Lucas Gould has tried for years to quantify what he calls the “Starbucks app experience.” He’s surveyed people ad nauseam: “Why do you use it?” with responses that range from its ease, its convenience, and its ultimate payoff, the rewards.
Gould is looking to replicate that overall feeling — at least in the medical marijuana space. He recently launched Spendr, a consumer-facing payments app built specifically for the cannabis industry. The company has quickly hit a multimillion-dollar valuation, a little more than a year after Gould quit his job with JPMorgan Chase to build out the business full time.
While he’s not the first to lay claim to this “Starbucks of cannabis” designation, he said Spendr is the first app in the cannabis space to blend payments and rewards.
Spendr launched officially in beta March 1.
“We feel we have a really powerful value proposition,” he told me. “There’s nothing like it, and the feedback we've gotten, and the excitement and the energy around it, has been really exciting so far.”
The idea, Gould said, was initially born out of personal frustration — dispensaries primarily operate as cash-only businesses. Most industries today don't. And Gould said the digital solutions that do exist are “antiquated.”
Gould, 26, also fell in love with the Starbucks app. It’s not just about earning rewards, he said, but this “intangible feeling” he and others get from using it.
Spendr, while borrowing from his experience in corporate banking at JPMorgan, leans heavily on that latter concept.
The app works much in the same way as Starbucks, Venmo or PayPal. Consumers load money onto the Spendr digital “wallet,” then use said wallet to buy products from dispensary partners. Spendr offers cash back rewards — around 5-6% during the beta, although that will settle around 2% once the app is fully deployed. Customers also receive a bonus for signing up and making their first transaction.
For dispensaries, Spendr offers a backend dashboard with marketing and promotional tools.
While Spendr's most easily classified as a fintech, Gould also wants people to see it as a lifestyle brand. To create its own so-called Starbucks effect, Spendr takes a “next-level approach,” Gould said, compared to competitors like AeroPay, Hypur or Colorado-based CanPay, which allows consumers to pay for cannabis purchases with a debit from their checking account.
Spendr users can store their medical marijuana card and driver’s license photo on the app. That makes purchases more convenient, Gould said.
They can also rate their favorite products in a personal library. Gould said many dispensaries hand out patient journals, or physical notebooks, but rarely, does he keep that on hand.
The company makes money through transaction fees; Gould said the amount is less than what’s typically charged by credit cards.
“We support the normalization of cannabis in general,” he said. “We have to make it more comfortable, a more rewarding experience — not this back alley-type transaction, where it feels like its illegal, because it's not. A lot of that starts with how you buy it.”
Spendr has rolled out fairly quickly. The company, based at the Scripps Center downtown, now has 11 employees. It landed a banking partner last year, a key piece of the puzzle. Every digital wallet is FDIC insured.
Gould thinks the company will continue to grow at a fast clip. To date, Spendr has raised $1.5 million in equity with a $15 million valuation, he said.
It helps that Spendr operates in a kind of “regulatory moat.” Major credit card companies, like Visa, Mastercard and Discover, won’t process cannabis transactions because cannabis remains federally illegal. PayPal and Venmo have also largely stayed away. That means plenty of opportunity.
Also in Gould’s favor: He has had heavy-duty, second-hand exposure to the cannabis space. Gould’s father, Jimmy Gould, was a major player in Ohio’s marijuana legalization campaign in 2015 and currently runs CannAscend Processing in Wilmington.
Strawberry Fields in Columbus, which the elder Gould also owns, signed on as Spendr’s first dispensary partner, and Jimmy Gould is serving on Spendr’s board and is an investor. Based on the experience so far and outside interest, Jimmy Gould predicted the company’s next valuation could hit between $50-$100 million, and very soon.
“It’s a hard industry and you have to get approvals for everything, but the results so far have been unbelievable,” Jimmy Gould said. “Our average transaction (at Strawberry Fields) has gone from roughly $120 to over $165 a purchase. That’s incredible. People tend to spend more, whether on cannabis or anything else, when they don’t have to pay cash at point of purchase. There’s never been a tech company for payments, rewards and marketing tools that provides the benefits you'd get from a credit card without the negatives, the fees, the attrition or the debt.”
The company’s initial focus is Ohio, where there are more than 250,000 registered medical marijuana patients. Ohio medical marijuana sales are approaching $725 million and counting, according to state officials.
While the company is targeting cannabis, Lucas Gould sees a lot of demand from cannabis-adjacent and non-cannabis merchants: small businesses like CBD shops, smoke shops, even barber shops or coffee shops that also want to offer a rewards or loyalty program, he said.
It’s also where Spendr can depart from Starbucks. The rewards earned through Spendr can be used at other participating merchants and locations.
Lucas Gould called it a win-win.
“The consumer can earn rewards buying coffee and then use those rewards on their cannabis, or earn rewards on their cannabis and use those to get discounted coffee. And we’re starting to see how special that really is,” he added. “You’d be surprised at how many people who call us simply to say thank you.
"We’re doing something nobody else has done before, and it's been needed for so long.”
