A quick stroll through any dispensary may have you slackjawed at the sheer number of products on the market today. From edibles to tinctures to flowers and more, cannabis has come a long way in the US from being sold illegally in nondescript plastic bags.
Nevertheless, it’s still customarily compared to that other ‘legal drug,’ alcohol – much to Socrates Rosenfeld’s dismay. He’d rather you think of it like a CPG product.
“This is something that you put in your body. We ask whether our eggs are cage-free or whether there are antibiotics in our burger,” Rosenfeld, founder of cannabis e-commerce platform Jane Technologies, tells AFN.
“Many of these [cannabis] brands are giving back to the community, hiring for diversity. Consumers feel like they have power with where they spend their dollar, and all of these considerations put together make cannabis a CPG item.”
Operating across 31 states, Jane Technologies offers dispensaries and other cannabis retail segments an e-commerce platform that provides real-time inventory tracking as well as data-driven insights into consumer preferences. It also runs an aggregated online marketplace that helps consumers explore local cannabis offerings and discover new products.
The Santa Cruz, California-based startup claims that roughly 20% to 25% of all legal cannabis transactions in the US take place through its e-commerce site.
“What you’re starting to see now is, whether it’s groceries, convenience stores, or quick-service restaurants, people are expecting and quite frankly prioritizing the digital experience to access local goods and services,” Rosenfeld says.
“The flip side is that you’re seeing small businesses who historically did not invest in a digital footprint do that during the [Covid-19] pandemic and now they’re realizing all the efficiencies.”
The CPG-ification of cannabis
Another factor driving this CPG-ification of cannabis is consumers’ growing comfortableness with the plant, Rosenfeld says. As legal access to cannabis increases across the US and other countries, consumers are experimenting with a wide variety of uses to address health ailments, anxiety, or simply boost relaxation.
In response, cannabis brands are spending more time thinking about their overall brand image, marketing, and packaging, particularly as competition increases. Similar to how you cannot order a six-pack of beer direct from Coors and have it shipped to your house, cannabis brands must sell through a dispensary or e-commerce platform like Jane’s. As a result, cannabis brands have to work hard to cultivate a recognizable brand identity with their target demographic.
“We now have 750,000 products in our catalog, which is crazy. You walk into a dispensary and it’s just so overwhelming,” Rosenfeld says. “What you end up doing is asking the budtender what to purchase.”
He adds that unlike alcohol, which affects most people in the same way, cannabis products can impact each person quite differently due to the nature of the body’s endocannabinoid system and different terpene profiles.
“We tell people to think of cannabis less like alcohol and more like music. You listen to a song and I listen to a song and it maybe gives me a different feeling than it does for you,” Rosenfeld says.
“A company like Spotify or Pandora is able to understand that and present more songs based on your preferences. That is what we are going to get to.”
As consumers discover more about the diverse impacts of cannabis and the breadth of products on the market, e-commerce platforms with search features have strong appeal. Not only is online shopping convenient for consumers, but they can also peruse over a million verified reviews on Jane’s website – as well as optimizing their search through smart searching features, Rosenfeld suggests.
The result is a much more empowered and informed cannabis consumer who no longer has to ask a budtender what to buy, or purchase products blindly.
“What we need to do as a technology company is to be able to personalize cannabis to the individual consumer better than Spotify puts music on your daily tracks. That’s what we want to get to and we can only do that through the digital world because of really structured clean data,” Rosenfeld says.
The continued digitization of cannabis
Cannabis consumption increased dramatically during Covid-19 as locked-down consumers explored the plant’s purported health benefits, sought relief from pandemic stress and quarantine boredom, or simply decided to do something different with their stimulus checks. Jane Technologies saw a 32% boost in e-commerce sales during 2020 as a result.
According to Rosenfeld, consumption levels in 2021 have remained relatively elevated compared to pre-pandemic figures, even as quarantine restrictions lift and the world steers more towards normalcy. Digital orders still account for nearly 20% of retail purchases and accounted for 47.1% of retail growth in the first quarter of 2021.
“The interesting piece is that for online cannabis sales the cart sizes continue to go up,” he says. “Today, the average is sitting between $120 and $130. A year ago, it was sitting between $100 to $110.”
A vast number of cannabis retailers sought out digital solutions like Jane Technologies during the pandemic to keep sales flowing, Rosenfeld adds. Once retailers go through the process of putting their inventory online and integrating the e-commerce site, they rarely backtrack to purely analog operations, he claims.
Covid-19’s tailwinds continue to be beneficial for Jane. In August 2021, it made its first international expansion, launching in Canada through cannabis retailer High Tide.
It also released a new headless e-commerce solution, Jane Roots, in partnership with Columbia Care’s cannabis discovery tool, Forage. Jane Roots takes care of back-end e-commerce infrastructure including integrations, data cleansing, personalization, reviews, and automation. This allows retailers and brands to focus on designing the front-end user experience and updating content without losing back-end code, according to Jane Technologies.
As the space has reached new levels of legitimacy and maturity, so have the quality and breadth of investors coming to the table. Just look at Jane Technologies’ Series C round last month, in which it raised $100 million from lead investor Honor Ventures with Third Point Ventures, Gotham Green Partners, L2 Ventures, Delta Emerald Ventures, and Artemis Growth Partners. The round brought the startup’s total funding to $127 million.
In cannabis tech’s early days, capital primarily came from cannabis-focused niche investors.
“We are starting to see the tip of the spear of institutional investors taking a look at the space,” Rosenfeld says.
“Mainstream traditional investors are no longer seeing cannabis as a second-class citizen. They’re seeing it as the next great American growth story. This is going to be the fastest-growing industry in the world – not for a year or two, but perhaps for an entire generation.”