In the latest episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I discuss new cannabis licenses from Oklahoma, Washington, California, Rhode Island, Michigan, and Canada as well as testing lab and distributor license trends in 2020. We also speak with Colton Griffin, CEO of Flourish Software, a seed-to-sale software solution for the cannabis and hemp industries.

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Cannacurio Podcast Episode 28 Transcript

Announcer: This is the Cannacurio Podcast by Cannabiz Media, your source for cannabis and hemp license updates directly from the data vault. Don't forget to subscribe to the Cannabiz Media newsletter and follow us on LinkedIn, Instagram, Twitter and Facebook to stay informed of future episodes and data releases.‍

Amanda Guerrero: Welcome to the Cannacurio Podcast powered by Cannabiz Media. We're your hosts, Amanda Guerrero and Ed Keating. This week we're joined by Colton Griffin, the CEO of Flourish Software.

Flourish actually has an interesting story with us here at Cannabiz Media. They have been in and out of our purview for quite some time and just recently signed up to become a Cannabiz Media subscriber. We're very excited to have Colton on the show and learn more about their experience here within the industry.

As always, we're going to jump in with Ed and the data vault and see what he's got for us this week in terms of updates. Ed.

‍Ed Keating: Thanks Amanda. Actually, a lot of data has come in, in the last week or so, and I don't know if it's regulators trying to just do some year-end housekeeping, but we had new licenses coming in from Oklahoma, Washington, California, and Michigan, rec and medical, as well as Canada and even a little bit in Rhode Island.

Then the data team has been working furiously in Oklahoma to create companies that own the licenses, because we're seeing that there's a lot of ownership of multiple licenses. The team's been really pretty busy bringing in a lot of that kind of data.

‍Amanda Guerrero: Yeah. Focusing on stacking, I see, within California. Now, will these updates be published within the first month of 2021? Or when can we anticipate this in the database?

‍Ed Keating: Oh, they're actually already in now. These are ones that have come in essentially live because as we get them-

‍Amanda Guerrero: Fantastic.

‍Ed Keating: ... they go live essentially immediately. I mean, we'll see in 2021 what comes in in terms of things that may be coming in over the holidays, but we get them in as soon as we find them. Yeah. Look for them in there now.

‍Amanda Guerrero: I love it. As I mentioned, we have on the show with us today, the CEO of Flourish Software, Colton Griffin. Colton, thank you so much for joining. Welcome to the show.

‍Colton Griffin: Thanks for having me. Excited to be here.

‍Amanda Guerrero: Yeah, of course. Like I said in the introduction, you've been in and out of our reach for the last few years and just recently came on as a subscriber. What made you guys move forward with our platform?

‍Colton Griffin: Well, I appreciate the persistence, and sorry for blowing up your sales cycle metrics.

‍Amanda Guerrero: No worries.

‍Colton Griffin: Honestly, we've wanted to work with you guys for a long time. We just needed to make sure that we had the team and infrastructure in place to take advantage of the platform. As we got into the fall here, we felt like we were ready and ready to adopt it and leverage the database and work with you guys, so we made the decision and pulled the trigger.

‍Amanda Guerrero: I love it. Well, we're so excited to have you on the team. I know it was a big day of celebration on the sales team when we saw the subscription come through.

In terms of Flourish, you guys are a seed-to-sale solution for the cannabis and hemp industries. How did you know you wanted to focus on the supply chain within both industries and create the solution?

‍Colton Griffin: Yeah. Well, I think timing and a little luck helped make it all happen. I've been a long time hemp believer and cannabis fan ever since I was really young, actually. It's amazing to see how much this industry has ... Well, first of all, that industry is here as a legal and legitimized industry across the world at this point, and amazing how far it's come in the last couple of years. Our background and my background is really rooted in traditional supply chain operations and technology.

Think very large scale warehouses, manufacturing plants, and all the software that moves hundreds of thousands of boxes and directs hundreds of workers around a facility. That's really the world I came from. We just happened to fall into cannabis by meeting some folks in the industry and learning that there was a huge need.

Back in 2017 when we started the company, I was actually living in Atlanta. I'm in Los Angeles now. I don't think I had the appreciation for where the industry was, living there.

As soon as we discovered that there was this huge cannabis market just ready to explode and already had a couple of years under its belt and software was one of the biggest pain points that operators were facing, and the type of software they needed was the type of software that we knew how to use and build and deploy.

We had worked with hundreds of companies across the country doing that in other verticals. We said, "Wow, there's an awesome opportunity for us to apply our skills here and make a difference and support something we believe in." Here we are.

