Though the United States continues to take baby steps toward mainstream acceptance and legalization of cannabis, the industry still has a long way to go before it begins to resemble any other traditional trade.
“The cannabis industry is very fragmented. The brands that are sold in Washington State are often very different from the brands and products that are sold in a market like California,” Cy Scott told Built In Seattle this morning. “Washington State, Nevada, Colorado, California — they’re all different, and are maturing at different rates.”
And Scott should know — he’s the CEO and co-founder at Headset, a Seattle-based cannabis tech startup that announced $12.1 million in funding today. The company builds data analytics software for cannabis product manufacturers, processors and retailers, helping them understand which brands and products are finding success and in which markets, whether it’s vapor pens in Pasadena or cannabis beverages in Bellevue.
The round was jointly led by Poseidon Asset Management and AFI Capital Partners.
The platform works by plugging directly into a retailer’s point of sale — with integrations for 16 industry-specific systems so far — and thereby enables a real-time window on the state of the industry. Scott says that’s a major improvement on more traditional business intelligence services like Nielsen, which must usually wait a month or two to produce its reports.
“We’ve got some cool technical challenges to be able to do that, a lot of machine learning and product coding and normalization that we have to do on the back end,” he said. “This is a new industry, and we’re able to leverage new technology to do things a lot better — and not just repeat the ways they’ve always been done.”
“It’s pretty exciting stuff,” he added.
The startup will use this funding to expand its customer base beyond the cannabis industry — and beyond the borders of the United States. Scott said they also plan to double the company’s headcount over the next 12 to 18 months. Headset currently employs 20 people, most of whom sit in Seattle with a smaller office in Toronto.
“There are some traditional packaged goods, alcohol and tobacco companies that are very interested in leveraging the data that we provide,” Scott said. “And we’ll continue to push into Canada, Europe, South America and so on.”
This is a new industry, and we’re able to leverage new technology to do things a lot better.’”
Scott and co-founders Brian Wansolich and Scott Vickers grew up in Southern California, where they started the cannabis product database Leafly in 2010. That company was acquired by Seattle-based Privateer Holdings in 2011. When Washington State voted to legalize recreational cannabis in 2012, Leafly promptly moved to Seattle.
“We stuck around with (Privateer Holdings) for a few years and, as often happens in your average startup story, we decided to do something else,” Scott said. “We saw this big gap on the product data side and thought ‘Well, let’s go and solve that one.’”