A startup that wants to bring the “Starbucks app experience” to the cannabis space – piloted in a Columbus medical marijuana dispensary – has expanded into a new state. The addition could be the first of many as the company gains traction with new users and dispensaries, its founder and CEO said.
Cincinnati-based Spendr, a fintech launched just five months ago by JPMorgan Chase alum Lucas Gould, signed a dispensary customer in Adrian, just over the Ohio line in Michigan. 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 called Michigan an ideal opportunity. Besides its proximity, the state has legalized adult recreational cannabis use and has some 500 dispensaries compared with Ohio’s 58. Sales of legal cannabis in Michigan neared $1.8 billion in 2021, versus $381 million in Ohio.
The number of mom-and-pop and independent shops in the state make for a much shorter sales cycle, he said.
“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 is the son of Green Light Acquisitions founder and CEO Jimmy Gould, who was a major player in Ohio’s marijuana legalization campaign in 2015.
The Jimmy Gould-owned Strawberry Fields dispensary in Columbus was the beta tester for the app, resulting in a 28% increase in average transaction value and a one- to two-minute drop in transaction times, according to a news release. More than 98% of customers keep using the app.
The app is the first to blend both payments and rewards in the cannabis space. Similar to Venmo or PayPal, consumers load money onto the Spendr digital “wallet,” then use said wallet to buy products from dispensary partners.
Its revenue comes from transaction fees.
Spendr offers cash back rewards on purchases: 3%-10% during its initial rollout. Customers receive a bonus for signing up, making their first transaction and hitting certain milestones along the way.
Users can store their medical marijuana card and driver’s license photo on the app, and rate their favorite products in a personal library. Those "intangible" benefits like that increase loyalty to the app, Gould said.
For dispensaries, Spendr plans a 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 and enrolled 10 merchants, without any major marketing push, Lucas Gould said. Cannabis-adjacent businesses, like CBD shops, also have shown interest.
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.
“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.
Spendr could also offer lower fees to retail businesses, like barber shops or coffee shops, that use the platform, Lucas Gould said. The company is also pursuing strategic partnerships with distributors and/or cannabis e-commerce companies.
“We've proven early product-market fit," he said. "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.”
