The Alibaba of Cannabis With Aeron Sullivan of Tradiv

Aeron Sullivan of Tradiv

Tradiv.com is tackling one of the biggest problems in the cannabis industry. Tradiv connects cultivators, wholesalers, dispensaries, and marijuana infused products (MIPs) companies together on one platform. Tradiv will allow participants on their platform to view, purchase, and arrange delivery all online.

Learn more at http://www.tradiv.com

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Matthew: Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you looking for a fulfilling and lucrative career in the cannabis industry? Visit www.cannainsider.com/careers. That’s www.cannainsider.com/careers. Now here’s your program.

As part of an ongoing series to chronicle the innovation that is occurring in the cannabis industry, I will be profiling entrepreneurs from Canopy Boulder, the first cannabis accelerator here in Boulder, Colorado. Today I’m pleased to welcome Aeron Sullivan of Tradiv to CannaInsider. Welcome to CannaInsider Aeron.

Aeron: Yeah thanks Matt. It’s good to be here.

Matthew: Aeron tell us a little bit about your background and what Tradiv is.

Aeron: Yeah sure. So my background has been predominantly in the military, the Marine Corps specifically. I was in about eight years, and the first four years I spent doing traditional military things. You know we deployed to the Middle East, spent time there. But I was lucky enough the second half I was able to get a position with a prototype engineering facility that worked within the Department of Defense. And it operated much like a normal business. We primarily focused on engineering, testing and acquiring equipment, specifically amphibious vehicles, for the fleet Marine force.

Matthew: Okay. Amphibius vehicles, so did you get to ride around in those?

Aeron: Yeah so they’re actually, we were testing basically the next generation of the amphibious vehicles. Of the ones that I operated in the first four years of my career in the Marines.

Matthew: That would be fun to like pull up to a beach party in a hovercraft or amphibious vehicle. What do you think about that?

Aeron: Yeah they actually do these things. I think I was unfortunately never able to participate in one, but they do these sort of like fleet days where they take military equipment, they land on a public beach somewhere. Everyone thinks it’s way cooler, the people that are actually operating them, because then at the end of the day we’re going to have to spend about eight hours maintaining them. But they do do that from time to time.

Matthew: So tell us more Tradiv. What is Tradiv exactly?

Aeron: Yeah sure. So Tradiv, I like to think of it as the first online wholesale cannabis marketplace where we provide a solution all the way from the point where a vendor uploads the product to where a buyer purchases that product, and we will them manage and track it all the way through the dispatching of payment and delivery of the product.

Matthew: Okay. So is there an example you can give us of maybe flower or an infused product and how that might work from beginning to end?

Aeron: Yeah so from beginning to end, you know, if you were to use Tradiv exclusively for instance you might be a cultivator where you find a clone. And you find that clone on Tradiv, you purchase that clone, you grow that clone into flower. You then can sell that flower on the marketplace as well has take that trim, sell it on the marketplace. An infused product manufacturer would purchase that trim, process it, create an infused product and then again sell that to a dispensary via the system.

Matthew: Okay. There’s a lot, for people that don’t know, there’s a lot of gotchas and illegalities about banking in the cannabis industry which I think will be a short term problem, maybe an intermediate problem. It will be solved eventually, but if I am a dispensary, and I want to buy let’s say 20 pounds of flower from a cultivator, will I be able to go on Tradiv, look at cultivators, ask questions, look at their background see what their reputation is and then actually execute a transaction and get delivery?

Aeron: Yeah, no absolutely, and I think that’s really one the biggest reasons that people like to use B2B e-commerce, and I will use Ali Baba for an example. The reason that Ali Baba was so successful was because in the past businesses had individual relationships with manufacturing facilities in China and around the world. And what Ali Baba did was that it allowed those businesses and those manufacturing facilities to have one relationship, and that relationship was with Ali Baba. And just like Ali Baba, Tradiv isn’t just a B2B marketplace, it’s an accountability engine which means that when you do business on Ali Baba or Tradiv you get rated. And you get rated on not just the product you’re providing but were you on time. Was it within cost? Was it easy doing business with you? Did you have sound business practices?

All of those things are reported in our transparent marketplace so that if for whatever reason an individual relationship fell through with a manufacturer, you’re not starting from scratch. And this allows both businesses and manufacturers to develop and cultivate their relationship not with one person or one business but with the community. And that way when you go to the marketplace you can see what their past reputation or accountability procedures were to make sure that who you’re doing business with isn’t just a licensed business, but is also somebody who has sound business practices and is going to be easy to do business with.

