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Leafly Holdings, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

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Delivered full year 2022 revenue of $47.4 million, up 10% over full year 2021

Reported net income of $5.1 million, up from net loss of $12.0 million in 2021; Delivered 2022 adjusted EBITDA loss of $23.2 million, ahead of guidance

Total Ending Retail Accounts grew to 5,806, up 10% over 2021

WASHINGTON: Leafly Holdings, Inc., a leading online cannabis discovery marketplace and resource for cannabis consumers, today announced financial results for its fourth quarter and year ended December 31, 2022.

“Despite a year filled with challenges broadly for the cannabis industry, and the associated impact on our revenue growth, we grew the number of subscribing retailers and brands using our platform by double digits in 2022 and continued to focus on delivering an outstanding consumer experience while driving more value for clients who use Leafly to reach high-intent shoppers. Our recently launched products, combined with our subscriber base, continue to create opportunities for us to increase monetization,” said Yoko Miyashita, CEO of Leafly. “At the same time, we’ve been intently focused on managing our expenses and cash flow. With softer ad spend expected to continue in 2023, we are driving deeper relationships with our customers and optimizing teams for efficiency.”

Full Year 2022 Financial Results

  • Revenue was $47.4 million, up 10% over FY 2021
  • Gross margin was 88%, consistent with FY 2021
  • Total operating expense was $69.5 million, up 43% over $48.7 million in FY 2021, reflecting increased expenses due to new public company costs, and new hires in Q4 2021 through the first half of 2022
  • Net income for 2022 was $5.1 million, compared to net loss of $12.0 million in FY 2021 primarily related to $36.8 million of non-cash changes in derivative liabilities and partially offset by the increased operating expenses noted above
  • Adjusted EBITDA loss was $23.2 million, compared to adjusted EBITDA loss of $9.4 million in FY 2021

Fourth Quarter 2022 Financial Results

  • Total revenue was $12.1 million, in line with Q4 2021
  • Gross margin was 88%, consistent with Q4 2021
  • Total operating expense was $16.3 million, up 8% over $15.1 million in Q4 2021
  • Net loss was $5.8 million, compared to net loss of $5.1 million in Q4 2021
  • Adjusted EBITDA loss was $4.2 million, compared to adjusted EBITDA loss of $4.1 million in Q4 2021

The non-GAAP financial measures EBITDA and adjusted EBITDA are presented in this release. See the reconciliations of such non-GAAP financial measures to their most comparable GAAP measures in the tables included in this release below.

The company is also further aligning its cost structure to better reflect the current industry and macro-economic environment, allocating resources to the areas the company believes will bring the greatest return to ensure a stronger marketplace, long-term. As a result, the company is announcing a headcount reduction of approximately 40 positions – or 21% of the company’s workforce – through a combination of layoffs and attrition. The company expects a one-time cash restructuring charge for the layoffs of approximately $700,000 in Q1 of 2023. Leafly expects total annual cash savings on an annual basis of approximately $8M, beginning in Q2.

“Given the continued pressure on our topline growth, we made the difficult decision to trim our workforce,” said Suresh Krishnaswamy, CFO of Leafly. “With these reductions, in addition to those we made in 2022, we are emphasizing efforts to align more closely with customers and highlighting the value that Leafly can provide. This realignment of our business priorities also helps extend our cash runway as we stay focused on improving our path to profitability.”

 

Key Performance Metrics

 

Three Months Ended December 31,

 

 

2022

  

2021

  

Change

  

Change (%)

 

 

  

 

  

 

  

 

 

Average MAUs (in thousands)

8,026

8,669

(643

)

-7

%

Ending retail accounts

5,806

5,265

541

10

%

ARPA

$

554

$

595

$

(41

)

-7

%

 

Year Ended December 31,

 

 

2022

  

2021

  

Change

  

Change (%)

 

 

 

  

 

  

 

  

 

 

Average MAUs (in thousands)

7,962

10,005

(2,043

)

-20

%

Ending retail accounts

5,806

5,265

541

10

%

ARPA

$

566

$

636

$

(70

)

