Dutchie, a nearly three-year-old, Bend, Oregon-based software company focused on connecting consumers with cannabis dispensaries that pay it a monthly subscription fee to create and maintain their websites, process their orders and track what needs to be ready for pickup, has raised $35 million in Series B funding. The capital came both new investors Thrive Capital and Starbucks founder Howard Schultz, along with earlier backers, including Kevin Durant’s Thirty Five Ventures and the cannabis-focused fund Casa Verde Capital.
The money comes hot on the heels of Dutchie’s first major round of funding — $15 million that it closed last September — and suggests that the cannabis industry has fared better during the COVID-19 pandemic than people outside the industry might imagine.
We had a fast chat yesterday with the company’s co-founder and CEO, Ross Lipson, about the year that Dutchie is having.
TC: I’d seen recently that Dutchie has added contactless payments.
RL: Yes, when the pandemic hit, virtually all of our dispensaries shifted to a curbside pickup model. We built a solution that allows customers to select curbside at checkout, and also includes a way to notify the dispensary when they arrive and provides them information on how to locate their vehicle.
TC: A year ago, there were more than 30 states where cannabis was either medically legal or that had legalized the recreational use of marijuana. How has that changed?
RL: We now work with over 1,300 dispensaries in 32 markets. By comparison, a year ago we were only operating in 9 markets. Nationwide, 47 out of 50 states now allow some form of legal cannabis, and 2020 could bring full legalization in major markets such as New Jersey and Arizona.
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TC. Can you put that into context? How many dispensaries are there in the U.S.?
RL: Dutchie processes 10% of all legal cannabis sales worldwide and powers over 25% of dispensaries. That’s more than 75,000 orders a day.
TC: You had 36 employees the last time we talked. What’s that number now?
RL: We currently have 102 employees and we aim to double our team by the end of 2021.
TC: Aside from helping dispensaries shift to a curbside model, how has the pandemic impacted your business?
RL: Virtually all states deemed cannabis dispensaries as essential businesses [once COVID took hold]. Many still had to comply with state laws and close their physical stores, though, leaving only one option for sales — online ordering. We saw dispensaries shift from about 30% of overall sales coming from Dutchie to upwards of 100%, and our business grew 600% in roughly one month.
Overall, we’ve seen a 700% surge in sales volume during the pandemic. We had to scale quickly to deal with six times the load on our technology.
TC: Think those numbers will shift around as some parts of the country open up?
RL: Dispensaries are poised to keep online ordering and e-commerce options available because it is part of what their customers now expect.
Pictured, left to right, above: Ross and Zach Lipson (Zach, Ross’s brother, is the company’s co-founder and chief product officer).
