For all the controversy about states legalizing cannabis for recreational and medical use, the companies involved in cultivating and selling the leafy product are up against many of the same challenges faced by other businesses. At White Diamond Botanicals, a major challenge is making recreational pot stores in Colorado aware of the wholesaler’s products, says Karson Beckstrom, founder.
Pueblo West, Colo.-based White Diamond Botanicals is a licensed retail marijuana cultivation facility. The company’s website, WhiteDiamondBotanicals.com, lists products and their potency but can’t legally sell online. Before joining Tradiv, an online cannabis marketplace, potential buyers could request more information via an online form or call to arrange a purchase.
Beckstrom wants the 2016 startup to be part of the conversation in an increasingly competitive industry and Tradiv is giving his company exposure he couldn’t get on his own. “This industry is fast-paced and competitive,” he says. “In Colorado those at the top are breaking away from the past and what is making them excel is marketing and reaching customers, as well as their products. It’s important for me to get my product in front of those buyers.”
That means tapping into a Colorado cannabis market with sales that topped $1.1 billion in 2016, according to the state’s department of revenue. Colorado accounted for about 41% of legal cannabis sales in North America, including the U.S. and Canada, which grew 30% in 2016, to $2.7 billion, according to Arcview Market Research. Arcview Market Research, a unit of Oakland-based cannabis investment company Arcview Group, projects legal cannabis sales to top $20.2 billion in North America by 2021.
For White Diamond, reaching more stores in Colorado led Beckstrom to Tradiv in late 2016 shortly after the company launched. Tradeiv’s website, Tradiv.com, connects dispensaries, cultivators, and manufacturers of cannabis-based edible, medicinal, and extract products.
In Colorado there are two types of licenses for the cultivation of the cannabis plant: one is medical, the other recreational or retail. White Diamond sells its products to retail stores and extraction labs. The latter process the cannabis into edible and concentrated forms for sale to stores, Beckstrom says.
Tradiv works like this: White Diamond and other wholesalers list their products on Tradiv.com. Any interested buyer will contact Tradiv about a specific product, then a marketplace employee contacts White Diamond to confirm the product is still available and whether the price is still in effect. Tradiv shares that information with the buyer, takes the order and passes it back to White Diamond, all by phone or email.
Wholesale cannabis delivery is made by sellers or state-licensed couriers, some of which are armed and some drive discrete vehicles, Manlove says. Tradiv can arrange a courier delivery if the seller requests it.
If White Diamond delivers the product, the driver collects payment from the buyer. Couriers either collect on delivery and return the cash to the wholesaler, or established customers can pay by check. Federal Trade Commission regulations currently prohibit online payments, Manlove says.
Tradiv charges sellers $99 a month to post products on the marketplace, Manlove says. Buyers pay no fee. The flat monthly rate adds to the marketplace’s appeal for White Diamond. Some brokers and consultants charge per-pound fees, which can range from $50 to $100 per transaction.
The marketplace started in 2015 with a goal of connecting cultivators and edible product manufacturers with stores, says John Manlove, director of sales and chief operating officer. “We wanted to be a wholesale platform like Alibaba and Amazon.”
Tradiv works only with state-licensed buyers and sellers—both retail and medical—and carries only cannabis, no equipment or other products. That might change in the future as could its market reach, which is limited now to Colorado. The company has explored the California market but isn’t ready to expand, Manlove says.
The marketplace was built on a highly customized version of Magento Inc.’s open source e-commerce technology, Manlove says. About 35 of Colorado’s 100 cannabis cultivators sell on the platform and 50 dispensaries use Tradiv to connect with those sellers. The marketplace looks to maintain a balanced product mix. “We don’t want too much of any potency level,” he says. “We want to maintain that merchandise mix for buyers looking for different price ranges.”
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