Learn How Cannabis Dispensaries and Cultivators Connect with Cannabase

jennifer beck

Cannabase offers an online wholesale marijuana marketplace that connects commercial growers with retailers and dispensaries. Cannabase promises to do the heavy lifting for retailers and growers to help them facilitate their ability to both buy and sell cannabis with the right partners. Listen to this interview with Jennifer Beck, co-founder and CEO of Cannabase in Denver Colorado.

Prior to October 1 2014 dispensaries were required to grow 70% of their own cannabis. This requirement was called, vertical integration. With the end of vertical integration both dispensaries and cultivators are freed from the burden of selling only what they grow. This presents tremendous opportunities for both growers and retailers. Cannabase.io aims to help these two parties connect.

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Matthew: Cannabase offers an online wholesale marijuana marketplace that connects commercial growers with retailers and dispensaries. Cannabase promises to do the heavy lifting for retailers and growers to help them facilitate their ability to both buy and sell cannabis with the right partners. I'm happy to have Jennifer Beck, co-founder and CEO of Cannabase with us today. Hi, Jennifer.

Jennifer: Hi, Matt. Thank you for having me.

Matthew: Sure. Just so people understand where you are in the world, can you let them know where you are geographically?

Jennifer: Yes, we are in Denver, Colorado.

Matthew: Great. And can you give us some background on what Cannabase is and how it helps people?

Jennifer: Absolutely. Cannabase is a comprehensive network that connects the legal cannabis community. So there are three main components: Cannabase Marketplace, which has cannabis wholesale network; Cannabase Connects, a private network for consumers 21 plus; and Cannabase Maps, which is our dispensary finder.

But based on what we've talked about in the past, I think we'll probably be focusing on Cannabase Marketplace and the wholesale market that's inside of it.

Matthew: Okay. So how did you get into this business? I mean, were you involved in the business at some capacity and just saw the need, or were you talking with people? How did this come about? How did Cannabase come about?

Jennifer: Yeah. My background is in technology. So my emphasis has always been on online marketing and understanding consumer behavior. My actual background before that was in psychology. And so, I've always been fascinated with how technology can really encourage certain behaviors. And in an industry like cannabis, you have really complex systems that are changing frequently and are really hard to navigate. And so, when we decided to build Cannabase, I think one of the things that we were the most excited about was how we could bring some really powerful technology to the space to solve problems that still hadn't been solved yet.

And then on a more personal level, I've been fascinated with how we can help encourage the success of cannabis by helping business owners be compliant, be more efficient, and grow their businesses in a way that makes the rest of us - the consumers, and the political bodies watching over us happy as well.

Matthew: Now for listeners to really understand how Cannabase helps growers and dispensaries, can you tell us what vertical integration is and how since that has gone away that's a boon for Cannabase?

Jennifer: Absolutely. One of the reasons that when we entered this space wholesale wasn't a hugely defined component of the industry yet was because Colorado was vertically integrated. Vertical integration mandated that to have a cultivator license you had to also have a retail license and vice versa. So you had to grow 70 percent of what you were going to sell, leaving a 30 percent margin for wholesale.

This effectively kept the market really small while we were still testing out the first licenses and how legal cannabis was going to work. It was a very, very successful model for Colorado. But that law expired in October making it legal for first time for someone to get a specialty license as just a cultivator or a license as just a retailer. In addition, that 70/30 law has expired for recreational shops. So now they can choose how much of their own product they want to grow themselves and how much they want to buy on a wholesale market.

Matthew: So why would a dispensary want to buy wholesale versus growing themselves? I'm just playing devil's advocate here.

Jennifer: Absolutely. There's a number of reasons. When wholesale is limited to only 30 percent, dispensaries were required to be growing their own products. So it was a key component of their business plan and their brand. But even with that imposed, you still had situations like 420 is coming and you want to stock up on extra product, so you would buy it wholesale. Or something happened. You had mold problem, you could restock with somebody else's product or even variety. A lot of people have specialty strains and they might be excited to see how their consumers react to a new type of strain, if they're able to buy from another grower and decide then whether or not they want to start growing that themselves.

