“I never consumed cannabis for the first 29 years of my life. I was an Apache helicopter pilot company commander in Iraq. I lived a very intense lifestyle, and I had to train to make life or death decision on a daily basis. It’s a very intense thing to ask of an individual.”
Socrates Rosenfeld is talking to AgFunderNews about his personal journey that transformed him from an opponent of cannabis to a medical user, and now a cannabis tech entrepreneur.
“When you are trained to be extremely intense and to meet the enemy with violence, and then you transition out of service and put a backpack on and go back to class, it may seem simple, but it’s a significant transition.”
Rosenfeld founded Jane Technologies, a cannabis retail technology, and e-commerce platform, in April 2017 in Santa Cruz, California.
AgFunderNews can reveal that the company just closed a $6 million Series A round for funding from private investors, taking its total to $8 million.
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Why Jane Technologies?
The company claims to have the world’s largest real-time cannabis product inventory database.
With the retail price of cannabis reaching as low as $4.00 a gram in some markets, Jane Technologies hopes to increase dispensaries’ revenue by helping consumers discover the products on their shelves through a convenient online shopping experience via iheartjane.com. The platform also provides data analytics to its dispensary clients.
The funding follows the rapid growth and expansion of their marketplace, iheartjane.com, to nearly 500 dispensary partners across 19 states and US territories in just over a year.
Like many vets, Rosenfeld found it difficult to adapt to civilian life after seven years of active duty service. It was during his MBA studies at MIT in Boston that he first considered turning to cannabis to address his reintegration issues.
“I thought it was not for me. I thought it made you lazy, that only unmotivated or unhealthy people consume cannabis, but that couldn’t be farther from the truth. Before I started consuming cannabis, it was hard for me to turn the volume down and I met everything with the utmost intensity. Cannabis provided me with balance and the headspace to connect with loved ones and, most importantly, with my own self again, not as Captain Rosenfeld, but as Socrates. That’s an important thing for vets to do when they take off the uniform.”
He soon discovered that many other vets had found the same relief through medicinal cannabis consumption. Rosenfeld is now working to shed the stigma associated with cannabis use and to encourage other vets to share when they’ve found relief so that it may help others who are transitioning out of the service.
Deciding to try cannabis was challenging enough. Rosenfeld soon discovered that procuring his newfound medicine was full of complexities. He was frustrated that he couldn’t get his medicine the same way that he could order an Uber to take him to the airport or call on GrubHub to bring food to his doorstep.
“There was no efficient, accountable, and transparent way for me to find my medicine, so we decided to build it. Through our research, we found not only a problem with customers trying to educate themselves about products and to find them in a transparent way but with retailers lack of an e-commerce platform,” Rosenfeld explains. “We realized that if we can make it easy for the retailers, we can make it easier for the consumers.”
When Rosenfeld started working on this pain point in 2015, he discovered that the cannabis retail software space left a lot to be desired. Some dispensaries were trying to create their own software platforms while some software companies overcharged dispensaries for substandard solutions that offered a fragmented experience for retailers and consumers at best. With all the regular demands of running a brick and mortar store combined with the steep regulatory compliance pressure that dispensaries face, creating an in-house software solution or trying to make one of the primitive options work was hamstringing industry growth and consumer satisfaction.
“Before we started, you had to go to one website, and then scroll through the menu and go to another website and scroll through another menu. If you found the medicine you wanted, it wasn’t guaranteed that it would be in stock because the inventories were static,” he explains. “We started asking how people shop for everything else online and exploring why it couldn’t work the same way for cannabis.”
Real-Time Integration into POS
Roughly two years later in 2017, Jane launched its e-commerce platform iheartjane.com on April 20th, or 4/20, which also happens to be international cannabis day.
“We provide our retail dispensary partners a fully automated e-commerce solution that connects every product on their shelf to local consumers in the area who are shopping for those products. We provide consumers the opportunity to shop for cannabis like they shop for everything else in this world.”
Today, Jane claims that its real-time cannabis product inventory database is the only cannabis software with proven real-time integration into any existing point-of-sale (POS) system, currently integrating with over 35 existing POS solutions in the cannabis space allowing product updates in a matter of seconds. It also boasts the world’s largest real-time inventory product catalog, with more than 70,000 products.
