Spendr, the Cincinnati startup that wants to bring the “Starbucks app experience” to the cannabis space, has expanded into a new state after making early inroads in Ohio. The addition could be the first of many as the company gains traction with new users and dispensaries, its founder and CEO said.
Downtown-based Spendr, a fintech launched by JPMorgan Chase alum Lucas Gould in late 2021, signed its first dispensary customer in Adrian, Mich. The move represents a significant growth opportunity for the company and comes just five months after it launched its beta product earlier this year.
Gould said Michigan’s proximity — plus its market size and total number of dispensaries, roughly 500 compared to Ohio’s 58 and counting — made it an ideal opportunity.
There’s a much shorter sales cycle given the number of mom-and-pop and independent shops in the state, he said. Sales of legal cannabis in Michigan also neared $1.8 billion in 2021, versus $381 million in Ohio last year.
“They are very different markets, but we’ve learned our business is very scalable right now,” Gould told me. “It happened quicker than we had planned, but at the same time, I felt as if our team was ready to move on to the next state.”
Gould, the son of Green Light Acquisitions founder and CEO Jimmy Gould, who was a major player in Ohio’s marijuana legalization campaign in 2015, launched Spendr last year. The app is the first to blend both payments and rewards in the cannabis space.
The platform 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 on those purchases — anywhere from 3%-10% during its initial rollout. Customers receive a bonus for signing up, making their first transaction and hitting certain milestones along the way.
The app offers other “intangible” benefits, Lucas Gould said, which improves its overall stickiness with customers. Users can store their medical marijuana card and driver’s license photo on the app. They can also rate their favorite products in a personal library.
For dispensaries, Spendr will offer backend dashboard with marketing and promotional tools.
“That’s going to be a focus, perfecting our suite of marketing tools. One thing we found across every dispensary, regardless of Ohio or Michigan, was it's extremely hard for them to not only run their business, but to grow their business,” he said. “They're caught up in regulatory red tape."
Since its beta launch, Spendr has added thousands of users. The company is working with 10 merchants, both active and enrolled, including the Jimmy Gould-owned Strawberry Fields dispensary in Columbus. That’s without any major marketing push, Lucas Gould said.
The company has hired its first full-time salesperson, pushing its employee count, including contractors, to 15. The goal is to hit 100-plus dispensaries by the first quarter of next year.
There appears to be plenty of pent-up demand. People are spending about 30% more per transaction when using the app. In a recent study, 60% of its users said they would switch dispensers if theirs did not offer Spendr.
Store employees like it as well, he added. There’s less cash to count, and they can get customers in and out at a much faster pace.
“We've been surprised by the overwhelming response from dispensary employees," he said. "They've become our best salespeople. They’re very authentically telling the consumers, ‘Here's why I use Spendr.’ It’s a win-win-win across the board.”
To date, Spendr has raised $1.5 million with a $15 million valuation. It’s likely the company could raise new funds in a Series A round before the end of the year, he said.
That would allow the company to expand to more states. Earlier this year, Jimmy Gould mentioned Illinois is a potential next target. "Then, the plan is to expand all across the country," he said.
So far, it’s been a pretty lean operation. The company’s biggest expenditures are incentives — or getting people on the platform — and product development.
Lucas Gould said Spendr is gaining traction with cannabis-adjacent businesses, like CBD shops. Spendr could also offer lower fees to retail businesses, like barber shops or coffee shops, that use the platform.
The company is also pursuing strategic partnerships with distributors and/or cannabis e-commerce companies. Those deals would help Spendr hit its customer targets even faster.
“We have a great opportunity,” Gould said. “We've proven early product-market fit. There's demand on both sides. We want to make this whole process convenient, easy, safe and rewarding. The one thing holding us back now is execution.”
