A cannabis-focused SaaS platform to provide e-commerce solutions
Minimum Investment: $100
Over 257 active businesses utilizing the Cannabiscope Interactive Wheel
Conducted two successful paid pilot tests in 2018
Plans to release content management system (CMS) and payment processing for CBD in early 2020
12 signed letters of intent from dispensaries and retailers that plan to utilize the CMS and payment processing platform
Cannabiscope was originally founded in 2015 as Cannabiscope, LLC and later restructured to Green Valley Affiliates, LLC and then Green Valley Affiliates, Inc. (each doing business as Cannabiscope), with the goal of making it easier for THC/CBD retailers to display their products and for consumers to learn the effects of each product before purchasing. Through their Interactive Wheel, consumers can drill down through desired effects, scents, or flavors to find the strain of cannabis that is right for them. The company has over 257 active businesses utilizing its Interactive Wheel to display their products. Cannabiscope plans to use the proceeds from this raise to build out a full Content Management System for retailers so that they can have a site that displays their products in-store and online and an online shopping cart for consumers to empower e-commerce, easily add new products, analyze customer data, and much more. The company currently has 12 signed Letters of Intent with dispensaries that plan to utilize its Interactive Wheel and Content Management System.
Security Type: Crowd Notes
Round Size: Min: $50,000 Max: $250,000
Valuation Cap: $2,500,000
Conversion Provisions: In connection with an equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into non-voting preferred shares (Conversion Shares) at a price based on the lower of (A) the price per share paid for Preferred Shares by investors in the Qualified Equity Financing or (B) the price per share based on a $2,500,000 valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.
Transaction Type: Primary
The company is offering the following perks to all investors. Perks are meant to be a thank you from the company for investing in a Crowd Note. The perks below are not inclusive of lower dollar amount perks.
Over the past few years, many states have legalized marijuana usage in some form. As of the beginning of 2019, cannabis is legal for medical use in 33 states. Washington, D.C. and 10 states have also legalized cannabis for recreational use by adults over the age of 21.i At the end of 2017, approximately 97% of the population of the U.S. lived in a state with laws permitting the medicinal or recreational use of marijuana.ii
As more states legalize marijuana in varying capacities (recreational or medicinal), demand and supply for cannabis products is expected to increase. However, due to the infancy of the legal cannabis industry, people struggle to find reliable information on which strains of cannabis or CBD may help them with specific issues. Whether that be pain, focus, or help sleeping, it is difficult for consumers to compare different strains and products.iii
Cannabiscope is a Software-as-a-Service (SaaS) menu platform that integrates with THC/CBD retailers’ point-of-sale (POS) systems to present their inventory onsite and online. The company aims to assist dispensaries and other CBD/THC retailers with payment processing to empower e-commerce sales with additional plans to create a robust data dashboard to give dispensaries and other customers a competitive edge.
Cannabiscope Interactive Wheel - Discover
The Cannabiscope Interactive Wheel is an educational tool and virtual menu that allows customers to search for THC/CBD products based on physical and mental effects, flavor, aroma, and remedy. The Interactive Wheel can be integrated with existing dispensaries’ POS systems to easily display its menu and product descriptions. Users can first choose high level descriptions including physical or mental, aroma, or taste, and can then drill down into more specific options including effects like sleepiness, pain, relaxer, nausea, focus, euphoric, or more. Users are then shown a list of product options that match their specifications.
Content Management System and Data Dashboards - Inform
The company plans to build a complete platform in order to provide dispensaries and other retailers with a personalized interactive shopping wheel, a content management system, and an e-commerce cart. Features for this platform include
E-commerce Shopping Cart and Payment Processing - Sell
Cannabiscope’s goal is to help the cannabis industry move from brick and mortar stores to online retail. The interactive wheel already features a “Shopping Cart” functionality, and the company plans to quickly integrate payment processing for CBD as it is already federally legal. If THC becomes federally legal, the company will already have the necessary infrastructure built in order to quickly integrate THC products. One of the major benefits of having the menu properly synced with a retailers’ point of sale system is that it allows customers to purchase products that are actually in stock. An online presence is important for businesses in the cannabis space to increase orders for delivery and in-store pick up.
Cannabiscope plans to use the proceeds from this raise on research and development, general marketing, and general working capital. If the minimum amount is raised, the company plans to allocate $40,000 towards research and development, and $10,000 towards general working capital. If the maximum amount is raised, the company intends to allocate $180,000 towards research and development, $60,000 towards general marketing, and $10,000 to general working capital.
The proceeds allocated towards research and development will assist the company in expanding its product beyond its current boundaries. It plans on transforming its Interactive Wheel into a complete shopping wheel, developing a content management system, and an e-commerce cart. With these new features, the company hopes the wheel will empower businesses in the cannabis industry to accelerate revenue both onsite and online. In the future, the company also plans to collect and organize industry data and insights to sell to its clients through data dashboards.
