Dutchie, a cannabis fulfillment platform, announced Tuesday it raised $200 million in Series C funding and acquired two technology providers.
The funding round was led by Tiger Global Management and included investors Dragoneer, DFJ Growth, Snoop Dogg’s Casa Verde Capital, Thrive Capital, Gron Ventures and former Starbucks founder and CEO Howard Schultz.
Past investors include Kevin Durant’s and Rich Kleiman’s Thirty Five Ventures, Sinai Ventures and Tinder’s Justin Mateen. Since the company was founded in 2017, Dutchie has raised a total of $235 million. After the recent funding, Dutchie reported a $1.7 billion valuation.
“Our investment will help Dutchie extend its platform and deepen relationships with merchants, consumers and brands to drive better outcomes for all in this ecosystem. We look forward to supporting this world-class team as they hit a new phase of growth,” said John Curtius, a partner at Tiger Global Management, in the release.
Strategic acquisitions
In the funding announcement, Dutchie reported it acquired two cannabis retail technologies, LeafLogix, a software provider, and Greenbits, a retail platform, for an undisclosed amount.
LeafLogix, a seed-to-sale enterprise resource planning (ERP) solution, specializes in operationally supporting the industry’s multistate operators (MSOs), a market Dutchie started to enter in November. MSOs curate the cannabis for products the dispensaries are selling.
LeafLogix’s ERP handles the compliance and operational tasks to ensure MSOs are following up-to-date state and municipality regulations. The acquisition will allow Dutchie to service MSOs within its current North American market and LeafLogix’s global MSO networks in Colombia, the Caribbean and Africa.
Greenbits was first to enter the cannabis retail market with its point-of-sale (POS) platform in 2014. As Washington, Oregon and Colorado legalized recreational marijuana, the company discovered there was no payment system that supported regulated compliance reporting. Without a POS solution, cannabis retailers relied on cash transactions that were difficult to track for regulators. With strategic partnerships, Greenbits became the largest cannabis retail POS system and the first to achieve $4 billion in annualized sales, reported in September.
Growing market
After the 2020 election, six more states passed legalization legislation, and more than 111 million people in 15 states now have access to legal recreational marijuana. During COVID-19 shutdowns, the cannabis industry was labeled an essential business in a number of states, including, Michigan, Washington, Illinois, Massachusetts, Minnesota and Florida. This contributed to $20 billion in recreational cannabis sales last year. That figure is expected to grow to $40 billion within the next four years.
To handle the unprecedented growth of e-commerce cannabis sales last year, many retailers quickly turned to technologies like Dutchie to procure an online ordering and delivery platform. The company currently works with 2,116 dispensaries across 36 markets in the United States and Canada.
Dutchie’s platform gives retailers the ability to customize their ordering and fulfillment process with its recent release of Dutchie Plus. The tool provides dispensaries with menu management tools, custom-built analytics and prebuilt integrations into fleet management software, customer relationship management tools and reward program solutions. Dutchie gives access to API and coding examples on its site for on-demand integration, democratizing the cannabis e-commerce market.
The company provides education tools within its platform so clients can make informed decisions on their cannabis needs. While most purchases are cannabis flower products, the company is starting to see higher demand in products like vaporizers, edibles and tinctures. With the rise of e-cigarettes in 2019 and yearly FDA warnings of false product marketing of vaporizers, clients reportedly are looking for cannabis retailers with tools to validate the authenticity of their purchases in growing product markets.
The combination of the three industry leaders will enable Dutchie’s technology ecosystem to meet growing customer demand. The Series C funds will be used to acquire talent for sales execution into new markets and develop new fulfillment solutions to support the cannabis industry.
To head this mission, Dutchie announced Tim Barash, former CFO and chief business officer at Toast, would serve as the new executive chairman.
“Dutchie is powering a new generation of entrepreneurs driving one of the most disruptive consumer trends of the last century,” said Barash. “This is a once-in-a-lifetime opportunity to join a team focused on accelerating an industry that has a wide range of positive societal impacts, from better health and wellness outcomes to reversing a stigma that hampers criminal justice reform to supporting communities by enhancing state and local tax revenues.”