-11

%

2022 Business Highlights

  • On February 4, 2022, Leafly and Merida Merger Corp. I completed their business combination.
  • Carlos Pinto, a seasoned sales and marketing executive, joined Leafly as Chief Commercial Officer, overseeing the company’s sales, marketing, and content teams.
  • Given the macroeconomic and revenue environment, the company adjusted its expense load through a headcount reduction of 21% in October and improvements to its overall expense and cost structure, with expected savings of $16 million in 2023.
  • Leafly ended the year with 5,806 retail accounts, a 10% increase over 2021 as retailers in existing and new recreational markets adopted the Leafly platform. Leafly saw a 33% increase in the number of brands subscribers leveraging Leafly, growing from 655 at the end of 2021 to 868 at the end of 2022.
  • Retailer average revenue per account (“ARPA”) was $566, a decline of $70 from 2021, driven by Leafly’s overall strategy to enter markets with competitive pricing to drive increased market penetration in local markets. As market penetration increases so does the company’s ability to drive additional revenue. This strategy drove ARPA up in New Mexico and Montana, where market penetration reached 75% with ARPA increases of 55% and 68% respectively in those markets.
  • The number of orders in Q4 was 768,477, just slightly below Q4 2021’s total of 776,098, a year that benefited from COVID-19 induced demand.
  • In October, Leafly and Uber Eats announced a first-of-its-kind partnership providing Torontonians the ability to order safe, legal cannabis and get it delivered straight to their homes via the Uber Eats app. The pilot program launched with several stores in the Greater Toronto area.
  • 2022 saw the launch of several key products including marquee and strain page feature ads, traffic-driving advertising placements across some of Leafly’s most valuable online real estate; new business reporting tools allowing retailers to better track their performance on Leafly; a fresh delivery-first shopping experience making it easier than ever for consumers to place orders for delivery directly on Leafly.
  • Leafly continued to highlight its position as a thought-leader by publishing its annual, informative reports providing the only comprehensive view of cannabis jobs (2022 Jobs Report) and cannabis as a crop (2022 Harvest Report) in the United States. The often-cited reports showed more than 428,000 jobs could be attributed to the cannabis industry and that cannabis had become the 6th largest crop.

Financial Outlook

Today, Leafly is issuing first quarter 2023 guidance. Based on current business trends and conditions, the financial outlook is expected to be as follows:

  • For the first quarter 2023, Leafly expects revenue to be between $11.0 million and $11.3 million and adjusted EBITDA loss to be in the range of $4.3 million to $4.0 million.

Leafly has not provided a quantitative reconciliation of forecasted GAAP net income (loss) to forecasted total Adjusted EBITDA within this communication because the company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to: depreciation and amortization expense from new assets; impairments of assets; changes in the valuation of any derivatives; the valuation of, and changes in, grants of equity-based compensation; gains or losses on modification or extinguishment of debt. These items, which could materially affect the computation of forward-looking GAAP net income (loss), are inherently uncertain and depend on various factors, many of which are outside of Leafly’s control. For more information regarding the non-GAAP financial measures discussed in this communication, please see “Non-GAAP Financial Measures” below.

Webcast and Conference Call Information

Leafly will host a conference call and webcast to discuss the results today, Thursday, March 16, 2023 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). A live webcast of the call can be accessed from Leafly’s Investor Relations website at https://investor.leafly.com.

The live call may also be accessed via telephone at (844) 200-6205 toll-free domestically and at (929) 526-1599 internationally. Please reference conference ID: #037566. An archived version of the webcast will be available from the same website after the call.

Olla Issues Going Out of Business ‘Epilogue.’ Last Day of Service is April 1, 2023

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WASHINGTON: Seattle-based Olla, a once promising eCommerce platform for the legal cannabis industry, is the latest cannatech company to go out of business.  In a farewell “epilogue” posted on the company’s website, Olla bravely admits what many others in the space have discovered, “the costs associated with providing this product to our customers outweighed the price the market was willing to bear.”

According to the website, no new licenses will be issued, and existing customers will have until April 1, 2023 — about three weeks from this notification — to find a new service provider.

