Earlier this month, Grown In profiled Verda, a Canadian-based cannabis technology startup that is funded largely by members of the Chicago ArchAngels investment group. Verda developed a cannabis delivery app that started in Saskatchewan and will soon pilot operations in Massachusetts. Here are edited transcripts from our conversation with CEO Evan Adcock, who discusses the future of cannabis delivery in Illinois, industry observations from north of the border, and how he and a few teenage buddies started a pot company.
Grown In: Explain how as a teenager you set out to start a cannabis technology company
Evan Adcock: Starting your first company at any age is scary and uncanny. Experience cannot be taught and we often found ourselves learning by doing. Being 18, it was safe to say that we were not taken very seriously at first.
I had the opportunity to attend business school, which assisted in the idea of starting a business. Initially, our idea was to write a business plan coupled with forecasts (which in reality was a dart at a dartboard) and take it to investors to help fund our new idea. This did not work. We scheduled over 20 meetings and received no offers which now in hindsight made perfect sense. We had no traction or even a prototype.
I then connected with a relative and serial entrepreneur, Stelios Valavanis, who loved what we wanted to build and started mentoring us through this journey. His first advice was to scrap whatever money we could together and build a prototype of the platform we wanted to build and take it to potential customers. If they liked it and would use it if it was fully built, he told us to ask for a very simple non-binding Letter of Intent (LOI).
His famous words to us were “you know what’s better than a business plan, building a business”. We took this advice to heart and got to work. Within months we had 3-4 LOIs from major cannabis players in Canada.
We have now spent years in the industry and are seen as thought leaders in the space despite our age. At the end, age doesn’t matter, it is what you do that matters.
Grown In: Describe what you believe Verda brings to the market that didn’t previously exist.
Adcock: To differentiate our product, we had to take into consideration that regardless of federal legalization, each state and province would adopt their own set of rules for the sale and distribution of cannabis, which meant that for our product to operate in numerous locations simultaneously, accommodating for the evolving regulations, including tax rules, possession limits and delivery protocols was crucial.
With this, we built functionality that allows us to customize each store’s permissions, so that we will always be completely compliant and trustworthy for the retailer, and able to reactively modify a store’s ruleset to accommodate for advancements such as moving from a click and collect model to offering home delivery.
Another aspect we aimed to improve is encapsulating many different capabilities and features into one single platform. Today, compliant software does not come in a turnkey solution for cannabis retailers, but rather they have to invest in multiple platforms to manage similar aspects of their business. Verda stands above the rest as it contains all the key capabilities for cannabis e-commerce, so retailers only need to invest in one platform.
Grown In: Being based in Canada, how do you view state-by-state expansion opportunities in the United States?
Adcock: Being based in Canada gives us a competitive advantage to state-by-state expansion seen in the U.S.A. Based on our Canadian legislative experiences, we have seen cannabis regulated by our federal government. In the United States, regardless of federal legalization cannabis will continue to be regulated by each respective state. In turn, this means wholesale, distribution, retail and e-commerce rules will all be individually determined by the state that wishes to pursue legal cannabis.
This presents a unique opportunity for Verda, as our platform can be utilized in every state, custom to each state’s regulations. We have the ability to turn on/off functions such as delivery, pickup, in addition to customizing tax regulations, possession limits etc, per store. This provides substantial opportunities for Verda to be utilized as a centralized and well-managed platform for any store across Canada and the U.S.A.
Grown In: What do you predict to occur in Illinois, from a delivery approval standpoint, based on what you observe in other markets?
Adcock: We have seen a recurring pattern in the United States of states first legalizing medical cannabis, then weighing citizen attitudes and modifying the system based on feedback. After medical has been accepted by the public, recreational cannabis is next on the ballot and usually legalized within a few years of a state becoming medical.
States will start with a barebones approach, meaning that they usually only allow brick and mortar retail to operate for a while before adding any other methods. Governments, understandably, want to take legalization one step at a time and not overwhelm the market or citizens.
After recreational cannabis has been legal for around 12-24 months, and the government has received and processed feedback from the public, they will then add alternative ordering options, like home delivery. Governments understand that users demand home delivery for cannabis, no different from any other consumer product these days, and especially no different than the illicit market. Home delivery for cannabis is inevitable in every single state, it is just a matter of time and how states roll it out.
This is not a perfect formula and certain states have different values and motives and that will be seen in the time it takes or how they regulate delivery. This is seen in Colorado who waited to see how the market unfolded to just now be offering delivery starting January 2021 even though they were first to legalize. Another example is Massascheutts who is unveiling delivery as we speak, 18 months following legalization but are only issuing delivery licenses to Social Equity or Economic Empowerment applicants. They feel it is their duty to enable these groups to get a foothold in the industry which highlights the value of theirs.
Based on the current state of Illinois recreational cannabis, I would predict that they unveil home delivery within 12-24 months. I also believe, based on past decisions they have made, that Illinois will try to include social equity somewhere in the home delivery mix.