After serving as a helicopter pilot in the army for several years, Socrates Rosenfeld turned to cannabis as a sort of meditative medicine. And in 2014, as a McKinsey analyst studying “aggregators” like DoorDash, he saw an opportunity in the budding space.
Around that time, Rosenfeld predicted that in a few years “the cannabis consumer will expect to shop online.” He reasoned that the experience should be as seamless as buying groceries or shoes—a digital world where you can read customer reviews that say which sneakers run a size small and which edible knocks you out—but the industry (and the law) wasn’t quite there yet.
“We saw the industry, where you had no online payments, no ability to go direct to consumer. We had all of these offline, fragmented, small local businesses without any sophistication in terms of technology,” Rosenfeld told Retail Brew.
So, he left his job at McKinsey in 2016 and cofounded Jane Technologies, a company that builds and powers dispensaries’ e-commerce operations.
Jane says it now makes up 20% of all legal cannabis sales in the US, per internal data. And last month, the company announced a $100 million Series C financing round.
- The fresh funding brought Jane’s total amount raised to $130 million.
- The value of VC investment deals in the overall cannabis space has already topped $1.5 billion this year, according to Pitchbook data. That’s up from $1.1 billion in 2020.
The pandemic lit up the cannabis industry: It was deemed an essential business in the US—a boon for Jane. “Cannabis became a first-class citizen in the world,” Rosenfeld said. “It pushed a lot of people online.”
Only 17% of legal cannabis sales were done online pre-Covid, per Jane’s data, but e-comm sales reached a high of 52% in 2020. Now, online transactions account for 38% of all legal cannabis sales. According to Rosenfeld:
- From 2019 to 2021, Jane went from $100 million in total transaction volume to a projected $3.5 billion.
- The company has almost doubled the number of products on its database, now at 750,000 items, up from 350,000.
- Consumers’ average basket size continues to grow as well, currently around $120 to $130 across Jane’s ecosystem.
How Jane clears the smoke and mirrors
Jane works with 2,200+ stores (and about 90% of all multi-state operators) in the US and Canada to manage and automate their e-comm inventory and processes. There are about 600 SKUs that sit at a dispensary location and they change over daily, Rosenfeld explained. (He counts 750,000 SKUs across all of Jane’s partners.)
- Customers include Verano and Columbia Care, along with some of MedMen and Curaleaf’s retail stores.
Jane takes their offline or unrecorded inventory—products “that might be misnamed, they might not have photos for those products, maybe they don’t have descriptions”—and cleans up the data using machine learning and pattern matching algorithms. From there, the company digitizes dispensaries’ menus for their websites and unlock their stock for third-party cannabis marketplaces like Leafly.
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When Jane started out, Rosenfeld found that dispensaries were accustomed to avoiding any traceable digital footprint. But as cannabis became more mainstream and retailers realized they needed an online presence to compete in the market, Jane was there to step in and capitalize on the learning curve.
“Five years ago, you’d walk into a purchasing manager‘s office, and he or she would say, ‘I know what’s trending because my friends on the street are telling me that Blue Dream is really hot…so I’m going to buy a lot of these strains.’ That’s one way to run a business,” the 39-year-old CEO said. “But in a digital world, you have to use data and you have to use really actionable, real-time local data.”
Jane is counting on that personalization to differentiate itself.
The company, for example, can tell dispensaries how consumers in Santa Cruz buy cannabis compared with buyers in Brooklyn by following a SKU across different retailers and geographies, aggregating that data, and bringing it back to the retailers. Jane sells these “market insights” as part of its revenue model, though it’s not yet profitable.
“The main impediment so far has been there’s no digital payments allowed in the space,” Rosenfeld told us. “As a technology company, we’re really not allowed legally to involve ourselves, to put ourselves in the middle of the transaction.” This means Jane can’t take a cut of e-comm sales, but the company has found other ways to monetize via subscription models, advertising, and data analytics.
- Dispensaries can pay a monthly flat fee for automated online menus.
- Jane is also able to generate revenue by adding ads and sponsored products. Around 300 to 400 brands are now advertising on Jane’s platform.
- In the future, as digital payments unlock, Jane says it will use online transactions as another revenue stream.
Locally grown
Since the onset of the pandemic, Jane has noticed roughly one out of every two dispensary orders originating online. “Your digital experience has become the primary experience for these retailers,” Rosenfeld said. “Instead of becoming just a nice-to-have, we’re a need-to-have technology.”
Rosenfeld claimed he doesn’t want to create another Amazon or DoorDash, but to “reinvent what e-commerce is meant to do” on a local level, “to connect buyers and sellers, and then push that value distributed here into the cannabis industry and the local ecosystem.”
“The days of third-party dependence are of the past...What we're all about is first-party empowerment,” he told us.
“I think we could use the cannabis industry as an incubator for perhaps what the future of digital retail will be—if we can get this right in cannabis and not just copy other industries.”