Epilogue.

March 2, 2023

Five years ago, we set out to create a retailer-first eCommerce platform to serve the needs of the industry. We believed retailers should be able to build their own loyal customer bases, and deploy high-performing eCommerce experiences without relying on middle-men marketplaces.

Along the way, we’ve worked with retailers nationwide, shipped countless innovations, and facilitated over $1 billion in online orders. We’re proud of the product we’ve built and the team we’ve assembled, and are grateful for the community of ambitious retailers we’ve worked with throughout our journey that made Olla so special.

Olla’s story ends here. Many challenges in the world of cannabis remain unsolved, and we’ve failed to establish a viable business model. Simply put – the costs associated with providing this product to our customers outweighed the price the market was willing to bear. We have come to the difficult decision to shut down our operations.

As of today, it is no longer possible to sign up for Olla, and in exactly 30 days, on April 1, 2023, Olla’s services will no longer be available.

We know there will be lots of questions regarding next steps. We have addressed the most impactful below, and will work to support our customers during this transition phase.

Thank you for your loyalty, trust, and support throughout the years – it has meant the world to us. It has been a privilege serving you, and we wish you the best in your continued success in this beautiful industry.

Sincerely,
Nico, Josh, and the Olla Team ♥️

Metrc Expands Track-And-Trace Government Contract with the State of Missouri for Regulation of its Adult-Use Cannabis Market

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FLORIDA: Metrc, the most trusted and experienced provider of cannabis regulatory technology systems in the U.S., announced the expansion of its contract with the State of Missouri to support the regulation of its adult-use cannabis market. The Company has been the state’s partner in the regulation of its medical cannabis market since 2019.

In November 2018, the people of Missouri voted to legalize medical cannabis, and in December 2019, Metrc was selected to help launch and regulate the new market alongside Missouri’s Medical Marijuana Regulatory Program (MMRP) and the NIC. When Amendment 3 was passed in November 2022, Missouri became the 21st state to legalize adult-use cannabis. The following month, the state’s Department of Health and Senior Services (DHSS) began accepting requests from facilities to convert operations for adult-use, and Metrc’s track-and-trace government contract was expanded to include the adult-use supply chain. On February 3, the state issued 207 comprehensive dispensary licenses, 72 comprehensive infused product manufacturing licenses, and 56 comprehensive cultivation licenses, and numerous cities across Missouri commenced retail sales.

“As Missouri implements its adult-use cannabis program, we are thrilled to have the opportunity to build on the solid foundation created through our work with the state’s medical market,” said Michael Johnson, CEO at Metrc. “Our team at Metrc looks forward to working alongside the DHSS to expand our strong regulatory technology framework as the backbone for the entire supply chain, where patients and consumers are confident in consuming safe products and licensees are provided an environment to thrive.”

Metrc’s robust track-and-trace platform facilitates the data collection and regulatory insight for Missouri’s cannabis market, enabling licensed operators to easily track all activities impacting the status of a plant or the creation of cannabis-based products, including origin, testing results, handling, and chain-of-custody information, through the Company’s unique RFID tag model and software-as-a-service (SaaS) system. Seamless data tracking in Metrc helps operators optimize inventory control, accurately report sales data, and improve cultivation management. This information is accessible to state regulators, providing the ultimate transparency to ensure regulatory compliance, help combat the illicit market, and safeguard the health and well-being of Missouri’s patients and consumers.

Metrc now holds exclusive government contracts in every region of the U.S, including Washington, D.C., and maintains a strong presence in the Midwest, where it holds contracts with Michigan, Minnesota, Missouri, Ohio, and South Dakota. While these areas have diverse regulatory frameworks, each jurisdiction shares the common goal of ensuring safe legal cannabis markets. Metrc continues to be the favored partner of regulators and businesses in serving their unique needs and goals.

Chris Baker Named Chief Strategic Officer at POSaBIT

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WASHINGTON: POSaBIT Systems Corporation, the premier cannabis payments and point of sale platform, is proud to name Chris Baker to the company’s newly-created Chief Strategic Officer role.