With the end of vertical integration, I think there are a lot of retailers who will abandon their grow altogether. A grow is specialty. It's a lot of work. It's very expensive, and you have to really have to have a passion for growing and maintaining that. Some businesses would prefer to focus on the consumer side, the retail shop, and growing a retail brand. For those businesses, it's going to be more cost effective and probably better for their quality of life and the growth of their business to abandon their own grow, and instead work on finding growers that they really know, like, and trust. And can focus their business on building their own brand.

Matthew: Now would you say that there's an element of match.com, eharmony, or yelp in Cannabase where these are two different parties coming together in evaluating each other online?

Jennifer: Absolutely. We borrow from all the major social networks. The reason for this is that there isn't one single place that can really join together cannabis users or cannabis businesses in an effective and tailored manner. So we've really taken the best of each of those existing social networks to try and make a really comprehensive community. For Cannabase Marketplace, which is our licensed business network, and that's where our wholesale market is, you have a LinkedIn like feel where to get on and to have a profile you have to have a valid license number as either a grower, a retailer, or marijuana and mj's product processor. Once you onboard with that license number, you're landed into this private network with in-app secure messaging and tons of brands represented.

We have over 40 percent of Colorado's licenses are in Cannabase Marketplace participating in the wholesale market with businesses profiles and employee accounts, and everything is handled on a connection basis, which uses our in-house secure messaging. So businesses can safety connect over listings and requests on the wholesale market. They can also connect with one another's private business profiles and their employees just to have a normal interaction like they would on Facebook or LinkedIn, but without having to have a profile that's going to be filled with spam because of solicitors or their mom asking if they want to come over for dinner. It's just strictly private business connection platform.

Matthew: Let's say a retailer might want to say this grower was great, five stars. They did everything that I requested. It was a great relationship, and then others have visibility to that?

Jennifer: Absolutely. We're really working towards how we can create a sophisticated vendor trust. The most important thing with whenever we open it up to ratings or reviews is that there's room for people to fudge it, for the data to not be 100 percent transparent. So we layer in features like that very, very slowly.

But when businesses are represented in our private wholesale network, they're brands are very apparent. The owner, the name, and so if somebody is going to post about someone else, it's clear who's doing the talking. Right now the best way that a retailer can evaluate a grower on the market place would be through their listings themselves because the listings are integrated with lab data. So if a grower chooses to they can push lab data straight from the lab itself.

We also have a really robust image galleries and listings show supply and demand. So they show the number of unique views and the number of active connections. So versus just getting on the phone and saying, hey, this is what we're selling. A lot of people want it. You had better hop on it quickly. We have the ability to at least back it up a little bit and say, hey, we see you've had 24 unique views. Our different viewers have been checking this out. There's five active connections. It must be a great deal. I had better hop on.

Matthew: If you're either a retailer or a grower, if not now in a few years, it's going to be a much more competitive business for both of them. What suggestions or tips could you offer both a grower and dispensary to make sure that they're not just another dispensary or another grower? That they stand out in some way?

Jennifer: I think the most important piece is really recognizing and accepting what you just said, which is that this is going to be a very deafened landscape in two, three, four, five years. A lot of the business owners who are very successful today, have been able to do that - have been able to achieve that level of success without having to analyze their business in other - in traditional capacities that are taken for granted in other industries. For instance, the world of wholesale being texting everybody you know and seeing who has what in stock, and then having one or two connections that you go to all the time to refill product.

I know on a long term basis, it's not the most affective way to be managing your inventory, your margins, the quality of product that you're bringing in. And so, the number one thing that I think that businesses need to be to doing now is having the humility to say, okay, I was a pioneer. I did build a great a business, but that doesn't mean that more people aren't going to enter and that it isn't going to change. And so, I'll be open to tools of the future, but they have to work for me in the present. And using tools like Cannabase, I think businesses can make that transition out of a more underground - small underground market that it sort of began as, and help move it into a more traditional, transparent, sophisticated, set up where you're comparing vendors, you're comparing analytics. You're seeing market forecasts and you're really evaluating your business in a more traditional light.

Matthew: Oregon and Alaska recreational use is legal as of yesterday. They don't have a market place yet, but will you be moving into those markets - and when, and how?

