A letter from Treez CEO John Yang
In the not too distant past, there was once an industry that was large, profitable, and entirely underground. Thousands of people got rich working in this industry, but thousands more were unfairly punished by outdated laws, and those profits were hidden from the larger economic outputs of global markets.
But then the industry fought back. Got organized. Got active. Changed those laws.
Now we’re at a critical point in cannabis history. We’ve poured our lives into this industry, and its future is now at stake. It’s time to look back to see exactly how we got here so we can determine the best path forward.
In the last ten years, the nation’s outlook on cannabis has dramatically shifted. This profitable and dynamic industry no longer is forced to hide in the shadows. Riding a wave of popular demand and political support, the majority of the United States has either legalized or decriminalized cannabis and subsequently enacted compliance frameworks to protect consumers, drive tax revenues, and insulate us from a recalcitrant federal government’s interference.
In the wake of this shift, a novel industry has emerged – one that spans 37 states, and brings in an estimated $15 billion in annual revenue for licensed businesses across the country. However, we’re still only scratching the surface. The underground market has not been displaced; estimates of actual cannabis demand run as high as $60 billion, leaving $45 billion of untapped economic potential and taxable revenue.
The closest analogue to the situation we find ourselves in now is the alcohol industry of 1934, just as Prohibition came to a close. Even still, the post-Prohibition alcohol industry never saw the level of growth projected for the cannabis market – based on past performance, a conservative estimate of 200% growth within five years outpaces alcohol’s expansion many times over.
Yet unlike the federal re-legalization of alcohol, growers, manufacturers, distributors, and retailers cope with a rigid regulatory apparatus that stifles unified national growth, leaving the cannabis industry to expand piecemeal in accordance with a disparate patchwork of state laws. From continued federal prohibition to stigmatization to a more vibrant underground market, cannabis has to deal with far more hurdles than alcohol ever faced. But while the alcohol industry didn’t grow slowly by any means, the cannabis industry is on pace to outstrip its growth by an order of magnitude. How is that possible? The difference lies in the technological advancements of the past 75 years.
At the end of the 1930s, the telephone was emerging as the most radical and significant technological advancement for both business and personal communication. All of a sudden, the world was a lot smaller. Improved communication technologies facilitated the establishment of alcohol as a national product. Businesses could make dramatically quicker decisions and as a result, initial alcohol revenues exploded.
But today is different. Using a telephone is synchronous – it depends on both parties being on the line at the same time, and one-to-one. If I’m talking to you, I can’t possibly be talking to your friend, colleague, supplier, or competitor. Digital technology is asynchronous: a business owner in San Francisco can talk to a partner in New York City, whether that partner is awake, asleep, on vacation, or managing his or her own business. More importantly, you can communicate with each and every one of your clients and competitors simultaneously, all at the push of a button. The opportunities for growth are magnified proportionally.
After the post-prohibition explosion, alcohol growth slowed down. It wasn’t because demand was slowing or innovation within the sector – it’s directly attributable to the slow growth of technology. But this isn’t 75, 50, or even 25 years ago. As cannabis proprietors, we don’t need to put ourselves in that same position today: technological progress happens more quickly than 20th century merchants could ever imagine, and communication and collaboration opportunities are legion. We don’t need to hold ourselves and our industry hostage to antiquated systems that struggle to connect with one another, or closed off data systems that get in the way of globalized commerce. Not only can we now grow at the same pace as demand, we can collectively influence and measure that demand.
From cutting edge AI-driven harvesting equipment, to nanotechnology that deliver precision doses, to compliance software that facilitates vertical growth, technology will be the main driver of expansion for the cannabis industry. The world today is different, and at Treez, our vision and responsibility is to automate responsible commerce within this nascent world. This is our vision, our passion, and our life.
Three market dynamics shape the viability of this vision.
First, we find ourselves in a unique, once-in-a-lifetime position with an enormous, untapped industry with no dominant players. No winning conglomerates exist, and the few major players on the scene are willing and able to collaborate. This kind of vertical cooperation has already been seen in the cosmetic industry, where Sephora’s willingness to share their sales data with their distributors resulted in a market-focused specialization in their product development, as well as more sophisticated collaboration among their employees, associated staff, and even customers. The emerging cannabis conglomerates are hiring experienced personnel from companies like Sephora, capitalizing on their integrated sales and supply chain experience.