‍Amanda Guerrero: Yeah. Absolutely. What a journey since 2017. Now, in terms of the business focus here, you guys provide solutions for both the cannabis and hemp sector. I'm curious, what has that growth looked like? Is cannabis beating hemp or is hemp beating cannabis in terms of the number of businesses that you guys work with?

‍Colton Griffin: Yeah. We work with both cannabis and hemp operators in about 14 markets across the country. I think we're at about 14 states right now. Cannabis is still a majority of our business. I'd say we're about 70% cannabis, 30% hemp, probably due to the fact that cannabis has been in the market for a little bit longer than hemp.

We really picked up hemp operators in a serious way last year and have seen all the continued success this year with servicing the industry and the businesses in there. Yeah. We're looking forward to next year.

I think we'll see growth in both. I mean, there's new markets opening up in cannabis. In mature markets, we continue to see tons of traction and new people either finally adopting technology to make their business run smoother and scale, and open that second location or stop having to worry about some of the day-to-day stuff that we take care of through the software.

Hemp is just in its infancy right now. I mean, there's so much potential in the hemp market and we have even barely scratched the surface. I'm excited about both.

‍Ed Keating: That's great. Well, digging into it and getting to understand what Flourish does, you speak about being the best supply chain software on the market and focused on cannabis, hemp, but you also mentioned CBD. I'm curious, how does CBD fit in there? In my head, I think of it as like one of the end products of hemp or cannabis production.

Do you help people track that CBD all the way into the retail channels that we're seeing down in Florida and Alaska and elsewhere where it's supermarkets, convenience stores, gas stations? How do you fit in that whole CBD value chain or production chain?

‍Colton Griffin: Yeah. We include CBD in our top-line messaging basically to help our clients find us easier. We mostly service, as part of that segment of the industry, extractors. We service both the cannabis extractors and hemp extractors making CBD products.

For them, we do the same for all those businesses. We manage the inputs, we manage the machine extraction runs, the outputs, all the inventory, the sales orders, the batch tracking, lot tracking, to comply with various recall protocols and federal regulations and guidance for GMP compliance and Food Aafety Act stuff. That's where the CBD comes from in our messaging.

‍Ed Keating: Makes a lot of sense. Makes a lot of sense. Now, taking a step up a little bit, and this may tie back to some of the discussions you and I had a couple months ago. When we were studying the software providers in the whole space, I found companies who described themselves as ERPs, others as seed-to-sale, others as supply chain or back office. I'm curious, given your long experience with these kind of solutions, how would you describe the difference, and are the differences meaningful?

‍Colton Griffin: I think they are. Seed-to-sale is a very unique term for the industry, which I love. I mean, it's a great way to describe how we service our clients, from conception through in retail sale. It's pretty unique to cannabis and hemp.

ERP, enterprise resource planning, is such a charged term that I like to unpack that for clients when we're in conversations with them. I think is a good opportunity here to understand what that is. We, I would say, are an ERP 2.0, so the modern world of software is built in a very agile way.

Things are interconnected and we have multiple modules that capture business processes and segments of business and help enterprises manage their resources, manage their inventory through the various stages of production and sometimes physical locations and processes that they do to bring the product to market.

We're not a traditional ERP, like an Oracle or an SAP, something that was built 20-30 years ago and is huge and bloated and takes six months to 18 months to deploy and a million dollars in investment and then you have to bolt on everything to it.

We're a much more lighter supply chain execution, supply chain management platform that really tackles the core supply chain related functions that an ERP would handle. I'd like to say maybe we're an ERP from seed to sale, servicing the back office to support the front office. We can just grab all those words into one word or one sentence.

‍Ed Keating: All right. One of us has to say, bingo, you hit all the magic words there. Our buzzword bingo.

‍Colton Griffin: Yeah. It's challenging. I think a lot of customers, they know they want a piece of software to run their business, right? From end to end, they want one stop shop, a single point of truth for visibility and management. That's what we do at the end of the day.

From purchasing through fulfilling the sales orders, we can handle all those business processes. We enable finance with invoicing, and we would generally deploy with like a QuickBooks Online or another type of finance tool like that, that that tool manages the general ledger, but we'll still manage all the sales orders and the purchase orders and the cost of goods sold and cost tracking.

I think when, a lot of times, our customers come looking for ERP, I think we are what they are looking for. It's just about articulating that and splitting hairs over definitions. Technology has changed a lot since that term was invented years and years ago.

