Today, we are joined by Kyle Sherman, CEO and founder of Flowhub. Flowhub is considered to be the modern management platform for running a compliant dispensary that keeps up with the evolving cannabis industry. We'll talk about how he turned his mission to make safe cannabis products accessible to every adult on planet earth into one of the fastest growing cannabis dispensary software companies. Kyle also talks about how he convinced the government to give software developers access to the cannabis tracking servers, why it's now better to work from home and the future of cannabis apps in the Apple App Store.

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TRICHOMES.com talks with game changers in the tech community to gain valuable insights into the future of the fast paced cannabis industry. To reach the show email: techincannabis@trichomes.com.

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Audio Transcription:

Jason: For TRICHOMES.com, I'm Jason Kitamura and this Tech in Cannabis. I talk with game changers in the tech community to gain valuable insights into the future of a fast paced cannabis industry. Today, we are joined by Kyle Sherman, CEO and founder of Flowhub. Today we talk about how he turned his mission to make safe cannabis products accessible to every adult on planet earth into one of the fastest growing cannabis dispensary software companies. We also talked about how you convince the government to give software developers access to the and this tracking servers why it's now better to work from home and the future of cannabis apps in the Apple App Store. All right today we have the CEO, and founder of Flowhub. Kyle's Sherman with us today. Thanks for coming on Kyle.

Kyle: Hey, thanks for having me Jason, really excited to be on your show today.

Jason: Awesome, I guess for those others who don't know Flowhub, Flowhub is software not only a software for dispensaries but it kind of goes through the entire process of from seed to sales. Is that correct?

Kyle: Actually we focus primarily today on the dispensary side. So early on your right. When we first started FlowHub, we really thought we had this thesis that we should go build for the entire supply chain but we've since focused over the last few years primarily on retail, which is where our energy goes today. 

Jason: Gotcha, gotcha. Yeah, just one of the things about your company, as I love your guys' kind of slogan or mission statement, I love it. Make the safe cannabis products available to every adult on planet Earth. How did that all become a thing? How did that become kind of your mission? 

Kyle: Yeah, this goes back to a personal story I have. I've told this many times but going back to my early 20s, I was prescribed antidepressants and anti-anxiety medications, these pharmaceuticals. It was a really interesting process right to go through getting prescribed these really strong drugs, which I now know are strong drugs, right? And I really found that prescriptions are subscriptions. It's a great recurring revenue business for these pharmaceutical companies. Let's go get as many people as we can on these drugs they have to use long-term. You take them everyday. They change your brain chemistry and then over time it is really hard to get off this stuff. So I was put on these medications, some anti-anxiety and antidepressants and it was a really bizarre process because about a year and a half in, I felt like a different person. I'm like, what do I do? I never really needed these really. I realize they helped some people but for me it was clear that I was prescribed these without digging deep enough into it. I saw a doctor for 10 minutes, right? This is crazy. They ended on up all these things. So I went back to the doctor and said, I want to get off these things, he said you can't get off it, you're not getting off this. I said, what the hell? This is crazy. What do you mean? I have to prescribe you something else to get off these current ones. I want to get off everything but it doesn't really work that well and I thought this was crazy. So I went online and sure enough.I saw all these other people having the same questions. How do I get off these pills? And, so I started to take it into my own hands, I thought, well maybe I'll just try to do this myself, I'll titrate down and take a little bit less every day and it was a painful process Jason I mean it was brutal. I had pain down my spine. Kind of felt like electricity flowing, like zaps falling for my brain down my back and it was crazy. I was really taking a very small amount away every two weeks or whatever to make this stuff strong.

Holy cow. Could you imagine being in some disaster not having access to these meds while your body is used to taking them this is terrible and it turns out you can die if you don't take these meds, you have seizures and actually die. And so I was thinking this is crazy and around the same time I saw a show on CNN. It was Weed by Sanjay Gupta. Do you remember the special that played forever go? Charlotte Figi and the story of Charlotte's Web and I saw this and I thought I really should try cannabis. I've kind of used cannabis on and off for some time but maybe I should try cannabis for this. So I went out and I found a string called Harlequin. I was living in LA at the time, got my doctor's recommendation, went into a dispensary and found Harlequin, which is high in CBD, sort of low in THC, but enough that you can feel it, you feel the medicine working. And so I bought a Pax. The original Pax flower vaporizer. I took this three times a day. I was very regimented about it and it worked really well like I could titrate down, I would minimize the side effects such as the crazy pain in my spine and these brain zaps and all this and I fell in love with cannabis. I thought is was amazing. How come my whole life I was lied to about this thing, it's a medicine. Look at this, there's proof, I have my own personal experience now, and I thought we need to make this accessible to everybody. This is crazy. At the time California really was the only state that had this really robust medical program. Colorado had a decent one but California, it was nearly 20 years and so I thought we need to make safe cannabis products, accessible to every adult on planet Earth. We have to figure out a way to do this and then I started diving into the war on drugs and I went holy cow this is not just cannabis and the war on drugs is disaster. We've spent a trillion dollars since Nixon and we've completely destroyed communities of color and minority communities who have been disproportionately affected by the war on drugs. I thought the war on drugs was so important. We have to figure out how to end the war on drugs. We have to try to make safe cannabis products accessible to everybody. And so I moved to Denver from LA to go figure out what adult use looked like, right?

