green bits: helping cannabis retailers stay compliant

a pos that knows your local laws.

by liz gold
cannabizcpa.pro

after selling his former company, outright, to godaddy in 2012, ben curren stayed at the company for a year and then started considering what he would do next. after listening to cannabis-related news and realizing the inventory problems that were emerging because of compliance, curren got excited to tackle some of the issues plaguing many cannabis dispensaries.

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as a result, he jumped into the cannabis industry, leveraging his skills and background as an engineer at quickbooks to create a new technology to help legal cannabis retailers stay compliant.

founded in 2014, headquartered in san jose, calif., with another office in portland, ore., green bits serves more than 1,000 cannabis retailers across 13 states and processes more than $2.7 billion in sales annually through its point-of-sale platform.

“there is a new way governments are regulating this industry, which actually creates a lot of inventory problems,” curren said. “and i was really excited about solving that problem. when you look at the implications, it really affects a lot of accounting, how they do their inventory, how you communicate to the government about inventory movements. i was able to transition from other industries right into cannabis and because of that i thought i was really well equipped to tackle some of these problems.”

the platform, according to curren, is more than what folks in the cannabis industry call “seed to sale,” or a system that allows government entities to oversee, manage and enforce cannabis compliance. green bits works on the retail side, helping retailers by providing a point-of-sale platform. the information gleaned from that platform then goes the government so the dispensary can stay compliant.

curren describes the process like turbotax.

“turbotax is helping you get your taxes together and submit it to the government,” he said. “we’re a bit like that. the compliance in this industry is near real time. you have to do it every single sale. every time you touch inventory.”

at quickbooks, curren said he learned a lot about keeping up with payroll rates in different counties and cities. he took that experience and applied it to green bits.

“i took a lot of those concepts and that’s how we originally built green bits,” he said. “it’s this core point-of-sale inventory tracking system but you can bake in these different rules. you work differently in arizona than california. one platform works on these common issues but then it knows these local laws and rules and changes behavior to enforce those.”

for cannabis retailers, green bits performs a myriad of activities: tracks customers, verifies they are the correct age or are a valid patient, helps discover products, powers menus in the store and on the dispensary’s website, and updates inventory in real time. the system also manages inventory intake, helps with restocking, business reporting and cash management.

“like the modern retail store, these are the things they have to do all the time,” curren said. “our software enables and helps support them to do this efficiently. we built that in a particular way – we built the operational pieces in a way that can automate most of your compliance reporting. at the point of sale itself, if that patient came in and the (budtender) was ringing in too many things, our point of sale would not let you sell it.”

curren said the two biggest issues his customers deal with continue to be cash and irs code 280e. he tells a story describing one of his first customers in colorado, driving two hours to drop off $400,000 in cash to pay his taxes. cash management is top of mind.

“one of the things that is really painful for a cannabis business that is touching the plant directly is that they are not allowed to deduct regular business expenses,” he said. “they can only deduct cost of goods sold. this takes a big chunk of profit out of the business and is one of the biggest things federal legalization would change. a lot of businesses that are struggling now because of taxes in particular, will become more successful.”

as the industry evolves, more consolidation of brands will take place. curren said while there’s a lot of opportunity in the cannabis industry still, there is also a lot of competition.

“if you are going to open up retail or go on the grow side and create product, you just better be ready to execute well,” he said.

posted on june 28, 2019