These brothers just raised $15 million for their startup, Dutchie, a kind of Shopify for cannabis dispensaries – gpgmail

Ross Lipson comes from an entrepreneurial family, so perhaps it’s no wonder that as a college student, he dropped out of school to jump into the online food space, including cofounding, then selling, one of Canada’s first online food ordering service startups.

It’s even less surprising that having gone through that experience, Lipson would use what he learned in the service of another startup: Dutchie, a two-year-old, 36-person, Bend, Ore.-based startup whose software is used by a growing number of cannabis dispensaries that pay the startup a monthly subscription fee to create and maintain their websites, as well as to accept orders and track what needs to be ready for pickup.

The decision is looking like a smart one right now. Dutchie says it’s now being used by 450 dispensaries across 18 states and that it’s seeing $140 million in gross merchandise volume. The company also just locked down $15 million in Series A funding led by Gron Ventures, a new cannabis-focused venture fund with at least $117 million to invest. Other participants in the round include earlier backers Casa Verde Capital, Thirty Five Ventures (founded by NBA star Kevin Durant and sports agent Rich Kleiman), Sinai Ventures and individual investors, including Shutterstock founder and CEO Jon Oringer.

Altogether, Dutchie (named after the song), has now raised $18 million. We talked earlier today with Lipson about the company, its challenges, and working with his big brother Zach, himself a serial entrepreneur who cofounded Dutchie and today serves as its chief product officer while Ross serves as CEO.

TC: It’s always interesting when siblings team up. Did you always get along with your brother?

RL: We complement each other strongly. I’m energy, I’m sales and business development. I’m fast-moving by nature and the guy who wants to drive the car as fast as possible. Zach is the one who wants to make sure that we’re doing everything right. He’s the methodical one. We really do understand each other quite well and appreciate each other’s strengths and weaknesses, which enables us to meet in the middle on a lot of things.

TC: It’s also interesting that you’ve both been founders beginning around the time you were in college. Were your parents entrepreneurs?

RL: Our father is a founder and has run his own business for the last 35 years. Our parents also always pitched us that anything is possible and encouraged us to go for it. He was the dreamer and our mom was the cheerleader, which is a pretty nice combination.

TC: You started Dutchie a couple of years ago. Is running this startup more or less challenging than your experience in the food delivery business?

RL:  It’s our second year in business, and we’ve seen some explosive, unprecedented growth. As for whether it’s harder or easier than food, we’re very product and user centric, and by that we mean consumers but also dispensaries. We’re focused on the customer all day, every day, with a team that ensures that they have support, that they receive their orders, that the orders are out the door quickly or at least, ready for pickup. We make sure the photos work, that different potencies are marked. Our system is kind of like a Shopify of the cannabis space maybe meets DoorDash.

TC: You don’t deliver, though.

RL: No. We don’t do delivery for legal reasons; the dispensaries [handle this piece].

TC: You’re charging like other software-as-service businesses. Do you also take a cut of each sale?

RL: We don’t charge on transaction volume.

TC: You’re working with 450 dispensaries. Is there any way to know what percentage of the overall market that is, and how much is left for you to chase after?

RL: First, there are more than 30 states where cannabis is either medically legal or that have legalized the recreational use of marijuana and we operate in both types of markets. It’s hard to know the actual count [of dispensaries], because they are always being formed, getting acquired, or going out of business, but counting registered dispensaries, we work with more than 15 percent of them right now.

TC: Who are you biggest competitors? Eaze? Leafly? They also help consumers find cannabis and, in Eaze’s case, deliver it, too.

RL: Eaze is more focused on delivery where we’re more focused on pickup. It’s also only avaiable in California and Oregon, whereas we’re in 18 states. They educate the consumer about online ordering, which is great, but they also own the consumer experience, where we’re really powering the dispensary.

Leafly and Weedmaps are really different types of platforms; they’re mostly known for their dispensary and strain reviews, where we’re strictly an online ordering service.

TC: You’ve raised a big Series A for a company in the cannabis space. Do you have concerns about there being later-stage funding available when you need it?

RL: It’s true the most investors still haven’t touched cannabis, though you are seeing bigger deals. Thrive Capital led that [$35 million] round in [the online cannabis inventory and ordering platform] LeafLink [last month]. You saw Tiger Global [lead a $17 million round ] in [the software platform for cannabis dispensaries] Green Bits last summer. It’s a big advantage to the funds that can right now invest because there are these barriers to entry; they’re finding deals that are promising and they can get in early and without competition.

Pictured, left to right, above: Ross and Zach Lipson

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Y Combinator bets on a startup building a weed breathalyzer for cops – gpgmail

Y Combinator has kept an eye on cannabis startups over the years, but it’s their latest investment that’s sure to attract the attention of both marijuana users and law enforcement.

SannTek Labs, which is launching with new funding out of Y Combinator’s latest jumbo class of startups, is building a new kind of breathalyzer that can detect blood-alcohol levels but can also determine how much cannabis a person has smoked or otherwise consumed in the past 3-4 hours.

CEO Noah Debrincat say that he wants the startup’s SannTek 315 breath testing device to help officers make stronger “evidence-based decisions” rather than only relying on unsophisticated roadside sobriety tests or blood tests which can potentially take months to get results for and can lead to false positives by detecting cannabis use that took place several days prior to the test.

The SannTek breathalyzer detects the cannabis molecules in your breath, and gives a police officer a readout that lets them know if you have the drug in your system.

“We are specifically detecting Delta-9 THC, which is the predominant psychoactive component of cannabis,” Debrincat tells gpgmail. “We understand how that gets into your breath. We understand what it does to you and the impairing side effects. And we know that if people are driving with high concentrations of that in their system, their psycho-motor skills are seriously decreased.”

A young startup building a device that could lead to people being arrested is obviously a pretty high-stakes situation, but Debrincat says they are confident in the tech and there are certifications that they’ll need in order to get the device into law enforcement hands. “The only way that a police officer will buy this is if NHTSA, the National Highway Transportation Safety Association, puts its stamp of approval on it,” Debrincat says, noting that SannTek was already in talks with the agency.

If it’s adopted, the startup’s device will be able to be used pre-arrest to give the officer a number indication of a driver’s impairment, or as SannTek further hones their device, the breathalyzer could be used for post-arrest evidentiary testing back at the precinct in a more controlled environment.

A Canadian startup building a device for U.S. law enforcement isn’t the most popular position given many of the conversations around systemic discriminatory practices that result in higher police presences in communities of color. But Debrincat hopes that the company’s device can be part of a positive shift due to the greater objectivity it promotes and its tighter window of detection.

“The state of affairs currently is that there’s a bunch of misdemeanor charges for small weed crimes that are happening across America and one way to address that is by federally decriminalizing the drug, sure,” Debrincat says. “But what gives police offers power now is the ability to make a call because there is no [breathalyzer] device.”

There are reasons to be concerned for law enforcement getting a tool that could be used discriminately, but Debrincat says there is also plenty of reason to be concerned for the other drivers that are on the road while cannabis users might be driving impaired. The CEO tells me that drivers are 2x as likely to get into an accident while operating vehicles under the influence of cannabis. Other studies reinforce the risks of driving while high. 

The company wants to keep the price of their device low enough that precincts across the U.S. can easily afford them, right now Debrincat says the startup is shooting for the $800-$1,000 range to stay competitive with other options out there.

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