The company does not currently generate revenue or charge for its service. The company generated some revenue in 2018 from two paid pilot tests.
In the future, Cannabiscope plans to generate revenue by having customers pay the higher of a set monthly fee or 1% of their total revenue.
Phase 1 of Cannabiscope’s revenue plan is to provide CBD retailers with an e-commerce solution that will empower payment processing. Phase 2 will focus on Point of Sale integration with THC businesses that will allow them to show their inventory live both onsite and online. The company aims to be ready to provide THC businesses its e-commerce solution as soon as the federal government legalizes cannabis at a national level. Phase 3 of the company’s growth will focus on collecting and presenting relevant data to its customers to help them drive business decisions and generate sales. In Phase 3 the company will also look to diversify revenue streams through unique data offerings based on its POS integrations and unique insights derived from the interactive wheel.
Cannabiscope currently has over 257 active registered businesses on the Cannabiscope platform. Of the 250+ users, roughly 90 are dispensaries located throughout 12 different states, 11 are CBD retailers across 5 different states, and the remaining users are delivery services, seed/clone stores, labs, cultivators, producers, educators/researchers, and more.
The company currently has twelve signed LOIs from dispensaries to utilize its Interactive Wheel as their online menu and shopping cart. The company anticipates increasing customer acquisition by releasing its CRM platform.
Cannabiscope currently does not charge retailers to utilize its platform. In 2018, the company signed two paid pilot programs for one year of service and generated $12,375 in revenue. In the first half of 2019, the company generated just over $3,000 from the paid pilots. The company plans on charging for its service once the CRM and payment processing platforms features are released and successful.
In 2018, the company incurred operating expenses of roughly $25,000. The largest expense in 2018 was for general and administrative expenses including travel, events, meals, website expenses, and other necessary supplies, reaching $11,300. The next largest expense went towards salaries, reaching roughly $11,000. The founders of the company were only paid salaries for the first half of 2018. In the first half of 2019, the company has incurred operating expenses of $5,877, a 70% decrease from almost $20,000 in the first half of 2018. In the first half of 2019, the bulk of expenses were for salaries (58%) and general and administrative expenses (39%). A breakdown of all expenses since inception can be found below:
In the first half of 2019, the company incurred a net loss of $2,752, compared to a net loss of $17,096 in the first half of 2018. In all of 2018, the company generated a net loss of $18,491. In the first half of 2019, the company had an average burn rate of less than $1,000 per month. With roughly $5,000 in cash on hand, the company expects to have up to six months of runway before needing capital.
According to a report by Arcview Market Research and BDS Analytics, the U.S. legal cannabis industry increased 31% year-over-year in 2017 to reach $8.5 billion. The report forecasts that nationwide spending on cannabis will increase to $23.4 billion by 2022, growing at a 22% compound annual growth rate. This growth is expected to be driven by continued state-by-state roll-out of medical-use programs and adult-use recreational legalization. The research report also predicts that the industry could generate more than 467,000 full-time jobs by 2022. Globally, the market was estimated at $9.5 billion in 2017. As more international markets legalize cannabis, the worldwide market is projected to reach $32 billion by 2022, while lowering the U.S. share from 90% to 73%.iv
U.S. states have varying levels of cannabis legalization, with some states electing to legalize marijuana for both medical and recreational use. Two such states, Washington and Colorado, sold $1.3 billionv and $1.5 billionvi of cannabis, respectively, in 2017.
