The legal cannabis industry is still in its infancy in the US. At the moment, businesses are working on creating infrastructure, software, and standardized workflows designed to minimize barriers related to cultivation and retail (seed-to-sale).
Flowhub, a Denver-based cannabis POS (point of sale) platform provider, is one of the leading pioneers currently driving growth in the nascent sector. Led by Kyle Sherman, CEO of Flowhub, the establishment specializes in facilitating multiple aspects of cannabis retail, including compliance, sales, and analytics (reporting).
Here at MassRoots, we spoke to Kyle about Flowhub and his thoughts on the future of the legal cannabis sector.
Michael: What inspired you to create a seed-to-sale POS platform?
Kyle: About two and a half years ago, I saw WEED by Sanjay Gupta on CNN, which was a special at the time when I lived in Los Angeles with my wife. I have been into cannabis for some time, but I didn’t fully understand the medical applications of it. The show (WEED on CNN) was just mind blowing, because it featured Charlotte Figi, this young girl suffering from Dravet syndrome, having up to 300 seizures a week. I saw that cannabis literally saved her life, and because of cannabis she had around one seizure a week. That really gave me a sense of needing to leave Los Angeles. I owned an ad agency out there and I just wanted to get out of that business. I felt like it was not fulfilling and I really wanted to try to change the world by legalizing cannabis.
I thought that moving to Denver was probably the best next step. So we moved out here – I helped Weedmaps and Dixie Elixirs with their marketing. I also helped a vapor pen company called Neos with some marketing. While I was working at Neos, I met their head grower, who is very famous, Matt Berger. He created this strain called Bubba Kush back in the 90s, and I found out he was opening up a marijuana products facility. I said, “Hey man can I work for you for free, I would like to just work there, get my hands dirty and understand the compliance side of things.” He said, “I’ll pay you; that would be great,” so I pretty much immediately started working for Neos full-time doing their compliance and supply chain.
While I was there, we were on a system called Biotrack. It’s a well-known system in the industry, because it’s the only one available for seed-to-sale. I couldn’t believe it, because it was so old. I contacted their corporate headquarters to give some feedback about their software, and realized that they had no interest in feedback; they didn’t want any help with anything. This was the same with a lot of the people I talked to, and I realized that this was a widespread issue. This old-school software built in the 90s for pharmaceutical tracking, which had terrible customer service, was giving everyone a hard time.
With that I thought that surely there had to be someone in the world building incredibly advanced seed-to-sale software. I looked everywhere and I realized that there was nobody. I also realized that this was something that everyone needed in order to make this industry a real thing. To scale the industry bigger than what it is today, you really need great custom technology. That’s really how Flowhub came to be.
Michael: Analysts are predicting exponential growth in the legal cannabis sector over the next 5-7 years. What part of the industry do you think most of that growth will come from?
Kyle: With states legalizing cannabis for adult use, I think a lot of growth will come from retail. What’s going to happen is because retail relies on so many other things, it means that other areas of the industry will scale and follow that retail explosion. So if California goes adult use for 21 and older, I could imagine that if all of the laws went into play in 2017, we would see a major spike in retail centers.
But at the same time, we would see a major spike in tech companies trying to support these retail centers, and a big spike in real estate sales — in all of these different areas. I think it really starts though with retailers, the people who are selling the cannabis plant. I also think that we’re going to see big growth in edibles companies. I think there is a lot of work to be done when it comes to edibles, topicals, ancillary and infused products, so it’s going to be interesting to see where that goes. But I think that it’s going to be retail centers along with the products that they carry – that’s going to be first.
Following that of course is people like us – you can’t sell cannabis without technology. This is why we have been going through major growth spurts this past year. We’re growing out of the gate, because it’s such a necessity, so as more stores open that calls for more technology – you’d see how the dominos fall after that.
Michael: With the legal marijuana industry still in its infancy, legislation seems to be in constant flux. How can customers use Flowhub to boost compliance with the latest regulatory guidelines?
Kyle: It’s really cool because at the base of it, cannabis itself is a very linear process. It starts from a seed or clone, or tissue culture, and it goes through this process to get into the store. And the store is a very particular process in selling that product; so it’s a very linear process. You’re right that compliance does change from state-to-state, but it’s not as crazy as you’d actually think it is. It’s not as complex as maybe it’s made out to be. In a lot of ways, it is complex if you don’t have the right things, but we’ve really built a software for the workflows in cannabis. Because cannabis is so specific in the way that things are done, we’ve tailored our software to those things.
On top of that, you have the compliance layer. What you get at the end of the day is a very seamless experience for the retailer, because they don’t have to worry about compliance so much, since it’s done automatically for them. We’ve really figured out ways to navigate this complex arena of laws and break them down into very simple steps.
One of our greatest features is our Smart Cart Limits. For example, if a person is coming from out-of-state to buy cannabis retail in Colorado, the store can’t over check that person out of flower. There is a limit that the state gives you that says you can only buy seven grams per transaction, if the customer is from out-of-state. Our system won’t let you sell more than that, and our software works at stopping people every day from overselling to customers. It goes to show you that little things like that can affect the way you do business, now that businesses don’t have to worry about their bud tenders overselling to customers. Our software won’t even process that transaction. It’s these types of things that our software does to help people.
Michael: What are some technological obstacles that cannabis businesses are facing today, and how is Flowhub addressing these issues?
Kyle: A big one is data standardization. Right now, every time dispensaries get (for example) Wana Sour Gummies, with Wana being the brand and Sour Gummies being the product, at one location they might label the product as “Wanna” with two Ns, and at another dispensary it might just be Sour Gummies without the brand name. Our software standardizes this all of this data, which is useful – especially if you’re running a chain with multiple stores. We standardize that so all of the stores are selling the exact same product.
When these businesses run analytics on top of that, it changes the whole game for them. They are able to really see that a specific product is doing well. These are things that optimize the business. Sometimes businesses are facing these things every day without realizing it. When you’re putting in bad data, it’s not helping you; in fact, it gets in the way. We’ve really created workflows that encourage great data and it seems to be helping businesses. It’s a phenomenal way to get clean data out of the system. Sometimes businesses don’t know how broken their internal systems are until they are on a clear, transparent system like Flowhub.
Michael: Being in position where you get to interact with growers and dispensary owners on a daily basis, what are some common concerns that members of the legal cannabis community have about the future of marijuana?
Kyle: We constantly hear from our customers that because of Flowhub, they believe that legalization will happen faster. That’s something that means a lot to us, because we spend a lot of time researching the industry, talking to our customer base, and talking to people growing the plants and selling the product. We’ve really built our system to help make their lives easier, so they can focus on the fun aspects of the business, and not so much on compliance and these other things that a computer can take care of.
The biggest reaction that we get from people and our customers is “this is the future of the industry, and you guys are driving it for us.” We have a lot of people thanking us, and we have yet to encounter someone say “this software isn’t for me,” and I think this says a lot. We really care about our customers and what they feel they need, whether it’s product-related or making things more efficient. It’s really about working along beside them. They’re not used to this. All of these other providers have left them high and dry, in the dust without much thought. I think you can’t really build an industry together when it’s one-sided, when it’s just one group trying to help the business.
People are saying that we are the future of the industry, and they believe our software will actually help the industry grow faster. That’s our goal: our mission in the company is to legalize cannabis responsibly in North America, and eventually take it globally. That’s what we’re going to stick to and I think our customers appreciate that.
For more information about Flowhub and their seed-to-sale platform, check out their website.