Meadow, a leader in building cannabis dispensing equipment, is expanding from California. In the year Since its founding in 2014, the company has focused its efforts on its home state, but recently partnered with Michigan-based Wellflower.
The company retooled its cannabis platform for the Michigan market and now offers its services statewide.
“California is challenging,” CEO and co-founder David Hua told TechCrunch. We are still growing, but need to look at other states more.
Hua said the company has gone as far as it can in California. As a result, the company is in a healthy position, profitable and does not need to raise additional funds at this time, and can choose the next market carefully.
“We love Michigan so far,” Hua said. “In California, we work with operators who have been in business for over a decade, and they can be a little counter-cultural. In Michigan, the operators have professional experience and have worked in other shops. And they’re trying to go vertical, the trend that we’re seeing. [in California]He said.
The field sees Michigan as a stepping stone to the East Coast, specifically New York, New Jersey and Massachusetts.
“Massachusetts is up and running,” Hua said. “New Jersey is just getting their feet on the ground. New York is the kind where everyone is looking at how they set the rules.
Cannabis operators have a growing collection of tools, and Hua is finding that they are often overwhelmed by a variety of single-use platforms. Instead of stacking different APIs and platforms, Meadow offers a complete set of tools in an all-in-one solution – from marketing to e-commerce to customer loyalty programs.
The field is expanding without the help of additional foreign capital. The company’s last raise was in December 2018, and it has raised just $2.34 million since inception. Hua told TechCrunch that he had offers to go public in Canada but was happy with his decision to take the company private. He points out that one of the challenges of finding VC capital in the space has to do with the slow-growth nature of the cannabis industry. Local and state laws artificially limit the growth of cannabis dispensaries, and that goes against the grain of startup growth, he said.
“Okay, you’ve raised all this money, and you’re going to 10x, and there’s not enough room for 10x.” In his view, this will cause cannabis startups to look at other areas for growth, building products and services away from the company’s core competencies. “The complexity of what you’re trying to accomplish increases dramatically.”
The field strategy is always different. The company was part of Y Combinator’s Winter 2015 round, but didn’t raise a Series A and stayed around for a while. In the year It feels it will hit profitability in early 2022 and serve its customer base without external influences. Currently, the company employs 14 people, the average employee’s time is about five years.
Expanding outside of California may force Meadow to gradually change its growth strategy. However, Hua doesn’t foresee the need for outside funding unless there are dire times — descheduling cannabis, federal legalization or allowing interstate commerce operators to move cannabis freely across state lines.