“Chris’ extensive experience leading strategic initiatives and teams is a great fit. We could not be more excited to welcome him to the POSaBIT team,” said Ryan Hamlin, CEO/Co-Founder of the Company. “I have no doubt Chris will provide tremendous strategic support and insight as our organization continues to expand.”

“POSaBIT is an amazing opportunity,” commented Baker. “The company’s year over year growth has been incredible, and I am impressed by the strong market fit of their products. I am thrilled to join the team and continue to expand the Company’s footprint throughout North America.”

Chris is passionate about the power of technology, and boasts over 20 years of leadership in the industry. In previous roles, he has led award-winning, multi-disciplinary teams spanning 4 continents for global enterprise clients. In his role as Chief Strategy Officer of the Company, he will lead strategy with the POSaBIT team, partnering across the business to keep the Company ahead in a fast-changing business environment. His career started at IBM Global Services, where he focused on delivering projects and programs across the technology service delivery stack. Most recently, he served as VP of Technology and Innovation at Genius Avenue, an Insuretech/Fintech startup.

In connection with his appointment, the Company has granted 1,000,000 stock options to Chris Baker pursuant to the terms of the Company’s stock option plan. The Options are exercisable into common shares of the Company at an exercise price of $1.10 CDN per share over the next 10 years, with vesting over 4 years, all in accordance with the Plan and the policies of the Canadian Securities Exchange.

Dutchie Becomes First Full Stack Technology Platform to Earn Compliance Certification for Consumer Data Protection 

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Third party verifies Dutchie POS, Ecommerce, and payments offerings compliant with HIPAA to protect personal data

OREGON: Dutchie — the technology platform powering cannabis commerce — today announced that the company became the first full stack technology platform serving the cannabis industry to earn a System and Organization Controls (SOC) 2 Type 1 compliance certification with a Health Insurance Portability and Accountability Act (HIPAA) attestation – showcasing Dutchie’s commitment to protecting all sensitive customer information. The compliance was verified by a third party auditor and applies to Dutchie POS, Ecommerce, and payments offerings.  

“Cannabis operators face the most difficult operating conditions of any modern business,” said Dutchie’s Chief Technology Officer Chris Ostrowski. “Data security and privacy regulations such as HIPAA are in place to protect patients and customers from abuse – but can be a challenge for operators to comply with. It is a testament to our team and technology to become the first platform serving the cannabis industry to earn one of the highest levels of compliance certification. We enable our customers to create safe and easy access to cannabis, and this distinction furthers that mission.”

As the cannabis industry grows and increasingly handles sensitive consumer and personal data, the threat of hacks, data leaks, and fraud is immense. To ensure data is protected across its offerings, Dutchie underwent a rigorous third-party audit to examine customer data security, availability, and confidentiality across solutions. With the addition of SOC 2 Type 1, Dutchie is the first cannabis technology provider to achieve a HIPAA attestation, which is critical for enterprise and Multi-State Operators (MSO) businesses.

Some markets require dispensaries and their business associates to be HIPAA compliant, meaning they prove efforts to ensure the confidentiality, integrity, and availability of personal health information (PHI). Legally classified as a “business associate,” Dutchie is compliant with regulations under HIPAA and earned this certification to support customers in any market.

This certification is just the latest in Dutchie’s developments to best support dispensaries and advance safe and easy access for all. Dutchie’s fully-integrated digital payment and point-of-sale solutions reduce reliance on cash and support retailers’ operations. To learn more about Dutchie, visit: https://business.dutchie.com/.

Dutchie Seeks to Open Up Pennsylvania Traceability Market, Provide Choice to Cannabis Retailers

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Dutchie’s lawsuit against Akerna, Pennsylvania’s traceability system provider, will increase competition and allow cannabis retailers to use the technology platforms of their choice

PENNSYLVANIA:  Dutchie, The technology platform powering cannabis commerce – announced today that they filed a lawsuit against Akerna Corporation, a cannabis traceability provider, to ensure a fair playing field for technology platforms that support the cannabis industry in the Commonwealth of Pennsylvania. Dutchie is suing Akerna for unfair competition and tortious interference as a result of its refusal to open up its state traceability system for integration with Pennsylvania cannabis retailers’ technology partners of choice, including point of sale systems, despite a state law requiring open integration with any provider.