With a consumer user base increase of 40% month over month, Jane also reports its consumers are spending more. According to a study by Headset, the median purchase amount for a cannabis consumer at a recreational dispensary is $33. The average cart size for a Jane customer is $73. And Jane reports that its consumers have a higher retention rate as well, with an average of 50% compared to the industry average of 40%.
Cannabis Startup Investment Surge
Since the dawn of medical cannabis, software companies have been developing solutions for everything from simple delivery services to regulatory compliance. Cannabis startups as a whole collected $66.3 million in venture capital in 2016. The momentum continued into 2017, with Eaze’s whopping $27 million raise. Cannabis growers posted big raises in 2017, pushing funding in this category to increase 243% to $652 million.
A growing number of venture funds dedicated strictly to cannabis startups have also entered the space, with at least 18 focused funds making plays in 2016.
Elsewhere in the cannabis ecosystem, Eaze is a San Francisco-based cannabis delivery service offering an Uber-like smartphone interface, while Leafly is trying to create a Yelp for marijuana. On Capitol Hill, New Frontier is running a business intelligence and big data service for the blooming legal cannabis industry. On the production side, companies like Grownetics have long been working on ways to improve growers bottom lines while creating a stronger transparency chain and tracking tools.
Rosenfeld views fellow cannabis software companies as indirect competition, however. By his account, no one else is building an aggregated, real-time online marketplace.
“There are those that do e-commerce, and we call them indirect competitors. Anyone who is trying to do online ordering is swimming in our lane, but we differentiate ourselves by having patented software that can integrate in real time to any POS software on the market,” he explains. “We are a true tech company, not just trying to do online ordering where you put a cart at the top right of the screen and call the job complete.”
The Future of Jane
Jane’s home base location of California comes with many benefits. The state ushered in recreational cannabis use in January 2018, opening the door to an entirely new set of non-medical customers.
“This is the market. If you want to be in cannabis in the US, or potentially the world, it is here in California. This is the biggest stage in the world for those who want to separate themselves from the pack,” Rosenfeld says.
Despite its affinity for California, Jane has developed its software product with the broader market in mind. Ensuring that its platform would be suitable for other state markets where regulations impose different compliance requirements was a key component of the company’s scaling mission.
Expanding to other markets has also helped Jane cultivate another source of value for its company: data.
“We are now in a position to understand the cannabis consumer like no other company in the world. We know how the consumer is shopping for her products, what she buys from day to day at various dispensaries. We can now follow a customer through her shopping journey,” he explains. “This is exciting because we are obsessed with providing consumers with a high level of transparency and the idea of providing hyper-personalized recommendations.”
Some consumers are a bit leery of companies aggregating personal data, but Rosenfeld is hoping to learn from other industry’s missteps on this issue. The company is transparent about the insights that it is collecting and clear about how the data is used.
He’s also looked at the larger e-commerce industry to help understand how Jane may fit in the cannabis supply chain in the future. As an e-commerce company, Jane could pivot to direct-to-consumer sales, thereby cutting out the dispensary as a middleman.
“That is not what we want to do. We learned from the past that Amazon is great at many things, but it has killed a lot of small businesses, and we don’t want to make online business compete with offline business,” he states.
The temptation to pivot in different directions or to dabble in different aspects of the robust and ever-growing cannabis supply chain or no doubt tempting. Rosenfeld’s dedication to providing an e-commerce solution to dispensaries is more than just a desire to protect small business. It’s also part of the company’s growth plan.
“For us, one of the biggest challenges is to stay disciplined and focused. There are a lot of opportunities out there to take short-term solutions just to capture and make short-term dollars. That’s never been our MO and never will be. We really want to modernize the cannabis shopping experience and eventually to modernize the way e-commerce is done outside of cannabis, but to do that we have to be laser-focused and make sure that our e-commerce platform is best in class,” Rosenfeld explains. “We can’t be focused by the gaps that we see in the industry and chasing those value streams, which aren’t our core competency. We keep things very simple. We are in 500 dispensaries today, and there’s no reason we can’t be in 5,000 dispensaries in five years.”