Budding startup uses iPhone to keep cannabis biz legit


Before corporate shine and the smell of success, there was a counterculture aura and a whiff of weed. Pot and the dreams of some industrious guys shared a garage where the personal computing revolution incubated under the Apple brand.

So what would the late Steve Jobs think if he could see Apple’s iPhone used to keep the growing and selling of cannabis legal? Jobs, who said he smoked it early on because it made him feel more creative, might smile and say, cool!

A Denver-based startup called Flowhub has created a seed-to-sale software platform to help growers and retailers stay compliant with regulations in states where marijuana is legal.

To take the high road

Documentation that once took hours now takes a few minutes with special iPhone scanners called NUGS, used to record everything from customer IDs and tags on individual plants to tracking inventory from the time it lands on the shelf, sells and leaves the store. The information goes immediately to the proper regulatory agency.

In just Colorado, where medical marijuana has been legal since 2000 and voters approved recreational use two years ago, cannabis is about a $1 billion industry and more and more states are making medicinal marijuana legal. Industry analysts expect more states, perhaps enticed by a healthy revenue stream, are expected to follow Colorado in establishing laws in support of recreational use.

There are numerous regulations for every growth and harvest stage of every single plant, and the final sellable product is tracked to the tenth of a gram. Local governments can also impose separate regulations.

“There are just so many laws that make little sense to people,” said Flowhub co-founder Kyle Sherman. “They just want grow for medical patients or for recreational (users). In order to push for legalization, someone had to make it simple for people to be in compliance. We needed to make interacts simple. We are heavily influenced by Apple because they are so brilliant with user-interface design.”

Less time in red tape

Cannabis as a legal industry is so young, it’s difficult to identify industry leaders, analysts say. Every company is considered a start-up. Flowhub began in 2014 and competes with a handful of companies that offer compliance-related software.

In less than two year’s time, the company won contracts from some of biggest dispensaries in Colorado, and was recently selected as one of four software companies by the state of Oregon for growers and retailers to track product.

Last year, Flowhub won several Laurel Awards, which recognize innovation in the cannabis industry. Sherman was named entrepreneur of the year and the company took honors for best enterprise technology, most disruptive technology, best company and product of the year.

Sherman worked for a creative agency in California when he moved to Colorado three years ago to manage compliance for a supply chain. He used software that was clunky and often crashed with IT support often delayed in returning calls, he said. Sherman wanted to develop a platform that automated compliance simply and reliably.

“If I am inputting (data) on a pound of concentrates it could take me all day,” said Janessa Bledsoe, general manager of LaConte’s Clone Bar and Dispensary. “Flowhub makes it three times faster. It mirrors the same process. If something doesn’t look right, there’s a lot less detective work.”

Flowhub leases the NUGS, which are iPhones encased in a scanner sled. The company provides members with a data plan.

Consider that a grow facility has dozens of strains and each plant is assigned a 24-digit code for the state to track. If the grower wants to move the plant to a different room, the move must be recorded. The scanner can input several plants in seconds.

The dispensaries can sell a variety of products — flowers, joints, a nutrition bar — and each package has a barcode and amounts sold get recorded.

Spreading like weeds

“There can be a tension between businesses and the regulators,” Sherman said. “We see ourselves as a conduit for these two arenas. The business owners respect the legal system and if we’re helping increase compliance, we’re helping to legitimize this as an industry.”

Flowhub invites developers to create apps for the platform to help expand its functionalities, such using data for marketing purposes.

Twenty-five states have made medical marijuana legal, while four — Colorado, Oregon, Washington and Alaska — decriminalized recreational use. Others have ballot initiatives that will be decided in November.

Sherman believes cannabis will outgrow the alcohol industry and that the use of technology needs to take hold fast.

“We are living the future here,” Sherman said.