Matthew: Right. If it’s showing on Tradiv I have this much trim available or I have this many infused chocolate bars available, you’ll hold the vendor accountable if they then say oh it’s not, I had it listed up there but it’s not actually available after you said you wanted it. So there’s going to consequences to a vendor that has you know maybe somewhat questionable business practices. They’ll get a one star, and then people won’t want to work with them. It’s kind of like an EBay model.

Aeron: Yeah that’s correct. So when you buy a product you can rate the product just like you would, say on Amazon. But beyond that we’re also going to, we also publish what was the response rate to orders? Did they approve the orders? What was their percentage of on-time deliveries? And on a buyer’s side what was the, you know, let’s say they want to be able to do cash-on-delivery, how often did they have the cash available to actually make the purchase and how often did that seller or vendor have to pull the product back which you know of course is cumbersome with the metric. And really from both the buyer’s side and the seller’s side when you make a purchase you can have confidence that the purchase is going to go through and that the product is eventually going to be delivered.

Matthew: Okay. One thing, I don’t know if you have built into this or not, but I notice Airbnb does and I love it is before you make a request for a place to stay, it will tell you this, you know, this person responds to 84 percent of requests within one hour. It’s like wow, it’s so gratifying to see those little tidbits of details. And it’s usually very accurate. Is there going to be something like that built in?

Aeron: Yeah that’s correct. In fact it’s already built in. So once the beta goes live here in a few weeks, all those features will be available to our beta users and eventually to all businesses with the commercially ready product. And so it’s not just response rate, but how often was the product delivered on time? Was the quality of the product, it’s sort of like Zappos, you know was the shoe size accurate? Did it fit to the claim? And that’s sort of the same things.

It’s not only was I happy with the product, but did the product reflect the description when I made the purchase? And so all of those things, all those different factors really build up to an accountability measure that we’ve put in so that when you don’t have that product in front of you, and you can’t smell it, and you can’t taste it and you’ve never done business with this person, we want to be able to give both sides of the fence, both the buyers and sellers confidence that who they’re doing business with and what it is they’re purchasing or selling is accurate and that we can measure that accuracy.

Matthew: So let’s talk about delivery a little bit. Now before we get into delivery, actually what geographies are you going to be starting with? Is it Colorado, California, what are we looking at?

Aeron: So for the beta we’re just focusing on Colorado just to try and keep one cohesive market and put our focus effort into one area, but really the model that we’ve created can operate in any state that has a regulated system. So in Colorado we can both facilitate the sale of medical and recreational cannabis. Now you go to Washington and the rec system of course is well-defined, and so we can facilitate recreational sales in Washington. But the medical side, I mean that’s such a sort vague and loosely regulated side of the market. I mean it’s almost as bad as California if not worse, and so that’s an area we wouldn’t be able to move into. So for now we’re just focusing on Colorado, but we do have the plans to expand to any regulated market.

Matthew: Sure, work out the bugs here and then expand.

Aeron: Exactly.

Matthew: How is delivery handled, because we’re dealing with extremely high value inventory here; extracts, concentrates, mips, flower. And not only is it extremely valuable, but it’s a criminal rich target. If criminals get tipped off that this type of product’s in transport, you know, the probability of an event occurring goes up compared to other kinds of materials that are transported. So how do we deal with the delivery of cannabis products? What’s the best way to get it done?

Aeron: Sure, you know I think as the market matures, I think the supporting industry will mature as well. And you know right now there’s a couple different types of companies out there. You’ve got courier services and then you’ve got the large sort of armored car transports. And unfortunately I don’t think courier companies is necessarily the wrong way to go because the cost associated with moving the product with a small van compared to an armored truck is obviously almost incomparable. The problem is finding insurance underwriters and carriers for those types of businesses just isn’t there yet.

So what Tradiv does is we’ve partnered with Blue Line Protection group and companies like Blue Line Protection Group, and not necessarily because it’s the most efficient way to move product. It’s just the only safe and secure way to move it right now. They’re licensed, bonded and insured. And so if that truck goes off the road and that product burns up, we’re able to recoup that cost and recover it for the vendor who initiated the transport. Whereas if a courier company goes off the road, I mean, that product is lost. They’re not going to get it back. At least they’re not going to get the full value of the product back.

