Cannabis companies are facing unprecedented headwinds. Yet these companies are building businesses in a tough market plagued by a myriad of challenges, from banking bans to ever-changing regulations. One such startup, Lucid Green, found a solution to a growing labeling problem and raised a $10 million Series A led by Gron Ventures with participation from Gotham Green Partners.
The company’s smart UPC aims to reduce costs and increase transparency in all parts of the supply chain, from producers to brands, from retailers to consumers.
With Lucid Green’s system, aptly called LucidID, products barcode from seed to consumer. Growers and brands can use this barcode to upload and access test results and compliance certifications. Additionally, retailers can use it for real-time inventory management and building loyalty programs with shoppers. Because this happens with just one label, Lucid Green says this system eliminates the tedious process of affixing new labels to product packaging.
“Sometimes I feel like Henry Ford with the early Model T cars, where everyone is used to horses and saddles,” Lucid Green CEO and co-founder Larry Levy tells me. He talks about the challenges of bringing this product to market, saying that everyone was used to transporting goods with horses and with the advent of the car came the need for infrastructure to support it. . He feels the same is happening with cannabis right now.
Legal cannabis is highly regulated and requires many checks all the way to the consumer. The retailer or dispensary is often saddled with additional work related to affixing specific labels to different products as regulations change, increasing labor costs and reducing revenue. Lucid Green says his data suggests the LucidID system can save retailers up to $10,000 per month.
Other companies offer similar solutions around QR codes, but lack the full benefits found with LucidID. For example, some brands use QR codes to give consumers more information. Others use QR codes for inventory tracking. Lucid Green says the closest competitor comes from pharmaceutical companies, although most refrain from letting consumers access information available from pharmacies.
The project started from the consumer’s point of view. “The idea was to put all the [testing and strain information] in a QR code that leads to rich information to let people have a better experience,” Levy said. “About 18 months ago in the California market, regulators kept enforcing more regulations…and started asking brands to put in unique codes.” These codes include critical regulatory test results and often require workers to affix a label to each product.
“It’s been a huge driver for us to say, ‘Hey, we’re already putting this code on the pack, so why don’t you, the supply chain, use it too’.”
Wilder Ramsey of Gron Ventures led Series A. He told TechCrunch that talking to retailers led him to invest in Lucid Green. He says they’re desperate for that solution, with one of the largest dispensaries in Los Angeles jumping in and only accepting new products if it sports a LucidID tag.
“And that was a real wake-up call that this issue had reached a boiling point,” Ramsey said. “There are so many creepy SKUs out there. You have a stress component and a form factor component. You have a component size and vape cartridges available in half gram or full cart sizes. Then the consumer thinks, “Well, do I buy a Sativa or an Indica?” It’s not like a retailer stocking a six-pack or a 12-pack of Coke. And it’s not like Diet Coke or regular Coke. It’s like we have 5,000 products.
“I don’t know, maybe Larry has a masochistic streak or something,” Ramsey laughs after listing the boxes Larry ticked. “He’s a serial founder, and we’ve seen the benefits of that time and time again. He’s been at this issue as long, if not longer, than anyone else. And he has an ear for brands and distributors. Ramsey says this is critical when creating a two-sided market like what Lucid Green is creating.
“Larry is drawn to the fundamental nature of the cannabis industry, which allows founders to do things that can’t be done in other industries.” For example, Ramsey mentions the spirits industry, saying it is impossible to create a labeling solution for such a mature market. “When we hear founders think this way, they are the founders we gravitate toward… The Gron-worthy founder is someone who wants to leverage the opportunity of space birth to make a meaningful impact. “
According to Lucid Green, the company’s app has over 75,000 registered users. Between 2020 and 2021, LucidIDs made their way onto 16 million products, with March 2021 seeing the creation of an additional million products carrying a LucidID. Based on the current trend and signed deals, the company plans to add its label to 85 million units this year.