“We have heard from numerous customers and retailers from across the state that they had no choice but to use Akerna’s point of sale system despite the better options available,” said Dutchie general counsel John Kelleher. “Retailers should have the freedom to choose the technology partners that best help them succeed and ensure patients have safe and easy access to their medication. We are confident that Dutchie will prevail and that our action will help ensure more choice and competition across the state.”

While Akerna stated in its initial state contracting proposal that it would provide an open traceability system, Akerna has run its system in a way that only allows retailers to integrate with the company’s point of sale system. As a result, Pennsylvania legislators passed a new law in 2021 that requires the state, and Akerna as their agent, to open up the state traceability system for integration with any technology provider to increase competition and choice. Akerna has refused to follow the law for over a year. After numerous formal emails, letters, and meetings with Akerna, Dutchie is taking legal action to ensure the Pennsylvania market has access to true choice.

Akerna was hired by the state to provide software that keeps an accurate record of cannabis sales. But, by preventing technology partners from truly integrating, Akerna’s traceability software reduces the accuracy of those records by forcing retailers to rely on manual entry of their sales and inventory data for all information in a system other than Akerna’s own platform. Pennsylvania is one of only two states that don’t allow for open integration with their traceability system out of the 37 states where medical cannabis can be legally sold. Akerna provides traceability services in both of those states.

WSLCB Releases CCRS Updates: Issues Identified – User Action Required

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WASHINGTON:The limited issues with the newest version of CCRS have been identified – most can be accommodated by small changes in user submissions.

  • Manifests: Manifest are being processed and a PDF delivered to the submitter as intended.
    • Users can submit the new Manifest.CSV files. The contingency Manifest is still available for use if Manifest PDFs are not received within an hour of submittal of the Manifest.CSV
    • If you submitted a Manifest.CSV on Jan. 9 and did not receive a confirmation, please resubmit.
    • If you submitted a contingency manifest on Jan. 9 or 10, you must ensure that a Manifest.CSV with exactly matching product is uploaded, per the contingency instructions.
  • New Data: Only submit data that has not already been uploaded to CCRS. It is not necessary to include data that was already submitted unless it is being updated (using the update or delete operation, not insert).
  • User Errors: Several large files containing multiple errors have created processing slowdowns. If you have questions about creating these files, or other questions about using CCRS, please review the User Guide. If you receive user error messages that you do not understand, please contact servicedesk@lcb.wa.gov.
    • Large files that cause system stoppage may be quarantined and asked to be resubmit in corrected format.

Future system announcements and updates will be sent directly to system users and will be posted to the CCRS webpage.

As issues arise, we’re working to solve them as quickly as possible and appreciate your patience as we continue to look for performance improvement opportunities.

We are excited about the coming changes and want to make sure that CCRS system users have a positive experience with the new files and processes.

California Department of Cannabis Control Debuts Data Tool Showcasing Access Areas for Cannabis Business

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CALIFORNIA: The Department of Cannabis Control (DCC) today rolled out a data visualization tool that will help consumers see where they can purchase safe and legal cannabis products from licensed retailers, inform business owners about which cities and counties license cannabis businesses, and support ongoing conversations about access to California’s safe and legal market.

The data tool can be found on the DCC website here: 

Using data compiled by DCC staff in February 2022 and working closely with the California Office of Digital Innovation, the map shows that only 44 percent of cities and counties allow the licensing of at least one cannabis business type, while 56 percent of cities and counties prohibit the licensing of all cannabis business types. And even more cities and counties – 62 percent – prohibit the licensing of any form of cannabis retail.

“This data helps Californians understand the work we have ahead of us in realizing the promises of cannabis legalization, including supporting access to a safe, legal, and equitable cannabis market across the state and combating the unregulated, illicit market,” said DCC Director Nicole Elliott.