Matthew: Okay. What if buyer and seller meet and they say hey we want to arrange private delivery? Is that something that’s possible or is it a must that the secure courier, like Blue Line Protection group is used?

Aeron: So that’s a good question. I mean there’s really, from how we’re doing business now, I think to how we’re going to be doing business in a couple of years is going to require a paradigm shift in the industry. And so with that sort of transition, we don’t expect businesses to one day decide I’m going to drastically do business differently, and so we try to make it as flexible as possible. And so if a company or a business wants to move product with a courier or they want to meet in person, that’s completely fine. It’s just we’re not going to directly partner with those courier companies until they can prove to us that they have the insurance and the guarantees in place so that if Tradiv is help facilitating that sale and help facilitating delivery and something goes wrong, that our name isn’t on something that sort of enabled a bad event to happen, if you will.

Matthew: Sure, sure. That makes sense. Which kind of leads up to my next point which is escrow. Since we’re dealing with such high value products, if the seller says hey I dropped off X or I did my part and the buyer disagrees or there’s some sort of gray area, it’s important to have an escrow. Could you describe how escrow is integrated into the Tradiv offering in a way that helps both buyer and seller?

Aeron: Yeah, no, absolutely. I guess first on the compliance side of escrow. I don’t want to steal their thunder, but we’re partnered or partnering with a large bank in Colorado, and they’re about to make a big announcement to the cannabis industry so I will let them go ahead and let them make that announcement and perhaps we can talk again later, but basically what we’ve done is through this bank and through a payment gateway that they’ve hired to build their ability to move money on behalf of cannabis businesses is we’ve basically created a proprietary anti-money laundering policy or program that integrates the finite data that Tradiv produces for each sale which filters into or filters up into the larger anti-money laundering program of the payment provider. Which allows us in a fully compliant manner, at least given today’s laws and guidance passed down by the prudential regulators at the federal banking level, allows us to move money legally between businesses.

Now moving passed the compliance piece actually, or the mechanics of it is that essentially true what you said is when a product is purchased that buyer dedicates money to an escrow system, and it sits in that escrow so that both the buyer and the seller have confidence that the money is dedicated and it’s there, but if it needs to get pulled back at any point if something goes wrong we can do that. So when that product’s delivered the buyer is going to go through a series of checklists with the vendor, and if everything checks out and they approve and close that order, that money is then released from escrow to the seller.

Matthew: Okay. And how long do you anticipate that process taking from the money being released to actually appearing in the seller’s bank account?

Aeron: The normal timeframe associated with a wire transfer.

Matthew: Okay, two to three days maybe.

Aeron: Actually less than that. I suppose depending, you know, Mountain Standard Time, if you do it after 3 p.m. it will probably be in there the next morning. If you do it before noon that day, it will be in there the same day.

Matthew: Now do you feel like the Marine Corps motto, “Improvise, Adapt and Overcome” has helped you with Tradiv because there’s lots of challenges that exist in the cannabis marketplace especially when you’re dealing with finances?

Aeron: Yeah, no, that’s a funny question actually. So by no means do I think the Marine Corps has a monopoly on “Improvising, Adapting or Overcoming”, but one thing they do do a good job of is they instill in their officers and their senior enlisted that no problem is insurmountable. And anytime you’re given a problem, there is a way to overcome it. And so take for example if I asked a group of marines to take a hill. Marines I need you to attack and seize the hill, that is albeit dangerous, a fairly simple problem. But if I said hey marines I need to craft me a winning counter-insurgency strategy that accounts for the social, economic and political implications, that’s still dangerous, but it’s far more complex. And in the military we tend to call those wicked problems.

And so when we approach this concept of establishing a B2B marketplace, you know, at the surface level that’s a simple problem. Okay we’ll create a B2B marketplace, but when you bring that into the cannabis where you have the intersection state, local, federal laws, federal banking legislation, some of it is specific and some of it is vague. A very simple problem all of a sudden becomes a very complex problem or as we might call it, a wicked problem.

