As Amazon mulls cannabis entry, e-commerce startups are already leading the way.
Rumors have been swirling lately about when Amazon.com (NASDAQ:AMZN) will be jumping headfirst into the cannabis industry. A titan company moving into the burgeoning cannabis sector would likely create a huge boost in confidence from investors. Whole Foods CEO, John Mackey, publicly backs recreational legalization, and has stated that chances are “good” that the Amazon-owned grocery chain would stock weed on its shelves. Should Whole Foods start selling marijuana, there’s also a chance that Amazon would too. Since the signing of the 2018 Farm Bill, hemp can now cross state lines, which means logistics for stocking hemp-derived CBD products as well as marijuana should not be a major hurdle.
Amazon currently sells some cannabis products in the US such as hemp-derived CBD oil and assorted apparel, all of which are doing brisk sales. Full federal legalization will likely be necessary, however, before marijuana products can become a fully feasible option for Amazon. In the meantime, there’s a massive market opportunity right now as the growing CBD industry has largely been driven by online sales thus far.
While we are waiting on Amazon to get in on the game, there have been attempts from several e-commerce startups to become leaders in the cannabis sector. When we talk about online shopping we think Amazon, when we think about ride-sharing we think Uber, so when we think about cannabis e-commerce who is going to emerge as the front runner?
In terms of delivering marijuana to customer doorsteps, the app-based Eaze has been offering fast and reliable delivery services from dispensaries in areas of California for several years. After raising an impressive $65M in Series C financing in late 2018, an IPO looks increasingly likely. GreenRush is another app-based cannabis delivery service that plays in this category, though not as well funded. However, its delivery range is similar to that of Eaze, so these companies might need to consider branching out beyond their home states soon.
Meanwhile, cannabis growers who want to connect with dispensaries and retailers are choosing to use LeafLink, an online B2B platform that acts as a wholesale management portal and online marketplace. The startup has a wide coverage across six states, including California, and promises to give brands exposure to thousands of cannabis purchasing managers. Baker is another B2B ecommerce platform dedicated to helping dispensaries monetize their websites by helping them add e-commerce, marketing and sales tools such as online check-out, enhanced online store experiences and customer loyalty programs. Its CRM platform is currently integrated into over 1,000 dispensaries across the US and Canada, and is set to grow even further.
Arguably the largest cannabis-dedicated e-commerce company at the moment is Namaste Technologies Inc. (TSXV:N). The company is planning to become the “Everything Cannabis” store. Starting out as an online seller of cannabis consumption devices, it has now branched out into a one-stop online portal for patients and recreational customers, with 30 websites in over 20 countries. It’s also making smart investments. Last year, the company bought out an AI e-commerce company named Findify for $12-million in cash and shares. Namaste integrated the Findify AI and machine learning technologies into the platform to continually optimize conversion rates, retention, and referrals. It’s well capitalized too, recently raising CAD $51.7-million in an oversubscribed bought deal financing.
It may be too early to tell whether any of these new cannabis e-commerce businesses will be able to hold their own once big tech comes rolling in after full legalization. Already, websites powered by the software-as-a-service e-commerce giant Shopify Inc. (TSX:SHOP)’s platform has already started to clock over 100 legal cannabis orders a minute. It’s now dominating the field in Canada, having won the bid to support the government-run websites of provinces such as Ontario and British Columbia, and has become the POS system for cannabis heavyweights such as Canopy Growth Corp. (TSX:WEED) and Aurora Cannabis Inc. (TSX:ACB). For that reason, it seems Shopify may be the best cannabis e-commerce play in the short run.
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