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How The Green Exchange is Helping Cannabis Distribution Grow Up

September 15, 2015

“I live in what most people consider the breadbasket of cannabis,” says Josh Artman, CEO and founder of The Green Exchange, Inc., speaking from his home in a small town in northern Mendocino County. “The farm-to-table trend is really popular, especially for food in California. We are bringing the same concept to the cannabis industry.”

Two months ago, the company launched its second online software platform, Big Green Exchange, geared toward helping connect growers and collectives distribute with dispensaries around the state. “The wholesale platform is pretty new, but it’s already pretty popular,” says Artman. “Farmers never know how much they are going to produce. Sometimes it’s a down year and sometimes it’s an up year. If you have excess supply and you want to sell it to a dispensary, you actually have to go visit one of the many thousands of dispensaries and let them know you have extra product. It typically involves three trips to complete a sale to a dispensary.”

The first trip involves showing the dispensary a sample of your product. If the dispensary wants to make a purchase, the grower brings the agreed upon amount during a second trip and returns a third time to collect his or her payment. “It just doesn’t work very well.”

The Big Green Exchange seeks to change that, providing growers and dispensaries with a third-party auction platform. “In the northern producer counties of Northern California, pretty much everyone I know is involved in cannabis in some way, shape, or form. I created the wholesale platform out of a need to drag this prehistoric distribution model into the 21st century,” says Artman. According to him, the Big Green Exchange is the first online wholesale purchasing platform for cannabis.

Functioning similar to eBay, growers can sign up on the site for an account and list their products. The growers can either offer their products for auction, or set a specific purchase price. “They can create a virtual store that helps them brand their product,” says Artman. “On the wholesale buyer end, dispensaries can sign up for an account and basically scroll through all of these products for sale on Big Green Exchange, click on a button, and purchase whatever extra inventory they need for their shelves. It helps them have a bigger selection.”

Wholesale distributors and growers must provide either a federal Employer Identification Number or social security number to create an account. “You have to be some sort of legitimate government-recognized entity,” says Artman.

Roughly one year ago, Artman and his partner launched an online software platform called Loud Cannabis designed to help California’s medical marijuana patients find local dispensaries and collectives. “A patient can sign up on our site and once they are verified as a legal medical marijuana patient they can scroll through all of the different dispensaries or providers that are offering in their areas,” explains Artman. “They can see all of a provider’s products, make a selection, and place their order through the app.”

The dispensary or collective then contacts the patient to complete the process, including the payment and logistic portions of the transaction. This feature sets Loud Cannabis apart from other cannabis delivery apps, which predominately use third parties to complete the transaction. With Loud Cannabis, the patient and grower or collective are connected directly. Currently servicing at least one thousand patients, the platform is particularly helpful for patients while they’re traveling.

Artman and his partner also saw a need to improve safety in cannabis transactions. “When I first moved up here about six to seven years ago, it was kind of an inefficient and dangerous distribution system. On the grower to dispensary side, it was a lot of people meeting in back alleys and making two or three trips to complete the sale,” explains Artman.

While cannabis still remains illegal at the federal level, at least 23 states have passed laws legalizing the plant and its derivative products in some form, with four of those states (Oregon, Washington, California, and Alaska) have legalized recreational marijuana use. In addition to legalizing medicinal use, many of these states have decriminalized possession of small amounts of marijuana or reduced the penalties associated with marijuana possession from jail time to monetary fines.

“People are starting to come out of the woodwork and trust that the system is going to allow them to operate like any other business,” says Artman. Both the Loud Cannabis retailer-to-consumer platform and the Big Green Exchange wholesale-to-retailer platform are fully integrated with a host of social media functions. “It’s such an important way that people connect these days. It will be a way not only for people to market their products, but also to brand their companies. It’s harvest time here in the outdoor cannabis capitol of the world and soon people will have a lot of new flowers hitting the market. If you’re signed up on our platform, you can tweet or post to your Facebook followers through the platforms,” says Artman. “It spreads the word quickly when new products are happening.”

Helping connect the many growers operating out of California’s so-called “emerald triangle” with the rest of the state is also one of the platform’s objectives. “Mendocino, Humboldt, Trinity, and Lake County are considered the king of outdoor, sun-grown cannabis.” Products from these areas are in high-demand not only because of their quality, but because of the rising demand for organic, natural, and pesticide-free cannabis. “It’s tough to use organic as a term because there aren’t really any regulations for what constitutes organic cannabis yet. Some are using other words like ‘green clean.’ Everyone is trying to do their own branding of what clean cannabis means.”

“People care about where it came from, who grew it, how it was grown, whether it was grown responsibly and in an environmentally conscious way,” says Atman. The Loud Cannabis and Big Green Exchange platforms help connect retailers and patients to this information, providing them with more say in how they source their cannabis products. The company also provides growers and retailers with third-party testing services to verify the cannabinoid content, or whether the product contains any mold, fungus, or pesticides. In the largely unregulated cannabis industry, growers are using a wide variety of treatments and inputs for their cannabis crops, including some pesticides that many patients would rather avoid. “You see it happening all over the place. There are few rules with this right now. The creation of growing standards are happening, but there’s just lax control right now and people can spray whatever they want on it.”

As far as challenges go, Artman is optimistic. “It’s been humbling and a great learning experience. We have developed this great idea to streamline distribution of cannabis from farm to table. Now it’s actually created and it works. Now we have to get people to use the platform. Right now the crux of our emphasis is to get out there and create buzz—get people excited about the products,” says Artman. “The industry has to grow up.”

In 2014, the cannabis industry earned roughly $2.7 billion in sales, making it no surprise that a number of other companies have been hard at work developing cannabis delivery apps throughout the states that have legalized or relaxed the restrictions surrounding cannabis use. In Washington, where cannabis is legal for recreational use, Seattle-based company Dave is hoping to make the purchase of recreational marijuana easier than ever with online ordering and in-store pickup. Also based in Seattle, Eaze’s platform is similar, also promising that the delivery will arrive in ten minutes or less.

In California, where cannabis remains restricted to medical use only, NestDrop and Nugg are staking out claims to the Los Angeles cannabis market, while Flow Kana is branding itself as a “farm-to-bowl” service provider with its on-demand delivery service that forgoes the brick-and-mortar dispensary and opts for deliveries straight from organic cannabis growers. The growers also serve as dispensaries while Flow Kana processes the transaction. San Francisco-based Meadow is branding itself as “Uber for weed,” working with local dispensaries to provide deliveries to users who hold a medical card. The company will also send a doctor to a user’s address through its sister site, CannabisMD.

And in Colorado, the first state to legalize recreational use, The Clinic launched a service in partnership with Uber and Weedmaps which users Uber drivers to deliver marijuana to citizens throughout Denver.

Have news or tips? Email [email protected]?


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