And I think when I approached this idea and then of course the problems that came with it I never once went okay that’s just too complicated. And I think that’s where we sort of have a competitive advantage because a lot of our competitors and other people in the industry looked at the same issue and the same opportunity and they said, oh well that’s just too complicated and you know, somebody else will have to figure that out first. But they use words like the market’s not ready and the industry isn’t mature enough. To be honest with you this is going to be a rapidly changing industry for the next ten years. If we use that approach every time we came to a crossroads where there was a very tough or complex problem, we wouldn’t get very far. And so to kind of come full circle and answer your question, I do think the Marine Corps set me up to address tough problems and go we’re going to figure them out because they’re not unsolvable. They’re just hard, and so that’s what we, you know, perseverance and sort of attacking the problem, finding the experts, gathering the knowledge and solving the problem, finding a solution.

Matthew: And the harder the problems you solve, the greater the barriers to entry too which is the nice part about that.

Aeron: That’s true too. Yeah, no doubt about that.

Matthew: Now switching gears to Canopy Boulder, the accelerator you’re in, can you tell us what it’s like day-to-day to be in that hive of entrepreneurs with the excitement and everything going on, people trying out new business models. It’s like the birth of a star. It’s just exciting, a lot of energy. How do you feel about it?

Aeron: Yeah it’s funny when you said that I got goose bumps. It’s true. It’s really exciting, and I think you know it’s both exciting and beneficial for everybody because, you know, if you take another company and you put them in a room and you say hey I want you to build me this product, they build the product, and it’s sort of like there’s a lot of group think that sort of occurs. And it’s a little bit of a stoved-piped production. And so there’s not a lot of competing ideas or complimenting ideas that are introduced when you only have the dynamic of one group approaching a problem. But at Canopy Boulder, and I imagine any accelerator for that matter, is when you have all those different companies you’re constantly getting challenged on your assumptions, and you’re constantly getting introduced to new and creative ideas. And while you might not have an expert in some field within your team, there is certainly an expert somewhere in the room between all then of those companies, and we constantly lean on each other, and we constantly leverage each other’s knowledge. And so I believe that the companies coming out of this accelerator or really any accelerator are probably far more mature and far more vetted ideas and business strategies that you might find in an individual company trying to do it by themselves.

Matthew: Yeah great point about the group thing too because there’s people with such diverse backgrounds and business models at Canopy Boulder that you can kind of just, you know, ask another entrepreneur or founder like hey this is what I’m thinking what do you think, and you get a really valuable answer back. Or if you’re trying to make a decision from an investor point of view, someone like Patrick Rey or Micah can guide you based on what they’ve seen work previously in other investing situations. So there’s just all this incredible, rich information going on in a very small office. Everybody’s kind of in there together. All these things are going on, all these interactions are going on. I kind of liken it to a small town operator who is at a switchboard. Like when you’re at the center of everything like that plugging all these different nodes in, connecting people in the center of all this information, you just have all this value coming through you and you get to experience the market in a way that’s just not possible without having proximity to these other entrepreneurs and investors and mentors.

Aeron: Absolutely, yeah, absolutely.

Matthew: As we close Aeron, can you tell us how investors can reach out to you if they’re interested in investing in Tradiv?

Aeron: Yeah sure. So we’re a young company. I think come June there’s about four investment forums that we will be participating in, and so we’ll really be sort of in the thick of the investment period of this next year in about a month. But investors are welcome to reach out to us and start that dialogue early. Unfortunately right now we’re only accepting accredited investors, but if they want to visit our site at www.tradiv.com we have our contact information there. And even further if there is dispensaries, processors or cultivators that are interested in participating in the beta, we’re kind of good on processors right now, but we can certainly use a few more cultivators and dispensaries to round out the beta class. We’ll be accepting those over the next three weeks and they can find us at the same site, and we’ve got a beta signup there.

Matthew: Yeah can you spell out your domain for everybody?

Aeron: Yeah absolutely. It’s www.tradiv.com.

Matthew: Great. Well Aeron thanks so much for being on CannaInsider today, and best of luck to you.

Aeron: Yeah thanks Matt it was a pleasure.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

Key Takeaways:
[0:59] – Aeron’s background
[2:28] – What is Tradiv
[3:00] – Tradiv process Alibaba-like platform for cannabis
[4:13] – Aeron talks about the rating system on Tradiv
[8:32] – What state will Tradiv be serving
[10:03] – Aeron talks about how delivery works
[12:56] – How does the escrow system work
[15:15] – “Improvise, Adapt and Overcome”
[18:10] – Aeron talks about his experience with Canopy Boulder
[20:57] – Aeron’s contact information

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    So this is the legal version of Silk Road?