paper.”

This memo provided the impetus for developing seed-to-sale systems, Orens said. Looking ahead, Orens said there will be more emphasis on technology to make these systems more elaborate. Providers also will become more competitive. “However, in the end, these systems could become less restrictive as more states legalize cannabis and the federal government loosens some restrictions, so diversions to other states, for example, will not matter as much. In the end, these systems will revert back to commercial applications with an emphasis on light tracking. For instance, liquor and tobacco are not tracked the way cannabis is across the nation, so the cannabis tracking system could resemble the one used to enforce food safety and cosmetics regulations,” Orens said.

Major Participants in the Seed-to-Sale Industry

The variety of companies that provide seed-to-sale compliance and inventory management software are as varied as the industry itself. Some of the company’s came from managing complex accounting challenges, while others tracked narcotics abuses, or were created by people who ran dispensaries and needed better software to manage their businesses. Here is a list of some of the top providers in the seed-to-sale industry.

BioTrackTHC

BioTrackTHC originally was formed as BioTech Medical Software to help combat the prominent “pill mill” problem in Florida, where doctors were dispensing and prescribing powerful narcotics for inappropriate, non-medical reasons, according to the company. BioTrackTHC was formed independently from BioTech’s original narcotics tracking software, built from the ground up, so it could be designed to meet the unique features of tracking the cannabis plant from seed-to-sale. This system is used by states, dispensaries and growers.

As medical cannabis became more popular around 2010, the company was asked by cannabis entrepreneurs to apply its system to the cannabis industry in order to comply with state and local laws.

Today, BioTrackTHC is used by about 2,000 licensed cannabis professionals. The system uses a State Traceability System in Amazon Web Services’ GovCloud for its state medical marijuana program. While FedRAMP is a federal program, the authorization gives Hawaii’s cannabis regulators the highest level of data security available and is also expected to increase the speed of the state’s Traceability System, company officials said.

The BioTrackTHC State Traceability System allows state and local government agencies to track the production, transportation, destruction and sales of legal cannabis. Regulators can see each gram of cannabis throughout its production life cycle, so it is compliant with industry standards and state laws. This system is being used in Washington, New Mexico, Illinois, Hawaii and New York, according to the company.

The system’s key features include a “fully-controlled” system which tracks system accessibility and who took what actions and its final result. The system also can recall products in real-time (when directed by the state), so the products cannot be sold. If a dispensary tries to sell a recalled product, the system will issue a warning notification. The state’s system and, in turn the system itself, will restrict them from being able to sell it based on the fact that it’s bar code/16 digit tracking number is locked in the BioTrackTHC system.

For states and dispensaries, the system also provides real-time tracking of patient limits, so patients cannot fill multiple prescriptions at different dispensaries. BioTrackTHC’s linked systems alerts users that the patient has already purchased their daily limit and will not allow the patient to make a purchase in the system.

Franwell (Metrc)

This company says it is the “first all regulatory solution for cannabis,” so growers and dispensaries can comply with applicable laws. Franwell said it has developed and deployed “a turnkey solution which provides end to end tracking and tracing of marijuana plants and products. This solution was specifically designed for government agencies in charge of legalized marijuana enforcement.”

Metrc was launched in December 2013 for the State of Colorado’s Marijuana Enforcement Division “first and foremost as a regulatory compliance system, unlike any application on the market.” This system was “built by regulators specifically for oversight,” according to the company. To date, the system has registered over 20,000 users and tracked well over 5,000,000 plants and 3,800,000 packages, according to the company’s web site.

A July 2014 Brookings Institute report on Colorado’s entry into the legalized cannabis industry said: “In many ways, the system is the backbone of Colorado’s regulatory structure governing legalized marijuana.”

This system boasts a number of regulatory features, including “a vertically integrated ‘closed-loop’ medical marijuana regulatory scheme.” The system also uses RFID (Radio Frequency Identification) technology combined with serialized individual item tracking. This system creates an “end to end” surveillance system, so a city has real-time visibility at any given time into the “inventory” at all the locations, as opposed to being based on audits for tracking. This state-wide system is being used by Alaska, Colorado, Maryland and Oregon, according to the company’s web site.

MJ Freeway

MJ Freeway guarantees state, federal, and HIPAA compliance, and is integrated with state systems where available. The MJ Platform tracks the product from the grow stage to sale and boasts of 1,000 customers. However, this system was victimized by hackers and suffered from a breach in its security protocols in January 2017 that incapacitated many clients in Nevada. At the time, MJ Freeway CEO Amy Poinsett, called the intrusion an “unprecedented malicious attack.”

According to a report in the Boston Globe, hackers accessed servers of MJ Freeway and corrupted large amounts of data, although no customer records were stolen. The newspaper said the “recovery process has been slow, and at least some customers are abandoning the company.”

The company boasts of “comprehensive” marijuana tracking software, that helps develop client businesses, minimizes product losses and increases efficiency by tracking all costs and yields. This system is internet ready, so clients can access the cannabis software from PCs and tablets. The systems also allows producers and dispensaries to track products and ROI, keep patient and customer records.

Greenbits

Green Bits was founded by engineers with experience crafting global accounting software with complex compliance requirements, according to the company’s web site.

In 2014, the company began working with recreational marijuana retailers to develop a point-of-sale product that matched their product and inventory cycle from seed-to-sale tracking, to customer sales limits and inventory tracking. The company said its Back Office is a web-based portal that can be accessed via a phone, tablet, or computer using a web browser. The company also said it was the first to link with dispensary software location systems Leafly, WSLCB, and Weedmaps.

Flowhub

Working primarily with growers and dispensaries, Flowhub allows customers to upload sales data to Franwell’s METRC API. This system allows users to easily sync their data to METRC. The system boasts of a central distribution hub, (Flowhub’s POS) that allows users to create a company-wide catalog of products, suppliers, and strains so data is updated and standardized at all retail locations. At the POS, the company developed a customizable Discount Engine that automatically posts discount schedules that expire at a specified time date and can be limited by strain or product. The discounts are expressed as a percent or in dollars to give dispensary managers more control. The company’s POS system is cloud based and uses the latest web technologies without buying new hardware, the company’s website said.

Agrisoft

Based in Los Angeles, Agrisoft says its system offers point-of-sale, infused product, cultivation and security modules. It also offers data security using a biometric system logins for staff’ a streamlined, tracking, and verification system for monitoring integrated scales, barcodes, and system audit trails. It also can monitor the cultivation and efficiency of strains and conditions, while also managing inventory “from the back safe to the retail shelf,” while handling transactions with patients and customers using a touchscreen point-of-sale system, according to the company’s web site.



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 10 hours

Illinois’ Adult Use Market Continues to Flourish ⁦@GTIGrows⁩

@GreenMarketRpt – 1 day

We apologize for our slow reporting this week. We were affected by the storm that came through the Northeast and ar…

@GreenMarketRpt – 3 days

RT : Unlike other hemp-infused beverages that contain CBD, these products are made with hemp seed oil.

Back to Top

You have Successfully Subscribed!