If you recall in 2014 the first stores opened in Colorado and so we moved out there. My wife and I were very pregnant at the time with our first daughter who's due date was April 20th. We thought that was the craziest sign from the universe that we were on the right track. So we moved to Colorado and ultimately, I ended up working in compliance for a vertical supply chain. So we had a grow, manufacturing facility, MIPs and a dispensary and it was there that I really came to the conclusion that if we could build a great platform that could help retailers succeed in building their businesses stay compliant that we could actually help make safe cannabis products, accessible to every adult on planet Earth. We could go enable these SMB’s to deliver the products to the consumer and also make it more accessible. So that's really the origin story of Flowhub and how we came to this conclusion. This mission was the right one for the business and and really at the end of the day, we believe by providing really great software tools to retailers. Helping them run a great business, helping them provide exceptional guest experiences, helping them stay compliant so that we can create a world where safe cannabis products are accessible to every person on planet Earth. 

Jason: That's awesome. Yeah, I saw that you guys have apps that help the retailer themselves, like inventory have apps that help the consumer on their purchasing side. But I know one of the biggest headaches and the business is the compliance side. Especially, when you cross borders. A big part of it is Metric and I think you personally had a hand in changing that for the industry with your love for the API that Metric. Tell me a little about how that went all about. 

Kyle: Yeah it's funny. In 2014 we had to report data to the state through Metric which was called My Mitts at the time. So we'd have to go on to this website and we'd have to manually report plant waste, we'd have to report sales but there was no way to do this automatically. I mean so like literally you'd have to have teams of people reporting data to the state. You have to have multiple people doing this all the time, tracking by hand on a clipboard. Okay, just tag 1234 we moved it from this room to that room, okay, there's waste here. Okay, we sold this much to this consumer. So it was a really huge pain in the ass back then because no one could handle this. And I started to think, how is anyone going to scale their business? This is absurd. So, I went and I met with the Department of Revenue in Colorado and I just encouraged them. I said, you should open up an API to this system and that was the beginning of the conversation of what that could look like. I remember bringing in this alpha version of what we call the Nug now which was this handheld device. And I kind of put together this prototype of it back in the day. It was a separate Bluetooth scanner and I had it on my phone you could scan in the tags and I was showing it to the Department of Revenue. I said look what can happen. I mean, talk about cleaner data, right? Right now, we're writing stuff down in the clipboard, but if I could scan these and I could report to you automatically this information you're going to get better data, we're going to have a hell of a time, much easier time, delivering the data to you great like what's a win-win and so it took until 2016 to get access to this API. I'm really proud of the work that we did with some of our dispensary customers early on to just encourage them, put pressure on them to open up this API. Jeff Wells who runs Metric and the parent company of Metric was very open about wanting to do this and I don't think it's just us, right? Ultimately, it was many parties but we definitely were very early and I think we're the first metric integrator ultimately out of all this because we had started so early. You see California and Michigan and so they say it’s the law that you have to have an open API. So that's that was a real win. I think I learned early on that as a citizen as just a guy who lives in the United States, right? Like you can go in and actually talk to government officials and give them ideas in and get things across the line. That was certainly, a really interesting learning experience for me. Like, we can make change happen. We really had, it works. That's pretty cool. 

Jason: That's impressive, everybody talks about it and nobody does so that’s the thing. That’s awesome that you actually got them to pull the trigger on it. It’s a huge change for the industry to have access to that API.  

Kyle: Those early days were rough Jason. I remember we had seven or eight folks at one point just entering data and it was really hard to be on time you have to do it within a 24-hour period. If you have a really minimal window in the grand scheme of things to get hundreds of data points into the system. So that was certainly a game changer for us in the early days. 2014 and 2015 were hard years for retailers and growers in the space when it came to compliance because there were no tools back then, really.  

