Online ordering of cannabis products is growing and has increasingly become a preferred way to purchase them since the global pandemic began, according to Ross Lipson, co-founder and CEO of Dutchie, an ecommerce and online ordering platform.
The 3-year-old Bend, Oregon-based company raised a $35 million Series B round from new investor Howard Schultz and existing investors Casa Verde Capital, Thirty Five Venturesand Gron Ventures. Including this new investment, Dutchie has raised a total of $53 million, including a $15 million Series A in 2019, led by Gron, according to Crunchbase data.
Lipson’s background is in the food-order business. In 2008, he moved to Canada and launched GrubCanada.com. After building his company to thousands of restaurants across Canada, GrubCanada was acquired in 2012 by Just Eat. He later moved to Oregon and came up with the idea of Dutchie while standing in line at a dispensary.
Today, Dutchie connects consumers to local cannabis retailers and is capitalizing on trends that show the legal marijuana industry is one of the fastest-growing in the world and is slated to reach $30 billion in value in 2025. At the same time, UBS expects one-quarter of total U.S. retail spending to be online.
After raising its Series A, the company spent time building its team and innovating its product to meet constantly changing consumer demands for online ordering, curbside pickup, delivery and digital payment solutions, Lipson told Crunchbase News.
With the Series B funding, the company will continue with those goals. Dutchie has 102 employees, and Lipson has a plan to double that in the next 12 to 18 months.
“Each round gives us that power to accelerate on the team and product,” he said. “We are unique to the cannabis industry that we have the opportunity to define the consumer and dispensary experience with our purchasing platform at scale.”
There is a need for innovation in the cannabis industry as demand grows, especially when menus and inventories change every day, Lipson said. One of the challenges is that the typical cannabis consumer requires a certain level of education in order to make an informed buying decision.
They want to know category, THC levels, see a photo of the flower and read a description of the product. However, a dispensary’s menu could have more than 500 items on it. With an online ordering menu, consumers can educate themselves.
To keep up with this, Dutchie integrates with a dispensary’s point-of-sale system and also helps it be in front of new regulations.
Dutchie works with 1,300 dispensaries in 25 states and Canada, helping them process 75,000 orders a day. Lipson estimates $2.4 billion in annual gross merchandise volume, or transacted sales, are run through the platform.
“We are constantly looking to bring in new dispensaries and will provide them with more workflow tools, while bringing value to customers,” he added. “We have found, on average, people order 30 percent more online than in the store. Also, some customers are not comfortable going into the dispensary, and it gives them a place to look at products and ultimately order.”
What investors are saying
Karan Wadhera, managing partner at Casa Verde Capital, said in an interview that the firm “quickly gravitated toward Ross’ energy” as an entrepreneur and also liked his track record in the delivery business.
Casa Verde Capital is cannabis-focused and has invested in 19 businesses so far, and Dutchie was uniquely positioned in the e-commerce space, which was ripe for innovation, Wadhera said.“In general, it sets them apart, especially as Ross and Zach (Lipson, his brother and co-founder) are aggressive with their goals and have exceeded expectations,” he added. “We are confident in their ability to be a leader in this space.”