It’s not easy going green.
Ben Curren, co-founder and CEO of Green Bits, a cannabis retail platform, knows this all too well. His company, Green Bits, helps cannabis brands with a point-of-sale system and compliance. It’s a complicated maze of regulation—for example, each state that has legalized cannabis has its own set of rules—and Curren believes he can serve as a back-end and technology service for a budding industry. Of course, it’s not all altruistic. There are rewards for being able to solve an industry’s problems.
Green Bits, which recently announced in April a $17 million Series A round of funding, currently works with 1,000 dispensaries.
Adweek spoke with Curren about why a company like Green Bits is necessary, post-legalization trends in California and why marketers and advertisers need to wake up to the cannabis haze.
The following has been edited for length and clarity.
Adweek: What trends are you seeing in California post-legalization?
Ben Curren: So, you’re seeing stores that were pure medical [that are getting] into recreational, and they’re getting their temporary state licenses. With that temporary state license, comes a bunch of new things.
You see a lot of rapid growth [with] some of these businesses, where their sales are more than doubling because now you have a bunch of people that are just over 21 coming in. But then, at the same time, they’re starting to feel the government regulation.
Some of them don’t see that yet. So, a lot of people we talked to are more and more trying to deal with growth. And they don’t see what’s coming down the line [are the] additional regulations that are about to come when they get their permanent license. When recreational [cannabis] comes along, there’s [these] additional regulations on the wholesale side, which knocks out a lot of suppliers.
So, you’ll see a lot of major brands have trouble getting their products tested and getting onto the shelves of these stores—and then that continues to happen [as] more regulations occur. You’ll see it become more and more difficult to operate. And you’ll see some people not make that shift, so you’ll see some of the supply shrink a little. Because of that, you’ll see prices start to go up because there’s less supply and then on top of that, you have the state coming in and putting additional tax revenue. So you get [a] compounding effect there. The first year is extremely volatile.
What is your stance on the cannabis industry and federal regulation?
When starting a business like this in an emerging market, especially one that has federal law pointing one way or the other, I just look at it that we’re going have a lot of battles before the war is won, one way or another.
Are there any particular stats about the industry and where it’s going?
General trends that people don’t realize is just how how large the industry is and how large the individual stores are. On average, in Washington, a retail store [makes about] $3.4 million dollars a year or in Nevada, it’s $5 million a year.
The general retail sector would be dying to have sales like that every year. A lot of small businesses in general retail can do less than $50,000 a month. And [then there’s] these guys in Washington [are] averaging $300,000 a month and in Nevada even more.
I think [another trend] is seeing alcohol companies and pharmaceutical companies get really nervous. They’re starting to see how their sales are going to get disrupted. At first, a lot of them didn’t think that cannabis was going to disrupt their business at all. But they’re starting to see that it really is. If people are using cannabis, they’re not using as much alcohol.
What are some interesting challenges cannabis faces that marketers should know about?
On the digital marketing side, you’ll see a lot of cannabis companies are locked out out those types of platforms. So, if you look at Facebook and Google and the big places where you would typically advertise or market, [they] generally have policies against cannabis.
It leaves a lot of them real desperate on trying to figure out how to effectively market or create a brand. There are growers or edible makers right now that are trying to become the next Coca-Cola type brand, and they have very little avenues.
[It’s] interesting [however] that billboards are kind of popular, simply because they can’t advertise a lot digitally. They’re putting those dollars more towards crucial things like billboards. And then you have these unique platforms like Weedmaps and Leafly that are allowing them to run ads. But [they’ve] got to create [their] own network and [their] own place to get all the consumers rather than rely on something like Facebook.