The webpage, which includes a map, statewide statistics, and a search function, underscores challenges to licensing access more than five years after Californians voted to legalize the right for individuals 21 years of age and over to possess and grow specified amounts of cannabis for recreational use. The DCC cannot approve an application for a state license if approval of the license would violate the provisions of any local ordinance or regulation, making access dependent on local participation.

The DCC obtained this data by reviewing local ordinances and information provided on local jurisdiction websites, and by contacting some local jurisdictions directly. The Department recommends that those interested in starting a cannabis business contact their local jurisdiction directly for information about specific requirements. If you’re a city or county official and think your data is not correct, please email the DCC at locals@cannabis.ca.gov.

 

Oklahoma Seed-to-Sale Deadline is May 26

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All medical marijuana commercial licensees have until Thursday, May 26, to become fully compliant with the Metrc statewide seed-to-sale tracking system

OKLAHOMA:  EVERY commercial licensee must be fully Metrc-compliant by May 26. 

This means that ALL seeds, plants and products must be tagged and tracked in Metrc no later than May 26, except for dispensaries (see more in the Dispensaries section below).

ALL licensees must use Metrc for tracking inventory, transfers, waste and sales, including to patients and caregivers, no later than May 26.

No later than May 26, every licensee must be registered with Metrc, and the owner or key administrator must have already completed the New Business training. It’s offered every weekday and on-demand in Metrc Learn.

Once credentialed, licensees can log in and access the Support page to find on-demand, self-paced learning modules for additional training.

OMMA and Metrc are working together to schedule more training opportunities. Check back for updates.

Dispensaries

Like all commercial licensees, dispensaries must be fully Metrc-compliant by May 26.

Dispensaries have until Aug. 24 to sell or legally dispose of untagged items that were in the dispensary’s inventory on or before May 26. Dispensaries may not buy new untagged inventory after May 26.

Information will be available soon on how to conduct untagged sales from May 27 through Aug. 24. Check back for updates.

Required and Optional Training

Required Training

The owner or key administrator of each commercial license is required to take Metrc’s New Business class to become credentialed in Metrc.

Licensees can use the Metrc scheduler to sign up for New Business training, offered each weekday. The class is also offered on demand through Metrc Learn in your Metrc account.

When you complete the training, reach out to Metrc’s Support team to get credentialed.

Optional Training

OMMA and Metrc will conduct at least 5 free online seminars for Oklahoma commercial licensees between now and May 26. The seminars will have helpful information for licensees learning who wish to learn more about Metrc. Other training opportunities are also in the works. More information will be posted here when it’s available.

Metrc offers other advanced training courses on Metrc Learn and on its scheduler. Metrc also has training videos on its Oklahoma web page and its YouTube channel on the following topics (and many others):

Monthly Reporting

All commercial licensees must continue all monthly reporting using the OMMA Monthly Reporting Template for activity through May 26. The last template with activity through May 26 is due June 15.

Dispensaries must continue using the OMMA Monthly Reporting Template for any untagged sales and waste disposal from May 27 through Aug. 24.

Metrc will meet the monthly reporting requirements and the template is no longer necessary for all tagged sales and waste disposal after May 26.

Alan Kwan, One Tech, Is Redefining FinTech for Legal Cannabis

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NEVADA: Australian technology entrepreneur Alan Kwan has quickly become a major player in the fast-growing United States digital payments market, and he and his partner now set their eyes on helping the cannabis sector. Their technology services company, One Tech Platform, owns the US patent for the use and application of fundamental steps governing the use of QR code technology by smartphones that makes it easier to extract and share information contained in QR codes.

QR codes contain 200X more information than traditional barcodes and One Tech is building systems that will make it cheaper and easier for merchants to set up businesses that run on their QR technology.   The One Tech platform addresses several concerns bankers may have – one of the largest is that its platform allows users to meet their obligations under the US Banking Services Act via an unbreakable audit trail. The company provides Federal and State regulators full transparency across business-to-business and business to consumer transactions.

 

MJNews caught up with Alan Kwan at the MJBizCon 2021 trade show in Las Vegas, where we had a chance to discuss the many challenges that the cannabis market faces, and how the industry is underbanked because of the resistance from traditional banks to provide basic business services to companies within this fast-growing sector.

