Legalization of recreational cannabis in four states and Washington, D.C.—and potentially another twelve states by the end of 2016—has brought a host of challenges and opportunities for those looking to capitalize on this newly legitimized industry. From a business perspective, the opportunities are clear: legal sales in Washington state alone netted the state $70 million in tax revenue and several times that amount in gross sales during the first year. What is often less easily appreciated, however, is the challenge cannabis retailers face in complying with complicated, sometimes onerous, state regulations. For example, Washington has instituted “seed to sale” tracking of all cannabis plants, which requires retailers to manage inventory and record sales of otherwise-identical products by plant number. Retailers must then submit all of this information to the state Liquor and Cannabis Board. Added to the obvious logistical challenge of tracking hundreds of thousands of individual plants are the severe consequences of non-compliance, which can result in revocation of a retailer’s license and forced closure.
So, what can the conscientious, law-abiding cannabis retailer do to ensure compliance–without resorting to tedious and error-prone manual recordation?
Enter Green Bits. Founded by three tech-startup veterans that sold a company to GoDaddy in 2012, Green Bits offers an integrated hardware and software solution that takes the hassle out of complying with state regulations at the point of sale. Using a touch-screen terminal similar to that offered by Square, Green Bits sets itself apart with its software. Green Bits streamlines inventory management by assigning barcodes based on plant number, in addition to product number (a level of categorization deeper than allowed by conventional point of sale and inventory management systems). When a sale is made, Green Bits automatically uses that information to update inventory in accordance with state regulations. Best of all, Green Bits uses an API created by the Washington state Liquor and Cannabis Board to seamlessly report all of this information to the state. The result is a substantial time savings for the retailer and peace of mind knowing the investment will not be jeopardized by a simple human accounting error, they say.
The cannabis industry is taking notice. CEO Ben Curren recently claimed Green Bits has captured 45% of the retail cannabis market in Washington State and that the company has never lost a client. Last month, Curren announced the launch of Green Bits in every legal market in the United States. The cannabis industry is not alone in recognizing Green Bits’ utility and potential for growth: Green Bits was selected as one of six finalists at the TechCrunch Disrupt SF Startup Battlefield (a competition which helped launch tech heavyweights like Dropbox, Venmo, and Yammer) this September, and ultimately won second place.
Whatever the merits of cannabis legalization, a regulated market cannot exist unless there is a workable means for retailers to comply with state requirements. Moreover, the black market for cannabis will continue to thrive unless legal retailers are able to conduct business efficiently and become truly competitive. This creates an opening for innovative startups to become first movers where conventional technology companies are hesitant or unwilling. Though the future of recreational cannabis legalization remains hazy, Green Bits’ success demonstrates that the opportunities for entrepreneurs willing to serve this emergent industry are sky-high.