Jason: Now that all the legality and the talks of Federal legalization is everybody kind of jumping on the bandwagon and trying to be a software player in the space. You're already established out there, your software is very mature and has a lot of usage on it but there's a lot of people popping up here and there. What would you say are the differentiators between Flowhub and other competitors, like dispensary POS and management software's?

Kyle: Yeah, I think we're one, it has nothing to do with the software itself, it has to do with our customer service. We've certainly have a strong reputation for having incredible product support. That was really important early on to us, we wanted to create an environment where customers could get a hold of us all the time and so from the very earliest days, we had seven days a week, 12 hours a day phone support and it was really hard for us to do this but we felt like it was our duty and it created a really great loop where we could get feedback from customers. We created great relationships with customers and we wanted to be as close to them as possible. Having strong product support certainly made us very different and I think today, still we're known for that. I mean, we have an 800 number, you can call our 800 number and press one and get a hold of a product support person usually within the first five minutes or so. If whatever reason we're backed up you can leave your phone number and our our team will actually give you a call back when it's your turn in line. We've been really carefully building that part of our business for a long time. Like we want to make sure that I think we're probably most known for is that we really pick up the phone like if you need help we'll help you and it's not just a follow-up question. It's a Metric question and it's blended with a Flowhub Hub question. Our team is really knowledgeable on how to handle Metric. A lot of them come from the industry. And so they've had hands-on experience themselves and they can help lend a hand to new retailers, who are trying to figure it out. It's really complicated stuff. Sometimes, I think we've been really mobily driven from the very early days. You heard me talk about, even the prototype back in 2014 that I personally built scanning metric tags into the system. And, I think between our greet app that scans, driver's licenses and medical documents and create a patient profile very very quickly or  it could be our stash app that allows retailers to go audit their inventory in the back room or our view app which is built primarily for owners and managers who wanted to have analytics and it's an app you can download and Google Play store or the Apple App Store. You can view your store like view what's going on, how many people are in the store right now? Your average wait times, your top-selling bud tenders and products and vendors. So your sales numbers or it’s a quick glance into what's going on. But ,we're really a mobile-first business. And so, I think that also is really unique. We've built the technology stack to be flexible for mobile. So I think that's, that's also really a differentiator for us.

Jason: Absolutely. How far have you guys go? Like, how many states are you guys servicing right now?

Kyle: I want to say 14 markets today.

Jason: OK. What's the biggest headache between having multiple markets? Because I know there's some of them that just try to focus on certain states and that multiple because there's so vastly different on some of the rules. Kind of walk you through some of the pain points and how you guys have overcome some of these things.

Kyle: I don't know if we've overcome all the pain points yet of trying to scale to multiple markets in the space. Every state is like its own country, right? I mean, there's these really particular rules. I think it's funny looking back early on, I really bet that Colorado would be replicated pretty verbatim across markets and that turned out to be like half true, right? I mean other states got Metric and had similarities. But, it seems just every year these markets drift further and further apart and become unique in the way they do things. It makes it complicated I'll tell you Jason, it's not easy trying to scale into multiple markets and having a flexible system that's for all of them is really a difficult problem to solve. I think we've done a really good job, it's just really difficult, right? I think sometimes you see players kind of get stuck in a region and they never can break out of that region because their software is so particularly built for that region and so I was really proud early on that. We broke out into Colorado, Oregon, California and Alaska and Michigan. And we, I think we're one of the few players that did figure out how to do that at scale but I'll tell you it's still every day is a learning experience on how to do this well because every state has something new and all the time it seems and we've got to react to it and it can certainly be frustrating. But I think it's just a part of how cannabis is evolving in the US. It's kind of similar to alcohol, right? If you go to a state like Pennsylvania there are government owned stores. If you go next door to New Jersey they're not so right. It’s similar to alcohol, you have state bifurcation. What I'm really curious about is what interstate commerce ultimately looks like. What does it actually look like in practice? Because you have this very kind of bifurcated framework. So I definitely have theories there but it’s just going to be interesting. I don't know if that answers your question Jason but it's not easy.

Jason:  It's not easy. I hear you there. I mean, going back to your company being very mobile Centric and having a mobile capability. Just recently, Apple announced our kind of loosening the reins a little bit on cannabis. So, how do you think that's going to affect the industry?

