Trellis, a Toronto-based agtech startup that provides cannabis inventory management software, has raised a $2 million funding round led by Casa Verde Capital and including returning investor, Gateway, and new investors Argonautic Ventures and One Gun.
The Seed-to-Sale startup was launched in 2014 by sole founder Pranav Sood. The company provides management software that has applications for all parties along the supply chain – cultivators, manufacturers, distributors, and retailers – with easy-to-use dashboards that show real time cultivation, manufacturing, and inventory updates. Additionally, its enterprise platform allows businesses in the cannabis supply chain to remain in full compliance with U.S. inventory and management requirements. Trellis also tracks waste within an operation, calculating waste on a cost-per-gram basis, so producers can optimize their business methods.
“As cannabis legalization sweeps the U.S., the compliance burden for cannabis-related businesses will become more and more rigorous. Growers, who are generally hesitant to adopt new technologies, have been thrilled with Trellis’ tracking software. We have been searching for companies with an elegant solution to address the growing pains of the industry. That is exactly what Pranav and his team have built with Trellis,” said Karan Wadhera, partner at Casa Verde Capital.
Nobody’s Laughing Now
In February 2015, one month after the announcement that Founders Fund invested $75 million in Privateer Holdings – the world’s first fund dedicated exclusively to investing in the cannabis industry – Snoop Dogg announced the formation of Casa Verde Capital – a $25 million fund to invest in tech companies related to the marijuana industry – an early move that is looking increasingly savvy.
The legal cannabis industry continues to transform from a black market economy to a legitimate business and interesting asset class. As of the spring of this year, 21 percent of the U.S. population lives in a state where marijuana is legal, according to MarketWatch. Furthermore, 60 percent of the population support its legalization, while in April of this year, Canada introduced legislation to legalize the recreational use of marijuana by July 2018.
Cannabis market analysis and research firm, New Frontier Data, also forecasts that the U.S. marijuana industry will be valued at more than $24 billion by 2025 with more than 24 states having medical marijuana programs in place. By that time, nine states are also expected to have active recreational marijuana markets with California accounting for one quarter of the entire country’s sales at $6.59 billion.
Challenges remain however. The industry is still a moving target with different states imposing widely different regulations and requirements for doing business.
“This is a fast-paced, changing market with varying different dynamics that have more to do based on governmental and regulatory dynamics than they do on consumer dynamics,” Andrew Livingston, director of economics and research for cannabis-focused law firm Vicente Sederberg, LLC., told MarketWatch earlier this year.
It is here, at the junction of a rapidly growing industry trying to establish a legal framework in which to operation, where cannabis agtech companies like Trellis can find their niche.
“We are at a pivotal point in the industry where the market is expanding with new regulations and operators are experiencing growing pains. This makes it all the more important to have strong tools and procedures in place,” says Pranav Sood, CEO of Trellis. “Our focus is on developing industry tools that help clients manage their cannabis inventory, simplify their compliance processes and support the production of safe, optimum quality product. We are thrilled to have been able to attract such a strong team of beta clients, investors and advisors to support us in our vision.”
-Lynda Kiernan
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