Jennifer: Absolutely. We're actually in Oregon and a beta phase with their medical market. So Cannabase works for both medical and recreational product. We really like Oregon - working with Oregon. Oregon is very compatible with Colorado in terms of on a culture level. But also it feels a lot like Colorado in terms the wild west they've built with their medical marijuana program and really how well it's run. It doesn't look to be very strictly managed. It's a little bit chaotic, yet it's been a very successful program. So we're really excited to expand our Oregon offerings to the new recreational user base that we'll be entering, but we're already really excited about it and we would love to expand to Alaska as well.

Matthew: As we see legalization become wider and more mainstream, and cultivators become - their ability to create and grow more marijuana is enhanced, where do you see the price dynamic changing? Where is it now and where do you see it changing?

Jennifer: It's going to change enormously. This go back to that same concept of helping the businesses realize that although they've been successful up until now, there are going to be a lot of changes that occur over the next two, five, to ten years. And to me, one of the biggest changes is going to be the ability to differentiate strains objectively, which we don't have very easily right now.

One dispensary will call above a cush what another dispensary would not call above a cush. And dispensary prices are relatively arbitrary because cannabis is not a - it's so far from being a commodity that we don't even know how to decipher - we're still comparing apples and oranges and calling them the same the strain.

So part of the power of Cannabase is taking the baby steps to be able to make sense of what product is hitting the market and begin validating the prices being asked. So for instance in our wholesale market, a brand could list a strain and put that strain on the wholesale market and integrate it with lab data straight from the source. We could see the number the number of listings, connections, and activity compared to other listings that are similar. Cannabase is the largest wholesale market in terms of amount of product available. And so, we have a pretty robust data set to being slicing and dicing where we're seeing the outliers and where we're seeing the patterns and the trends. So if you take that strain, and you integrate it with the lab data, and you integrate it with it's marketplace data, and you compare and contrast it against it's peers, it's a very powerful data set.

We also have Cannabase Connect, which is an individual social network. And in this social network it's a lot like a Facebook, but individuals can say what they're smoking, and we can have trending strains. So at the moment you can just say what strain you're smoking. But in the next release of Cannabase Connect, which should be this Friday of this week or Monday of next week, individuals will also be able to tag the store that strain was from.

And we think it's going to be incredibly powerful for those brands to be able to reinforce their price on the wholesale marketplace not only with that lab data, which is important, but it isn't everything. You don't go to a liquor store and just look for sulfates and alcohol content. You want to look for the deeper experience, popularity, and how many of your peers and appreciate that product over it's counterparts. We think it's going to be really powerful to be able to say that brand's strain performs X, Y, and Z in the wholesale market, but you know what? It's priced so high because it is trending four to five times more often than its counterparts in the individual network. And that's where we're really going to be able to validate the marketplace with true consumer data, consumer trends, and consumer feedback. And I think that's the ultimate dream of Cannabase is to be able to aggregate that data, make sense of it, and help our businesses know how and when to use that data to reinforce the price points that they believe in and that they're looking for that objective way to reinforce.

Matthew: As entrepreneurs, you create this software, and you hope people use it, and they do. But is there anything that surprised you about the way people are using it that you didn't anticipate?

Jennifer: That's a great question. And I chose to be surprised every step of the way. So one of the main things that defines Cannabase is that we are at our heart a tech company. My background is in tech. My husband is our CTO, and he a brilliant developer. We are nerds at heart, and we love technology, and we can stay in the office for 70, 80 hours a week building and improving our product. And that's what we know, and that's the heart of this business.

When we chose to start this company, we took a different approach than a lot of cannabis tech companies have taken. And I do not blame them for the road they've taken. Because of the limited access to funds, because the federally legal nature of cannabis, it's hard to get enough money to build a tech company in order to create an in-house development team. Normally, most businesses are outsourcing. A lot of businesses are outsourcing. They're buying an app. They're buying a product from an agency. And that's what they go sell. We took the opposite approach. We were able to solidify enough seed funding to build a really powerful in-house development team. And so, we were able to take a completely unique approach with our product and that was building it on a customer development feedback model.

So what we do is we launch wait we call MVPs, minimum viable products - minimum viable feature sets, and then we let our users tell us what they like and how we can make it better, and how we can make it more tailored to their unique business, and we listen. We improve our software every single week. We do deploys. We release bug fixes, or front-end improvements, or small new feature sets. And then we take the features that aren't being used and we cull them. So we've been able to really create very tailored piece of software for this very unique user base that doesn't have anywhere else to go.

So, yeah, every thing has surprised me. Everything has surprised me, but I've let them determine what the product would be versus what I thought it should be. And knowing that we have the users we have, we have their time, we have their ear, we know that we'll be able to crafting a more and more sophisticated product as the market evolves and as that's what the users are ready for.

Matthew: You mentioned minimum viable product or MVP there, and I'm taking it you probably read the book The Lean Start Up by Eric Ries?

Jennifer: Uh-hmm.

Matthew: That is a great tool. And something that I just want to emphasize for other entrepreneurs out there is that you don't have to create this 100 feature software product or service, but just get it into the hands of your perspective clients as quickly as you can and get that feedback and then iterate. I mean that's kind of in a nutshell what the lean startup is. And so, it's so refreshing to hear you say that because I think it's frustrating for entrepreneurs to go into the cave and spend all that time, money, effort for something that prospective users may not even want. So that is great. I'm so glad to hear you say that, and so glad that you can share that lesson with other entrepreneurs in the space.

Now switching gears a little bit to your personal life, I read in a New York Times article about your wedding at Devil's Ranch here in Colorado. And you considered offering some cannabis infused cupcakes. What was it like to be the subject of that article, and do you see this as a trend to offer infused products or edibles at weddings?

Jennifer: It was very interesting being included in that series of articles around cannabis and weddings that were coming out right around when Chase and I were getting married. So we had solidified our wedding date for about two weeks after the Cannabis Cup, a year before - I mean, a year in advance. So we did before we decided to official start Cannabase. If we had known the schedule we would be on, we probably would not have planned a wedding for that time.

But because we had a wedding coming two weeks after the Cannabis Cup, we were included in a lot of these discussions around, yeah, incorporating cannabis into the event and, I mean, I do not - in a nutshell, I do not think it's going to become a big part of weddings especially bigger than alcohol, at least for a very long time. Although we thought it could be fun, and it could be a fun thing to give our friends, and a fun thing in light of what we do.

I think there's a lot of risks when you are bringing family members in from other states and even friends in that you maybe don't see all the time and encouraging them to try a brand new substance. You know you don't want anybody drinking for the first time at your wedding anymore than you want anybody smoking pot at your wedding. And I definitely think, although we considered the edibles road, it's a dangerous because as we all know edibles hits slow, unpredictably, and very intense. I mean, of all the drugs, I don't think cannabis is necessarily the best for a wedding.

A wedding is supposed to be a celebration. And it's emotional and you want people dancing and getting excited. Some people are able to do that with pot, but a lot of people - most people, especially if they don't smoke often are going to become a little more introverted or introspective or relaxed, not necessarily going into wedding dancing mode. So I don't think it's necessarily the best fit. But Chase, my husband, him and his groomsmen did go to a cabin nearby, and they were going to smoke a little bit afterwards, and that was really fun for them. And so, I think as long as it's done with taste and thought through, there's no reason it can be incorporated a little bit.

Matthew: Excellent point. I agree. Jennifer in closing, how can listeners learn more about Cannabase?

Jennifer: We encourage you to vised Cannabase.io, which is our website. From there you can really discover each of our offerings. Like I said in this interview, we really focused on Cannabase Marketplace, which is our network for licensed businesses, and within that is the wholesale market.

But we also have Cannabase Connect for cannabis consumers 21 plus. And it's a private portal where they can connect with those business owners through virtual private store fronts.

And we also have Cannabase Maps, which is our public facing dynamic dispensary finder. We'll be launching - we really only launched the MVP of our map up until now, which came out about August. But we'll be launching the really official Cannabase Maps at the end of this week or the beginning of next week. It's the first map with driving directions, really beautiful dynamic filters, really, really phenomenal, fast, robust, user experience. And then you're able to rate and review any of the stores on that map by signing in with a Cannabase Connect user account, and you're able to be on that map if you are a business in Cannabase Marketplace. So it's a pretty exceeding suite of tools, and we always encourage everyone to check out Cannabase.io, and find their place in the base.

Matthew: Thanks so much for the interview, Jennifer. We really appreciate it.

Jennifer: Thank you, Matt. Thank you for all your time.