Countries like Canada are also beginning to legalize marijuana for recreational use. In June 2018, Canada became the second country in the world—and the first G7 nation—to implement legislation to legalize recreational marijuana use nationwide.vii Canada and California are poised to capture 41% of the world cannabis market by 2022, reaching combined revenue of $13.2 billion.viii
In 2018, venture capital financings in cannabis companies surpassed $1.6 billion, a record high, and a 193% increase from 2017. Deal count in 2018 was also record-setting, with 225 venture financings. 2017 also saw significant growth in funding towards cannabis companies, with nearly $555 million invested, a 143% year-over-year increase, across 173 total deals. Deal count surpassed 100 total deals for the first time in 2015, with 123 such venture financings, a 124% increase from 2014. Between 2008 and 2018, there has been $2.97 billion invested across 722 venture capital deals in cannabis companies. Over 70% of capital invested from 2008 to 2018 occurred in 2017 and 2018.ix
The ability to leverage consumer data may provide cannabis enterprises with an edge over industry competitors. According to a 2018 Deloitte study, retailers who are capable of protecting and analyzing consumer data may be “well positioned to achieve a competitive advantage.” The consulting firm also notes that, similar to traditional retail verticals, in order for the retail cannabis industry to succeed, it must derive insights from customer information and analytics and deliver a superior customer experience. Cannabis consumers are also demanding that the data collected by online retailers be kept private and managed by trustworthy systems. Deloitte found that 22% of respondents—the highest percentage in the survey—stated that features tied to privacy protection and data security were the most important feature when choosing an e-commerce cannabis retailer.x
In 2019, the global retail technology industry is projected to generate nearly $204 billion in revenue, up 3.6% year-over-year.xi In particular, retailers are forecasted to increase their spending on software as businesses seek to improve analytics, digital marketing, mobile applications, e-commerce platforms, and artificial intelligence capabilities.xii In a 2018 survey conducted by Retail Touchpoints, 61% of retail professionals indicated they spent more on new technology than the year prior – more than any other budget category.xiii
Founded in 2008, Weedmaps is a technology and software provider in the cannabis industry. The company provides cloud-based software and data solutions that include point of sale, logistics, and ordering solutions. These solutions enable customers to scale their businesses while complying with the complex regulations of the cannabis industry. Additionally, Weedmaps provides information to cannabis consumers regarding cannabis products, local retailers and brands, and web and mobile platforms. The company made three acquisitions in 2011 including marijuana.com, mmJMenu, and WeedLaws.xiv
Founded in 2013, MassRoots is a technology platform that allows its users to share their cannabis content, follow their favorite dispensaries, and stay connected with the legalization movement. The company has a web platform and a mobile app that is available in the Apple App Store, Amazon App Store, and the Google Play Marketplace. MassRoots also operates MassRoots Business, a business and advertising portal that enable companies to distribute information to users and view analytics. Since inception, the company has generated roughly $1.2 million in revenue as of June 2019.xv
Founded in 2017, Jane Technologies is the creator of iheartjane.com, an online marketplace for the cannabis industry. iheartjane.com provides consumers with a confident, safe, and simple shopping experience that allows them to browse local products, compare by price, proximity, and popularity, and place orders at local stores for free. The company is rumored to have more than 150,000 products on its site and in partnership 700 stores across 21 states. In July 2019, the company raised $21 million in Series B funding from Gotham Green Partners and Pakala Jane Partners.xvi
Founded in 2013, PotGuide is a consumer resource, similar to TripAdvisor, but for the cannabis industry. The company educates and connects consumers with relevant service providers through a dispensary directory. The platform also provides consumers with cannabis friendly lodging, deal discovery, popular cannabis events and activities, legal content, and information on products. The company claims to have over 1.5 million users each month.xvii PotGuide is a CanopyBoulder portfolio company.xviii
Founded in 2010, Leafly is a cannabis information resource and technology company based in Seattle, WA. Leafly is an online resource that allows consumers to rate and review different strains of cannabis and cannabis dispensaries. The platform also allows consumers to explore different strains, learn about cannabis, and has a complete directory of dispensaries. In 2018, Leafly launched Leafly Pickup, a service that allows customers to reserve products from a local dispensary online and then pick them up later. The company claims to have 22 million visits to its site each month and features a comprehensive database of cannabis strains with more than 2,900 varieties listed.xix In 2011, Leafly was acquired by Privateer Holdings, a Seattle marijuana investment firm that is also the owner of Tilray (Nasdaq: TLRY).xx
Dave’s education in business combined with his interest in cannabis led to the creation of Cannabiscope as a tool to help patients discover the potential of the cannabis plant. Dave has over five years of experience working in the cannabis tech space starting with research in Israel. Dave graduated with a B.S. in International Business from the University of Nevada at Reno and a M.S. in management from NYU Poly.
As a serial entrepreneur, Paul has over ten years of startup experience from six different companies. Prior to Cannabiscope, Paul co-founded and served as the Chief Innovation Officer at the Guru Experience, a VC-backed startup that provided museums, zoos, and aquariums with a SaaS platform to make the experience better for visitors. Previously, Paul also co-founded Anacom Media and Inside Panama Real Estate and held various roles at several other startups. Paul graduated with a B.A. from the University of Southern California.
An investment in the company is speculative, and as such is not suitable for anyone without a high tolerance for risk and a low need for liquidity. You should invest only if you are able to bear the risk of losing your entire investment. There can be no assurance that that investors will receive any return of capital or profit. Investors should have the financial ability and willingness to accept the risks (including, among other things, the risk of loss of their entire investment and the risks of lack of liquidity) that are characteristic of private placement investments. There will be no public market for the securities being offered, applicable securities laws will restrict any transfer of the securities, and the securities will not be transferable without the company’s consent.
The information provided herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice, a recommendation to purchase, or an offer to sell securities of the company. You should rely on the offering statement and documents attached as exhibits to the offering statement when making any investment decision. An investment in the company is not suitable for all investors.
The company’s industry is highly competitive, and the company may not be able to compete effectively against the other businesses in its industry. The company is subject to a number of significant risks that could result in a reduction in its value and the value of the company securities, potentially including, but not limited to: