In 2019, venture-capital investing in the cannabis space topped out at over $2 billion.
While the Covid-19 pandemic is slowing down investments in virtually every industry, that number speaks to the fact that cannabis startups are gaining a lot of attention from both investors and customers.
As the industry gets ever more crowded, startups are having to up their game to compete for attention. To do that, cannabis companies might pursue a variety of strategies, from crafting the best version of a particular product or service to targeting an underserved niche or disrupting parts of the industry.
Those are the kinds of actions that attract (the right kind of) attention, including our own.
We’re always on the lookout for cannabis brands that are doing something new, disruptive, or otherwise exciting. In spite of the challenges we’re all facing during this pandemic, a ton of companies are continuing to do that this year. Here are some of the top cannabis startups to watch in 2020.
The companies in this roundup represent a diverse range of niches and focuses within the cannabis industry. None of them were born this year; in fact, many of them have been around for a couple years or longer. But in spite of the variety represented here, each of these startups has something in common with the other: They’re all making a splash right now.
Here are 14 cannabis startups to watch in 2020.
Since bootstrapping $600,000 in funding to launch its first product in 2016, Boston-based Ardent has become a major player in the cannabis startup world.
Founder and president Shanel A. Lindsay created the company after struggling to accurately dose her medical marijuana. She made it her mission to create the world’s first in-home cannabis decarboxylation device so cannabis users could easily activate THC and CBD cannabinoids in their flower and partake of alternative methods of consumption (such as eating or infusing as opposed to smoking).
Since then, Ardent has gone on to develop a variety of products that make it easy to enjoy the therapeutic effects of cannabis at home, from infusers and infusion kits to the new “Easy Bake Ardent” and the popular NOVA Decarboxylator. The products are gaining traction across the U.S. and Canada, making Ardent a cannabis startup to watch this year.
Colorado-based Baker (which seems to be in the process of rebranding as Blackbird) is on a mission to make the cannabis shopping experience more personal.
It does that by helping dispensaries connect with their customers through a variety of tech-based solutions, including data analytics, messaging, online ordering menus and tools, and a customer loyalty program.
That’s not all this CRM can do. The platform combines robust customer management tools with e-commerce, distribution, and inventory management software. The suite of tools can be tailored to both retail and wholesale brands.
All of this helps explain why the company already works with more than 1,000 dispensaries across the U.S. and Canada — and why it was able to raise an $8 million Series A round funding. Expect Blackbird to begin working with more dispensaries this year.
When it comes to the cannabis industry, payment processing is notoriously tricky. Many conventional payment processors won’t work with cannabis companies, so the industry has had to get creative.
Out of that creativity, a number of daring startups have emerged. One of the standouts is CannaPay, a payment processing startup focused exclusively on the cannabis industry.
The CannaPay team has experience with pretty much every aspect of payment processing, from establishing retail and point-of-sale (POS) systems to handling mobile payments, navigating the world of high-risk credit card processing, and installing specialized software and hardware. The team’s breadth of experience allows them to offer tailored and scalable payment processing solutions for cannabis companies of all stripes.
One of the startup’s standout features is its debit payment app, which allows cannabis consumers to link their checking account and make payments through the app (no ATM required). This user-friendly feature is helping CannaPay lead the charge on the tech-enabled payments that are no doubt the way of the future.
Confident Cannabis has zeroed in on two niches within the cannabis industry: B2B and lab testing. Here’s how: The startup provides wholesale cannabis and lab testing software for cannabis business operators. It also connects B2B companies through an online product gallery.
Wholesale cannabis businesses can utilize Confident Cannabis’ tools to test their products and analyze that data over time. But the startup’s services go way beyond testing.
Companies who test their products through Confident Cannabis can choose to enroll in the startup’s Wholesale Gallery, where other companies can browse their products. It’s a two-way street that also lets Confident Cannabis clients peruse the gallery to discover new products and monitor vendors. To date, the gallery boasts more than 8,000 products and counting.
The startup launched in 2015, and it claims its Laboratory Information Management System (LIMS) is now used in 16 markets and by more labs nationwide than any other LIMS (or 40% of labs across the U.S.). That’s a ton of growth for five short years!
The company’s progress to date is no doubt partly due to the fact that Confident Cannabis was launched by four Stanford Business School alumni. Based on their existing track record, we expect more growth from them this year.
When Business Insider asked 15 top cannabis investors to identify the cannabis startups they’re most excited about this year, Flowhub’s name kept coming up. The dispensary retail management platform has been around since 2015, and in that time the startup has raised a whopping $27 million and landed an ongoing seat at the table of cannabis startups to watch.
The passionate team of compliance experts, techies, and legalization advocates at Flowhub has created a suite of tools that assist dispensaries with both front- and back-of-house operations so they can run their businesses more effectively. To that end, Flowhub’s platform assists with compliance, supply chain data, inventory management, business intelligence data, and point-of-sale.
Their point-of-sale software, in particular, has earned the company rave reviews from VCs and dispensary owners alike. And it’s a big part of why Flowhub is now used by thousands of cannabis retailers and other partners across the U.S., to the tune of processing more than one billion dollars in annual sales. Expect that number to get even bigger this year.
Alongside Flowhub, Flow Kana garnered several votes on theBusiness Insiderroundup referenced above.
Since its founding in 2014, the company — which packages, markets, and distributes cannabis from organic California cultivators — has raised $175 million in funding. Flow Kana claims to be the “first sustainable, sungrown cannabis brand to embrace and represent California’s Emerald Triangle and its family-run, small-batch, independent farm ecosystem.”
Not surprisingly, the company does a lot to support the farmers with whom it partners. That support includes providing farmers with a scalable platform, sharing the Flow Kana team’s marketing savvy, and linking farmers to a statewide distribution network.
Flow Kana also partners with dispensaries throughout California, providing them with a "one-stop shop for clean, compliant cannabis products of the highest quality.” Their transparent supply chain appeals to consumers who are looking for pesticide-free and high-quality cannabis products.
This value-driven approach has garnered the attention of a variety of VCs, who like that Flow Kana leverages the power of marketing and distribution networks to link high-quality farmers with cannabis retailers and consumers throughout the state of California.
Up-and-comer Fyllo is a very new startup in the cannabis scene; it just launched in 2019. But this marketing platform for cannabis brands is already making a splash, having raised $18 million in funding to date.
According toBusiness Insider, VCs are keeping their eye on Fyllo because it’s rapidly emerging as a leader in programmatic cannabis advertising. That’s thanks in no small part to the fact that the company was founded by folks with executive ad-tech experience.
The company has also earned high marks for its focus on compliance, which helps ensure that any advertising conducted with the help of Fyllo will be compliant with local regulations.
Fyllo’s enterprise-grade suite of tools can help cannabis companies remain compliant while tackling all sorts of marketing-related goals, from gathering audience data and analytics to geo-targeting dispensaries, accessing and understanding local and federal cannabis regulations, expanding their brand’s reach, and more.
It’s clear the team at Fyllo knows their stuff, and VCs aren’t the only ones taking notice. A broad range of companies, from localized dispensaries to large businesses, have signed up to use Fyllo’s services. All of this helps explain why the company is emerging as a leader in cannabis marketing software.
Growing cannabis at home is notoriously difficult, and startup Leaf is on a mission to make that process dramatically easier.
The Leaf is a relatively compact, fully enclosed grow system that can be used to grow cannabis as well as a range of herbs and produce, including mint, strawberries, wheat grass, kale, spinach, basil, and more.
Though the Leaf has hit a few road bumps on its way to market, the finished product promises to help users grow plants easily and successfully thanks to convenient features including temperature and humidity control, automatic nutrient dosing, water level and pH sensors, LED lighting, and more. The pesticide-free system comes with a carbon filter that helps ensure smells don’t escape, and it comes with step-by-step video instructions and smartphone syncing.
Ensuring that the product meets all of its promises is a tall order, but so far Leaf has seen high demand. If they can pull it off, they’ll help revolutionize the home growing of cannabis. We’re definitely keeping an eye on this cannabis startup in 2020.
LeafLink shows up repeatedly on roundups of standout cannabis startups, and for good reason.
Since its founding in 2016, the wholesale management platform has raised upwards of $50 million and is now valued around $255 million. Over the past few years, the team at LeafLink has developed what is now the largest online marketplace for wholesale cannabis.
That marketplace includes a suite of products targeted at cannabis brands, distributors, and retailers looking to streamline everything from ordering, CRM, reporting, fulfillment, and shipment. The platform serves as a hub where brands and retailers can easily connect, partner, and grow.
Already, a number of heavy hitters in the cannabis space utilize the platform, including apothecanna, Wana, and Mary’s Medicinals. With ambassadors like these, expect LeafLink to continue attracting elite clientele.
Leaf Trade has developed an ordering and fulfillment platform for the buying and selling of wholesale, licensed cannabis and hemp, and business is booming. According to Pitchbook, the venture-backed startup closed a $4.5 million seed deal that’s helping to skyrocket its growth.
The platform connects licensed cannabis vendors and dispensaries and relies on analytics to support ordering, fulfillment, and marketing. Here’s how it works: Sellers build a custom storefront on the platform, buyers place orders with the seller(s) of their choice, and sellers package and ship the order. The whole process is compliant and trackable.
It seems straightforward, but there’s genius to the simplicity. Cannabis cultivators and processors enjoy streamlined order and fulfillment processes as well as effective inventory management, while dispensaries can buy quickly, track shipment statuses, and manage multiple store locations from a single device.
To put it more simply: Leaf Trade has virtually eliminated the need for emails, spreadsheets, and other time-sucking activities that are part and parcel of more conventional ordering and fulfillment processes.
That’s a win for so many companies, and it’s why we expect big things from this startup moving forward.
Lobo Genetics deserves a spot on this list if for no other reason than it’s so darn unique. This Toronto-based startup (which is a spin-off from parent company Spartan BioScience) offers on-demand cannabis DNA testing.
If you’re not sure what that means, let us elucidate: The startup has created a piece of hardware that conducts DNA analysis on mouth swabs to measure cannabis users’ ability to metabolize both THC (the psychoactive cannabinoid found in cannabis) and CBD (the cannabinoid most commonly associated with cannabis’ calming and pain-relieving effects).
Users register online for a kit, use the cheek swab that’s sent to them, mail the swab back to the company, then receive results on their smartphone. The company says its genetic test can also give users insights into their mental health risk factors as they pertain to THC use, as well as a better understanding of how THC might affect their memory.
The goal is to help cannabis users better understand their response to cannabis so they can make healthy, informed decisions about their cannabis users. The startup just kicked off in 2018, so keep an eye on their growth this year!
Much like Lobo Genetics, Tcheck stands out in a sea of cannabis startups because it’s tackling a unique issue within the space.
Tcheck has harnessed the power of UV spectrometry to create user-friendly tools that allow cannabis edible makers, growers, and enthusiasts to test edible ingredients, buds, and concentrates in order to get a clear sense of the dose involved.
For example, those making cannabis-infused edibles can safely and clearly determine the dose of each edible by testing the potency of their infused butter, oil, or alcohol. Folks can also test their home- or commercially grown bud or concentrates (e.g. rosin). The tests are quick and simple, and they can be run from a smartphone using the Tcheck app.
The end result? Edible makers can achieve greater consistency and clearer dosing from batch to batch; commercial cannabis growers can get a sense of their crop’s worth; and everyday users can ensure they’re dosing consistently and at levels that feel good.
It’s a quick and simple solution for an issue that’s long plagued cannabis growers and consumers, which helps explain why Tcheck is rapidly growing in popularity. The brand launched the second generation of its handheld testing device in 2018, and we’re looking forward to what they do next.
Like LeafLink, Würk is a repeat shower on many a list of cannabis startups to watch.
The company describes itself as “the future of workforce management for cannabis software.” To that end, it offers software and services to manage the human side of running a cannabis business, from time keeping to payroll, scheduling, recruiting, onboarding, compliance, taxes, and HR.
Think of it,the company’s website says, as “an entire human resources department in one platform.”
Würk’s platform can be tailored to small, mid-size, and large companies, meaning it’s equipped to help cannabis companies of all stripes effectively manage their teams — and it can grow alongside companies as they scale. By helping cannabis companies navigate compliance, tax structures, and industry-specific employment law, the platform gives them a greater chance of scaling in the first place. That helps explain why Würk has raised $16.2 million and counting.
Colorado-based Vangst is a cannabis job site and staffing solutions platform that’s leading the charge for on-demand recruitment tech in the cannabis space.
The platform features cannabis-related jobs in pretty much every category imaginable, including cultivation, extraction, finance, operations, technology, engineering, sales, marketing, and other administrative and executive roles. It also provides a place for cannabis companies to fill temporary positions (such as trimming or harvesting) with vetted job seekers.
The vertical hiring platform currently serves markets in Colorado and California, but after securing $10 million in Series A funding, it’s looking to expand into 10 additional states and Canada by the end of this year. Those are big plans, and that’s why we’ve got our eye on Vangst in 2020.
Each of the startups listed here earned a spot on this list because it’s doing something unprecedented, disruptive, effective, or just plain interesting. In all cases, these startups have demonstrated that they’re growing in popularity and/or funding and have thus laid the foundation for even more growth this year.
While the Covid-19 pandemic has made the future of startups in every industry less certain, the companies listed here have proven that they have a good chance of weathering the economic storm and emerging successfully on the other side.
No matter what the future holds, we’re keeping an eye on these exciting cannabis startups in 2020 and hopefully beyond.
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