‍Ed Keating: Yeah. Yeah. That makes sense. That makes sense. Now, in terms of the complexity of your clients, I'm curious if you're starting to see some who are crossing the streams by being involved in both cannabis and hemp.The reason why I ask is that as a data company on our side, we're starting to see that happen in a few cases. If you look at Curaleaf, you'll see that, obviously, they have their cannabis businesses, but they also talk about the fact that they're in hemp. I think Vireo also has a few hemp licenses. I'm curious, are you seeing that and do you have customers that cross the streams and work in both sides of the industry?

‍Colton Griffin: We do, to a degree. The regulatory hurdles to stand up a cannabis business are so much different than hemp that a lot of these bigger companies, they do have a hemp division because they want to sell a hot category like CBD pet treats or just pure CBD products so they can distribute nationally and maybe open that supply chain channel up and those relationships up; so that when cannabis becomes federally legal, they can just tack on a cannabis line right to that. We do see some customers in the hemp industry. Most of our customers are one or the other. Then some of our customers are invested in the other industry that they're not in just because they're related and close enough, but maybe they don't have the same operations team around them.

I do see a lot of our hemp clients are very well-suited to take advantage of growing cannabis and distributing and manufacturing cannabis products if regulations change on the state or federal level. I know that's in the plans for some of those sophisticated hemp operators that we work with.

For us, we built the software to solve business problems and run businesses, not just check compliance check boxes. Compliance is baked in end to end and core to what the product does, but it's not the end-all be-all. When we started building this in 2017, we basically said, "Hey, we need to make sure that we're relevant post-federal legalization." If all the cannabis regulations disappeared, I still want our customers to feel like they need and want this software.

When hemp came along in, I guess, 2018 after the Farm Bill and then really 2019 to see most businesses starting to adopt software, we validated a lot of those ambitions by being able to sell this to clients that weren't mandated to buy a piece of software.

I was really excited to see that be successful. We worked with the cannabis and hemp clients to capture the business processes and the data they need to make decisions and to comply with various regulations that they were trying to hold themselves ... or standards they're trying to hold themselves to. I do see in the future more businesses melding between both cannabis and hemp. It just makes a lot of sense.

‍Ed Keating: Yeah. Yeah. No, it does, and that was going to be one of the follow-up questions, like, do you think we'll see more of that? I think so.

I was curious, going back to one of the points you touched on with Amanda earlier in terms of the number of markets you're in. Are there certain types of characteristics that you like to focus on in terms of markets? Because we've been looking at software companies that cross, I think, what you've described as a low threshold to let's say, be certified on Metrc and be in a state.

How do you pick those states that you want to be in? Is it customers reaching out to you, kind of a pull demand? Or is it more you see certain characteristics that draw you to, "Hey, we need to be in Oklahoma. Crazy as it is, let's go in there."

‍Colton Griffin: Yeah. We get hundreds of inbound requests a month asking for more information on our software and how they can use it, from all across the country and internationally. We always are evaluating which markets we want to play in and which ones we can't.

We built the software in a way that we can really satisfy everybody nationally on the hemp industry. In hemp, it's pretty easy because the businesses look similar, didn't matter if they're in Kentucky or Tennessee or California or Virginia. There's not a lot of state-specific differences that we have to take in account for.

For cannabis, it's a little different because cannabis has such a more intense layer of regulations on top of the businesses. For cannabis, basically, if it's a Metrc state, we're certified and integrated in the Metrc in a very, very robust way. It's a huge piece of the value prop making that easier for our clients. We take into account the special business logic and nuances state by state that either Metrc dictates or the state dictates, and so we feel very comfortable with all those states.

Then we also operate very easily in states with no state track and trace like Florida, Oklahoma, Arizona, Texas, Virginia. All those states we operate in because we can just run the business and produce the reports they need to be compliant.

The only states that we don't work in right now are some of the BioTrack states, because either their license accounts are smaller and it's near impossible to build integration with. It's just they just haven't built it in a way that it's friendly.

Then MJ Freeway's created a monopoly in Utah and Pennsylvania, so they don't allow anybody to deploy there, so we can't operate in those states. Then Washington State, it's built a one-off integration for state track and trace that hasn't really, frankly, been worth the effort, so we haven't gone to that state. Yeah.

Then as far as characteristics of customers, we really can work with customers from like the five to 10-person, more startup-minded company, to the thousand plus multi-state operator. We have current clients that are in both ends of that spectrum. A lot of our clients are more like 20 to 50-person business that has an operation of decent size that needs software to help them run it on a day-to-day basis.

Those could be people that ultimately you're just trying to run the business in a more efficient and more thoughtful way. They need some software for visibility and controls and to hook things like e-commerce marketplace up to their inventory management system so that they don't have to type every order in manually again into another system. They're looking for those business solutions to solve and capture what they're doing on a day-to-day basis, free up their time to just run the business.

