Tag Archives: Cannabis

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Green Geeks: POS Technology Solutions (Part I)

The emerging cannabis industry is surprisingly technologically sophisticated. Take what I call the last mile: point of sale (POS).

I recently interviewed John Yang at California-based Treez, a POS solution focused on the cannabis industry. In fact, the free ranging conversation went so long, over two interviews, that I’ve decided to do a two-part blog series. In this first blog, I paint the picture (including taxation) and introduce Treez. In the second installment we’ll get down to the keystroke level.

“We are an enterprise-grade product with reliability and stability.” Said NAME. “In fact, you can run Treez as it’s meant to be in the cloud…we are a cloud-based solution first. But you can run it on-prem toowhich is important if you can’t be down for even a few minutes or a day. We serve dispensaries that have 100+ customers in the lobby at a time so any downtime is unacceptable.”

Let’s Talk Taxes!

Some readers know that SMB Nation’s hometown of Bainbridge Island is where Avalara started (about to IPO and known for creating online sales tax and compliance solutions). Thinking about taxes and compliance is second nature to me. When NAME took a left turn with our cannabis conversation to discuss Treez tax and compliance solutions, I told myself this conversation just got much better.

“In our business development efforts, we lead with the tax calculations for the State of California. Many of our competitors don’t have this functionality. We do taxes correctly and help dispensaries from being overtaxed. This includes that we take care of the excise tax calculations.” Shared NAME. “California is taxing 35% to 40%…different tax layers (city, county, excise, sales) that compound on top of each other. Think of it as a tax on top of a tax on top of a tax.” Seems like tough math to track.

cannabistaxationstuff 002

Figure 1: Treez tracks cannabis taxes. Harder than it looks folks.

We next discussed the Excise Tax Report. “it’s about….how much to pay….a lot of complexity…very important with compliance…we do the break out of the taxation – our competitors don’t have the granular level of detail.” Stated NAME.

I asked about how it works in Washington state, sensing that this young industry behaves differently in each state (#TrueThat). NAME shared that the State of Washington is a post-tax model like $40 for a ten pack of gluten free Indica peanut butter cups. The taxation is baked into a round number price that a customer would pay. If there is a mathematical mistake, the dispensary would have to “eat it” with respect to making the taxes paid whole.

In Part II of this blog series on Treez, I’ll speak toward the hands-on, keystroke-based POS solution and its use cases. Hint: Customer experience is the development paradigm.

VerticalWatch: Health Care IT 2.0 for MSPs

Hang on fast for a fat opportunity you might have overlooked. It concerns a new approach to health care and pain relief with just a bit of pleasure sprinkled in. I’m discussing the medical and recreational cannabis industries. I discovered this opportunity via research over the course of 2016/2017 in the Seattle area.

High School Jokes Aside…
Once you get the White Elephant out of the room (high school and college jokes), you’ll quakily discover

that the cannabis wallpaper 420 9industry is deadly serious. In my research, it resembles the local pharmacy dispensary business. You have similar legal compliance and supply chain issues.

And most view cannabis as a cure for ailments. Ergo I’m leading with the health care paradigm, not the black market drug dealing nonsense that has often defined cannabis.

 

Facts

  • 5-states (including California) recreational legal plus Washington D.C.
  • 22-states medical legal
  •  California is recreational legal as of January 1, 2018.
  • Massachusetts will become recreational legal in July, 2018

Risks
If you, the entrepreneurial MSP, considers yourself a risk taker, the cannabis vertical is for you! Right now the future is not an assured outcome. At the Federal-level, cannabis is still a Schedule 1 Controlled Substance under Federal law. Furthermore the Trump administration under Attorney General Jeff Sessions has rescinded the Cole Memo issued by the Obama administration as of early 2018. You can learn more about the Cole memo here but essentially it states that the Federal government was to stand down on active enforcement at the Federal-level of laws prohibiting cannabis. That effectively allowed the states above to legalize the sales and distribution of cannabis for both medical and recreational purposes. By undoing the Cole Memo, there are legitimate concerns that Federal enforcement against cannabis will happen.

Another industry risk is banking. Currently cannabis-related industry players can’t participate in the banking system at the federal level. There are a couple loopholes such as state chartered credit unions but it’s clearly a business model impediment to not have a full service banking relationship.

MSP Opportunity
Some SMB Nation community members are ideologically opposed to cannabis use and have little interest in this industry. Others are following the money. Say what you must but the cash rich cannabis industry is an ideal vertical market if you like interesting technology work and want to get paid (well). I’ll be defining the MSP opportunity over the next couple of months but the purpose of this blog was a HEADS UP!

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