15 Jun Tradiv Eyes B2B Sector
“Between August and October,” Aeron Sullivan, Founder and Chief Executive Officer of Tradiv, Inc., predicted, “everyone is going to see the first mega-wholesale flood of product [in Colorado]… something that has never happened in the market before.” He intends to be there with a range of online business-to-business services designed for the small enterprises that make up 88 percent of the industry.
Tradiv, a participant in the CanopyBoulder start-up accelerator, has just completed its beta phase and expects to roll out the commercial version of its software in Colorado this September and in Washington and Oregon in the months thereafter.
The model calls for adapting an existing e-commerce engine to address the peculiar issues that cannabusinesses face in accessing the market—the basic tasks of finding the product, purchasing it and receiving it. The solution is to create a reliable, transparent online supply chain, digital payment options and flexible-but-secure shipping arrangements.
These issues are more acute for the smaller, less integrated enterprise, generally those with five or fewer licenses. In Colorado, this market includes 56 to 57 retail-only establishments; cultivators with less than 20,000 square feet of grow space; wholesale-only producers of edibles and extracts; and the majority of small medical businesses whose trade is still approximately 30 percent wholesale and 70 percent retail.
“We didn’t build the system for marijuana businesses,” Sullivan said. “We built it for small marijuana businesses. That is our market.”
As described on the beta site, Tradiv expects to provide an online market that will enable:
- cultivators to sell flower with unique attributes, and the added advantage of professionally produced images;
- edible and extract producers to find trim and to sell product on the basis of characteristics such as THC level or consistency; and
- dispensaries to keep shelves stocked, compare prices, liquidate overstock and place advertisements for a product being sought.
Banking, of course, remains a major stumbling block for the industry. While closed-loop payment digital systems similar to PayPal or store gift cards are apparently legal and may provide a temporary solution for the industry, Sullivan sees the ultimate solution in the chartering of financial institutions, such as credit unions designed specifically to serve the cannabis industry. Fourth Corner Credit Union in Denver, which defines its mission as service to the cannabis industry is, reportedly, still waiting for the Federal Reserve to approve the master account it will need to open.
As part of its platform, Tradiv will offer reporting features designed to ease the compliance burden that banks now face. When banks’ reporting obligations are less onerous, cannabis business accounts may become a sustainable line of business for financial institutions.
“Shipping is a big one,” Sullivan said. Although Colorado law has required point-to-point shipping, the courier services currently operating in the space often use a model that more closely resembles that used by FedEx or UPS. This involves pick-up, transportation to a distribution warehouse for batching, and then re-loading onto another delivery vehicle.
It is an inherently less secure system than point-to-point delivery would be. Although Colorado regulators now permit the existing practice as a temporary measure, the need continues for transparent and accurate record-keeping. Tradiv’s platform is intended to address this. The company also requires insurance of all shippers with whom it works.
Because the cannabis industry also often demands flexibility, Tradiv will offer a variety of shipping services, including free pick-up for short trips, an automated shipping option for frequent repeat shipments or a suite of tools for those cannabusinesses that choose to do their own shipping.
As the second wave of Colorado recreational licensees, not bound by the restrictions of vertical integration, begin to open later this summer, the industry is poised to grow exponentially. As it grows, it seems reasonable to expect that demand for business management tools will grow as well. This is the niche that Tradiv has in its sights.