‍Ed Keating: Great. I mean, it's interesting listening to your answer because what I heard you say is the fact that you're able to help customers who are on the small side up to the MSO side. It scales that way, and also help people who are working in different compliance environments. Those that don't have seed-to-sale versus those that do, so another scaling thing. I guess it just speaks to the fact that you guys are really building a system that can scale in a way that helps customers.

I think they should take good comfort from that, if they are customers, because by covering all states, you really provide a solution that puts you ahead of those vendors that I've seen that we call one state wonders.

You go look at some of the seed-to-sale or point of sale vendors and almost every state has a homegrown solution provider, the local favorite let's say, but if any of those businesses need to cut across state lines, that solution is really not going to work. I would think that that's where Flourish can really come in and assist those stronger, bigger license holders.

‍Colton Griffin: Well, the barrier to entry to stand up a SaaS company to do some level of functionality that, yeah, is sufficient, especially at the earlier stage of a business's life is not that huge. It's a ton of engineering to get it to a point where you can scale up and then go across state lines. We've done that with a good number of clients now where we've proven out the ability to manage items across states and roles and permissions and data.

When we deploy in a state, there's a set of features and config settings that are just automatically set to the state's parameters so that ... Like in California, we don't tag plants individually until they go into the mature phases. In most other Metrc states, we tag them when they go into the bench. It's just these little differences state by state that we've already worked through and encoded so it makes it easy.

Our largest customer, or one of our largest customers at least, they went from like 50 to almost 1500 employees in under two years. They built that and scaled that whole business on our software platform, right?

‍Ed Keating: Wow.

‍Colton Griffin: It was incredible to see that type of growth for our customer. We learned a lot by holding their hand along that journey and helping them do it, which is why they worked with us in the first place.

We've worked with a good number of other customers that, I mean, we haven't scaled to a thousand plus people, but have definitely doubled and tripled and quadrupled their operations in a year or two, which has really been impressive.

We'd like to say that you can get in, you can adopt a certain level of functionality, you can run the business. Then when you've added 10 more headcount and you need some additional controls, those controls are already in the system. You can just turn them on and adopt more product and continue to run your business and not feel like you need to go switch.

‍Ed Keating: Yeah. I mean, it really seems that ... And I've talked about this in some of the reports that I've written, that there are benefits with going with a compliance provider like yourself that operates like an MSO does. You know the rules and regulations across multiple jurisdictions so this is not your first rodeo. When client X wants to move into that other state, you're already there, and they're not trying to come up to speed on your learning curve.

That leads me to the last question I have, is, how do you think the battle for market share is going to play out? Because the software space is crowded. Do you think it's going to be a big race to sign up as many MSOs as people can get, because some say they're going to be the winner, or do you think it's going to play out in a different dynamic?

‍Colton Griffin: It is crowded. I'll say that. I feel bad for our buyers because they have to wade through so many choices sometimes to decide who they even want to talk to. Then they go through evaluation phase and looking at different demos and trying to decide between all these various software platforms. It's a lot to wade through.

I do think looking out over the next year and definitely two years, we'll see some things shake out. Maybe see some consolidation, some people just running out of cash and needing to be acquired or people looking for a quick exit and exiting.

It'll be interesting to see how all the various software platforms beat out each other. From a multi-state operator perspective, most multi-state operators have not solved technology. In fact, I would say most multi-state operators don't even have a clear org structure to champion that. It's amazing how some of these companies are run and grown so large, a lot of inorganic growth as well, and they don't have consistent data and reporting systems across the enterprise.

I do think there's a lot of, us included are ... I mean, have a stake in one piece or another piece of multi-state operators operations and are working to service the whole enterprise for some of them. It's a slow race. It's not a fast one. Our larger deals are complex. There's lots of stakeholders. Those multi-state operators aren't always set up to make those decisions.

One of our customers, Parallel Brands, has been a great customer. When we started with them, they had that in place. They had a CIO that would champion it and rationalize technology and they deployed us across their markets. It's been really cool to see that be really successful. It's a huge advantage for them. I think some other operators could take note of that and take technology a bit more serious than they have.

Yeah. I don't know who will win that market, or if it's even a winnable market. I mean, maybe they are comfortable running six different software solutions across 20 states they run in.

‍Amanda Guerrero: Well, we will definitely be tracking their market growth over the next year through Cannacurio and through our Ed software stack that he comes out with every year. We've done a couple promos on it and create some materials on it internally to share with our subscribers and to share with others, but I think you bring up a lot of really interesting points, especially as it relates to technology within the MSO businesses.

