A growing number of states has legalized retail marijuana sales, but ensuring that everything works as advertised is no easy task. Among the many things that regulators have to concern themselves with are: granting licenses to dispensaries, retail sales, delivery, distribution, ensuring marijuana has been tested for pesticides and other materials, and other parts of the cannabis supply system.
In California, the software system that’s being used statewide to record the inventory and movement of cannabis and cannabis products through the commercial cannabis supply chain is made by Metrc, a low-flying, five-year-old, Lakeland, Florida company. In fact, Metrc now services 11 states altogether, plus Washington, D.C., including Colorado, Oregon, Alaska, Maryland, Michigan, Ohio, Massachusetts, Montana, Nevada, and Louisiana.
It’s the kind of traction that investors notice, and indeed, today Metrc is announcing its first outside round of funding, in the form of $50 million from Tiger Global Management and Casa Verde Ventures, the three-year-old, cannabis-focused venture firm that was famously cofounded by rapper Snoop Dogg but is largely managed day-to-day by Goldman Sachs and Nomura Securities alum Karan Wadhera.
In fact, Wadhera tells us he’d been following Metrc for a “number of years as it became one of the de facto track-and-trace systems” for government entities that regulate the cannabis industry. Tiger and Casa Verde “share deal flow quite regularly,” adds Wadhera, pointing to another co-investment in Green Bits, a maker of point-of-sale software for dispensaries. (Worth noting: Green Bits launched at TechCrunch Disrupt in 2015.)
The expertise of Metrc CEO Jeff Wells in the supply chain arena probably gave Tiger and Casa Verde confidence in their investment, too. Not so long ago, Metrc was part of a larger company called Franwell that was founded by Wells in 1993 and that quickly began developing products for the RFID market. More specifically, Wells tells us, Franwell began focusing on cold chain management and fresh foods, building up resources, research, and knowledge along the way (including about regulated markets) that he believes gives an edge to its clients today, including those of Metrc.
Metrc currently has 100 employees. Wells says it has no interest in catering to anyone other than regulatory customers, both domestically and internationally, though he says the company will “look to expand our regulatory focus,” including, eventually, by potentially expanded into “other regulated markets and products that need the type of tools that Metrc has created.”
Adds Wadhera of the deal, “Compliance is the backbone of the cannabis industry. If a license holder isn’t compliant, their business will cease to exist.”
Surely, as more state and sovereign governments legalize cannabis, compliance will play an even more critical role due. That’s good for proponents of greater accessibility to cannabis. It’s good for consumers who can be better assured that the product they are buying is safe. For Metrc and now Tiger and Casa Verde Capital, that’s also good for business.
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