Cannabis e-commerce platform Dutchie is celebrating its third birthday with a big infusion of cash from some even bigger investors. The cannabis technology startup now boasts former Starbucks Chairman and CEO Howard Schultz as an investor after landing a $35 million Series B round Tuesday.
The round, which brings Dutchie’s total funding to $53 million to-date, closed weeks after the company celebrated its third year of business in July.
“We are a young company, but things are moving really fast,” CEO and co-founder Ross Lipson said. “We’ve really set some lofty goals for ourselves and shared with investors and have been able to execute.”
This round of funding was led by Thrive Capital, with participation from a spate of old and new investors including Snoop Dogg’s VC firm Casa Verde Capital, Gron Ventures, Kevin Durant’s Thirty Five Ventures, and, of course, the coffee bean billionaire himself, Schultz.
Schultz did not respond to requests for comment, but Lipson said he was looking forward to tapping into Schultz’s mastery of retail at scale and leadership vision.
“He has a knack for leadership and big picture vision and understanding how to set a lofty goal and execute on it. It’s a very unique perspective he has after scaling a global and iconic brand like Starbucks, so I’m really excited to understand more about how he ran his organization from a leadership standpoint and big picture vision,” he said.
Dutchie is an online cannabis marketplace Lipson once described to Cheddar as “Shopify meets DoorDash.” Shoppers can either browse local cannabis shops and products on Dutchie.com, or shop directly on their favorite shops’ websites with a Dutchie-powered menu. The company integrated with digital payments provider Hypur in May to bring contactless payments to its some 1,300 dispensary customers nationwide.
The platform has seen substantial growth amid the COVID-19 pandemic as more cannabis companies turn to technology to accommodate changing customer preferences and operational restrictions. Dutchie has added about 650 dispensary or retail shop partners since March — about 200 since mid-May — and now has a presence in roughly 25 percent of dispensaries across North America, according to the company’s Series B investor deck. Dutchie also said in its deck that it processes some 10 percent of all legal cannabis is sold. Annualized sales have also surged considerably to $2.4 billion from about $350 million pre-pandemic — and from about $140 million in September 2019, when the company closed its Series A.
“E-commerce has always been a proven model or opportunity in all industries. And I think with the coronavirus pandemic, it has really shifted the consumer behavior to e-commerce, to ordering online,” Lipson said. “And in the cannabis space even more so, not just because of convenience, but more the education piece that cannabis consumers really, really find valuable.”
The company intends to use its newly-raised funds to continue that growth, by innovating on its product and expanding its team. The company now tallies about 100 employees and hopes to double that within the next 12 to 18 months with a particular focus on growing its engineering and product team to keep up with the rapidly shifting needs of dispensaries.
The middle of a pandemic, not to mention an economic recession, may seem like an unusual time to hire, but the cannabis industry is still in growth mode. BDSA projects the industry could hit $47 billion in global sales by 2025. And the trend toward e-commerce is strengthening, as well, with sales on course to surge about 18 percent to $58.52 billion in 2020, according to eMarketer.