I mean, really, it's surprising how not well thought out some of the implementations have been, but I really am looking forward to watching you guys grow and see exactly where you fit in and how you continue to expand your reach across the cannabis and hemp sectors.

Now, Colton, staying within that same frame and lens of thinking, this year has been pretty monumental for cannabis businesses. Do you guys have any predictions or hopes for the future as it relates to federal legalization or decriminalization? What are you guys looking forward to and hoping for the future?

‍Colton Griffin: Well, I think we are set up at the federal level for meaningful action, which is exciting. Government doesn't move as fast as we'd like to move, and that's pretty much across the board, which is a lot of times a good thing. We want decisions to be well thought out before they're codified into law, but at the same time, we do need some movement, especially on the banking and criminal justice reform for cannabis.

It's pretty ridiculous that there's over what? Over a quarter million, or is it almost a half million people that work in this industry, and it's still considered federally illegal. It makes no sense. Then billions of dollars in transactions and money that has to go through a very, very challenging banking framework to work, and it doesn't really work. These are very solvable problems that are ready to be solved and just need to be voted on.

I suspect and hope and look into the future of this in 2021 that we'll see some movement. I don't know that we'll see everything on our wish list be ticked off, but I do think we'll see positive movement at the federal level this year. It's going to take just consistent lobbying and reminding folks at the federal level that we need to see the change. From a techno-

‍Amanda Guerrero: Yeah. Absolutely.

‍Colton Griffin: Yeah. From a technology perspective, and even following up on the MSO theme, right now, the last couple of years has been just a market grab, right? Like, there's a brand new market. Let's try to grab market share, let's establish brands, let's test brands, let's stand up storefronts. Technology isn't always leading with that because, frankly, you just need to get the building up and you need to start running some sales. You need to just make it work in whatever way you need to make it work.

I suspect that we'll see much more closer attention to software and analytics and data as we get into next year in 2021, 2022, 2023. Because at a certain point, you go from just net new market expansion to competing with other people.

If you're in a competitive environment, you need tools to remain competitive. You need consistent data to understand how you're performing. You need consistent controls to produce consistency, and frankly, you need your operations team to not be pulling their hair out to getting that information.

They just need a system to look to and they're going to demand tools that they've either used previously in other past industries and past points in their career or that they see other people adopting and using. I think we'll see good things on the technology front in years to come. I mean, there's a ton of new market opportunities in the U.S., international aside, and I don't think this is slowing down anytime soon. It's just nothing but opportunity. It's a great time to be involved in the industry.

‍Amanda Guerrero: Well, I think we'll leave it at that. Opportunity, consistency, standardization across the board. All good things to think about and keep at the forefront of our minds here in 2021. Well, Colton, thank you so much for joining us on today's show. It really has been great learning from you and getting your take on what's going on here within the industry. Thank you so much.

‍Colton Griffin: Thanks, Amanda. Thanks, Ed. Really appreciate you all having me on. Always great to talk about industry and sharing the story and Flourish, and I really appreciate you guys having me.

‍Amanda Guerrero: Yeah, of course. It's our pleasure. All right, Ed. Well, let's take our last look into the 2020 data vault and see what we have to look forward to coming up next in the next few weeks before the end of the year.

‍Ed Keating: Yeah. Well, one of the areas that we're looking into are some of the licenses that we don't spend as much time on. Typically, laboratory testing labs and distributors. Not every state has distributors for example. These license accounts tend to be lower and also less volatile than the cultivation and the retail dispensaries that we look at almost every month. We're just trying to get to year-end views on those. Where did we see changes? Where did we see no changes?

We'll be reporting on that in future Cannacurio blog posts and also a year-end wrap-up that we'll put out, I think probably that first week of 2021.

‍Amanda Guerrero: How exciting. Well, everyone, thank you so much for your support this year and for tuning in. This is the Cannacurio podcast powered by Cannabiz Media. We are your hosts, Amanda Guerrero and Ed Keating. This has been a really great experience, and we're just so, so glad to have your guys' support to have these wonderful guests like Colton and the Flourish team on with us. Thank you so much, and everybody, stay tuned for more updates from the data vault in 2021.

‍Announcer: Thanks for listening to the Cannacurio podcast by Cannabiz Media. Stay up to date with the latest episodes of the podcast and get alerts on the latest licensing activity in the United States and Canada, as well as exclusive industry insights, by signing up for the Cannabiz Media Licensing Newsletter at cannabiz.media/newsletter.