MJNews: Good morning to another episode of Marijuana Channel One today we are streaming live from MJBizCon 2021 here in Las Vegas, Nevada, where the cannabis industry has taken a break from the pandemic and re-emerged to exchange information, build community and explore opportunity.  It’s my pleasure to meet with Alan Kwan who is one of the founders of One Tech, a new financial technology platform for the cannabis space.  Alan has a very interesting background so I’m looking forward to a great conversation.  Good morning, Alan.

AK: Good morning.

MJNews:  You’re Australian.  You have a background in banking, and you’ve got some really interesting investments in things like vision technology for the blind and cyber security, how did you get into the crazy cannabis financial technology space?

AK: Well, it all began with hard money lending and I’m very diversified in my investments: I run two public companies, and i also run a fund that invests in biotechnology, hence my. investment into the bionic eye in Australia.  I was in property development in the US and I sold out of those developments and. had some free cash and i was approached by some cannabis guys wanting to look at buying warehouses etc., so I was doing convertible notes, and it’s fairly easy to do loans here given its community-based law — you know, you can run promissory notes so essentially that’s how it started.   And that sort of piqued my interest.  These guys that are hugely successful in their field but unable to have the proper financial support.  So I looked at the legislation to try to understand the dichotomy.  I read the Cole memo and tried to see how I could participate and how I could solve this thing.

 

Serendipitously, we have a number of investments in QR Code technologies out of China,  and also I have a technology firm in Singapore that I’ve been director of for the last 20 years. We are ERP specialists, so we’ve been partners with SAP and we’ve been involved in the Monopoly ETF platform over there, so combining these skill sets I thought [made sense].  I was approached by a reverse ATM company, and so I flew over to Blackhawk Technology put in a hundred dollars and I thought ‘oh wow. it got stuck!’   How are you supposed to manage this hardware in thousands of dispensaries across the United States? And doing further study, I thought ‘oh well it’s probably not kosher to do workarounds.’

Prior to Covid, I was flying to Sacramento where I met with [California Cannabis Czar] Laurie Ajax.  At that time there was the vaping issue, and she was suggesting you should scan the QR Code, but a static QR Code doesn’t really mean anything unless it’s part of a providence chain,  So what the Singapore government has done with the popularity of QR Code-based wallets…  what they call SGQR so they will disseminate the original QR Code. So, our company bought the rights to a

QR Code scanning technology that precedes WeChat.  In China, 98 percent of the population pay by scanning QR Code, Alipay, wepay and that sort of thing. so I was able to meet the SAP scientists that developed that technology. I took the rights to the U.S., hoping that I could work with a federally-governed bank to solve this issue of banking.  And so I teamed up with a firm in California Umberg/Zipser and the founder of that, Tom Umberg, a California State Senator who was very much involved in trying to  shape that landscape, and be involved in safe banking.

I met with City Mayors and it’s really a workaround, I mean even the money that they take, so what One Tech can do is sort of a process where all the participants have to be involved and if the bureau or any agency was to disseminate that code then it would have to run across from manufacturing through laboratory tests etc.

And so that sort of information can then be embedded within the QR Code. It’s cheap to generate a QR Code.  It doesn’t cost anything: you don’t need infrastructure, or the sort of major costs involved — CapEx — in terms of running your business.

We met with the owner of Metrc, and were able to work with them to become an approved partner, so we can integrate with almost with every sort of [POS and traceability] software around. Aand that essentially means [compliance with] the [state] marijuana amendments,  as they look [ensuring] product does not cross state lines, and that you’re not selling to minors.  And you’re able to set from a banking point of view what would then be a suspicious activity report, so if there’s any discrepancy between your stock and what you’ve sold etc.   We all know that a lot of businesses have to do that in order to survive, but you know it’s almost tightening the screws and ensuring that there is no money laundering and you could only really achieve that if you have that providence chain.

WATCH THE ENTIRE INTERVIEW EXCLUSIVELY ON MARIJUANA CHANNEL ONE