Second, the technology necessary to expand the cannabis industry is already mature. In contrast to the situation in which early alcohol distributors found themselves pioneering new tech, digital sales and communications are already well-explored, tested, and widely distributed. Moreover, widespread legal compliance requirements forces cannabis operators to collect concise and accurate data across sales, product, inventory, customer service, and much more. APIs connect the modern world – from Facebook to Apple. Within the cannabis industry, collaboration happens through accurate and real-time API-facilitated data sharing up and down the supply chain. This flexible communication and management strategy facilitates rapid adaptation – the top industry players are readying themselves for Federal legalization and the vast untapped market of interstate cannabis commerce. The winners in this race will be the businesses who are most agile, flexible, and adaptable.
Finally, the cannabis industry features a push-and-pull dynamic never seen before in American business. In this nascent space, market players are not yet specialized in their core competencies – growing, distributing, retailing, managing, etc. – but the oncoming (and explosive) growth in the industry will force specialization upon them. Due to this dynamic, major players are openly and eagerly pushing each other to collaborate, challenging one another to ride the technologically-facilitated wave toward specialization. Enter Treez.
Treez is at the forefront of facilitating the dream of a strong, regulated, unified interstate cannabis market. In the past year, we have made the following innovations:
Managed over 1/3 of all California state transactions
- The mature cannabis market will operate on a single primary maxim: trust, but verify. Shared data is going to be at the heart of the cannabis industry, but it is absolutely essential that this data be trusted by all parties.
- Treez has built the best-in-class point-of-sale system; our market adoption is evidence of our partners’ satisfaction.
- Our software is a building block for the cannabis industry’s path to commercial automation.
- We offer an integrated retail payment solution for individual points of sale, and currently developing an analogous system for the wholesale solutions.
- With hundreds of different cannabis retailers in any market, open and consistent data is the key to the kingdom.
- Treez is at the forefront of this dual-edged push, with 240 brands in California sharing their digital assets and content into our open catalog.
- This catalog will forever remain open: brands will only have to load their information once to allow our APIs to disseminate the relevant information to the rest of the industry.
Real-time Analytics across the vertical
- The cannabis industry relies on a partnership between growers, brands, distributors, and customers.
- Treez makes it possible for retailers to share their granular insights with other actors up and down the supply chain so each entity can tailor their business to provide the best customer service.
- The cannabis industry is the quintessential 21st century economic system, linking retailers, distributors, and manufacturers in a single complex network. No individual actor in this system – no matter how large or comprehensive – can afford to do it all.
- Retailers, busy with customer service and front-facing design, don’t have time to tell distributors what they need moment-to-moment.
- Distributors, focused on supply chain management and logistics, can’t afford to be preoccupied with fine-grained details about which strains and brands are the most popular on any given day.
- Growers, concerned with the health and flourishing of their crops, can’t micromanage their schedules based on the whims and vagaries of the everyday market fluctuations.
- In the 21st century, unified platform commerce and artificial intelligence are increasingly central to the success of any major industry.
- Cannabis growth and retail has the unique opportunity to build in these cutting-edge advantages from the ground up, integrating digital tracking, communications, and artificial intelligence right from the start (without going through the expensive reorganization necessary for legacy industries to compete in the modern world).
- Treez recognizes this potential and is on track to be a digitally-driven seed to sale platform by Q2 of 2020.
The American cannabis industry represents an emerging opportunity the likes of which have not been seen before. While the end of Prohibition introduced a strong interstate alcohol market, the advent of digital technology means that the cannabis industry is poised to rapidly surpass the alcohol industry, if and only if all the actors will work together.
In the next decade, Treez is challenging the cannabis industry to be open minded towards both collaboration and change; to adopt technological solutions that will create a rising financial tide to lift all of our boats. We have a once-in-a-generation opportunity to build a business model that thrives on cooperation, mutual aid, and resource sharing. Cannabis retailers, distributors, growers, producers, brands, software developers, and all other cannabis professionals must see themselves as partners in the genesis of a new, more collaborative way of doing business. We must not see ourselves as rivals, but as partners who can grow most expansively and thrive most strongly only by uniting toward our common goal of creating the most efficient, agile, and humane industry the world has seen in our lifetime.
Treez began at MJBIZcon in 2016, and has grown and matured along with the national cannabis industry since then. We’ve shared in your surges and celebrations. We’ve shared in your struggles and setbacks. We recognize that none of us can do this alone, and invite you to unite with us and succeed as a community. We hope you will visit our booth – share your thoughts and ideas with us, grow with us, and seize these future opportunities with us. Let’s start today.
Treez is excited to show off brand new platforms at MJ Biz Con this year. To get your own personal sneak peak of Brand Treez, Plan Treez, Treez Pay, and our completely revamped analytics, click here to schedule a demo.