Kyle: Yeah, it's great. I saw Eaze launched their native IOS app that allows you to order an app. Now, this has been a bet of mine forever that we'd get here. I think you'll see more apps in the app store, right? I mean, like, you're going to see a better customer experience. Way to go Apple. I mean, can we just recognize Apple as a company for a second? It was probably a little late to the game in the grand scheme of things. But here you have a two trillion dollar business influential saying, hey look you're an legal market, recognized in the industry for what it is, right? It's a legal business and these states, it's just further supports the decline of the federal grip on the war. on drugs which is phenomenal, the drugs are winning. I think this is just a great signal, not just for cannabis but for the general war on drugs. There's a pathway out of this and private companies have to step up and support our industry because you have to respect what's been built here. I mean there's a 20 plus billion dollar industry today that's going to grow to be bigger than alcohol over the next, maybe 15 years or so, this is going to be a three or four hundred billion dollar industry domestically. So it's great to see Apple step up like this.

Jason: Yeah. It wasn't surprising but it was at the same time. It's something that should have happened but we're yeah we're pretty happy that they are making strides. Another thing I wanted to talk to you about, obviously the pandemic hurt a lot of businesses and it's kind of affected cannabis in a lot of different ways. But interestingly I saw that you're a pretty big advocate on remote work and I think your entire company is kind of converting to remote. And I just want to kind of get your feedback on it because I know, ever since a pandemic, everybody's kind of up in the air. In ways like how do we handle this, if we go back, we should we not, so we just if it works, it works, stay at home, but what's your take on that? Especially for a tech company. 

Kyle: Yeah, I think if you want to be competitive in terms of finding great people, you're going to have to be remote. It doesn't mean you can't get together right? I think it's an interesting debate right now where it's like do we have to work together every day? Is it like twice a week? And my thought is look we can get together. Maybe like every six months the entire company gets together and we hang out at a summit. Maybe teams get together monthly, maybe it's bimonthly, whatever works for that team but I think it's just that like whatever works for that team, right? Like we shouldn't we shouldn't shun getting together. But like do we really need to be together every couple days? Because I mean if you really think about producing work, I mean you can go meet with folks get aligned and then meet up virtually, deliver value and and then meet up again in person. There's just no real reason to have to go into an office every day and I'd rather our team, our teams are spending time with her family, they're not commuting. I'd rather see them focused, for their work day rather than, maybe being unfocused at the office, but being at home they can kind of frame their day as necessary. They have a doctor's appointment, they should be able to go to that. I think we're all adults, right? We all want to get good work done. There's a really strong mission. We talked about early on and in this chat that we have in front of us and people need to have the freedom to go make the choices they make during the day to go execute against that mission and that vision and like I think being remote is the perfect vehicle to do it, right. I personally have loved seeing my three children. I have relationships I did not have before. I'm sure there are many fathers and mothers that are working remote right now that are cultivating those relationships with their kids and I think that's beautiful.That's enlightening. It's inspiring, it's great for the kids,the future of our country, right? I mean, it's really cool. I think we have all the tech to do it. Look at us right now. I mean, we're having a conversation right. It's not as awesome as being in person, always. But it's pretty nice, right? You walked into your room, I walked into my room. We're having a convo after this. We hang up. Go on to the next one. It's pretty cool and eventually we'll meet in person, at some point. So I wrote an article for Rolling Stone recently that covers some of this and so if anyone's interested in a deeper point of view of this you can and go check out that Rolling Stone article. 

Jason: Yeah, I think that's what made me bring it up. Do you think this is kind of the business model of the future especially for Tech. Because, there's a lot of tech companies, some of the big ones are kind of 50/50. Some of them are like, hey, we're just going to go remote from now on. And some of them are, like they're trying to ease people back in. Personally, I think it's going to play a big, it's going to, it's going to make a big change on how things are happening in the future.

Kyle: It has to. I mean, look at the way technology is used in training anyway. I mean, I was with my Chief of Staff last year remotely and we were testing out some VR and AR Solutions just cause we were thinking outside the box. What could we do to make people feel like they're together during the pandemic and it was amazing the tech, you could literally, we had avatars digital avatars of ourselves. We could meet in person in this virtual studio and put Post-its up on the wall. You can see that this is not viable for prime time but you can see where this is going. There's always going to be people who want to be in an office. That's fine. That's there are going to be jobs and there are going to be jobs and opportunities for those folks. But I think the majority is probably going to want to work remote. Again it doesn't mean you're not seeing your co-workers once a month or, every couple months, once a quarter or whatever. But I just mean, like the majority of time more people are going to spend the majority of their time working out of their home office or apartment. Like this coffee shop, look, and it allows people to travel. Great. Go work from your parents house. If you'd like to go visit with them if you haven't seen them in a year. Great go do that for two weeks. That's awesome. 

Jason: Back to Flowhub, what's the plans for the future? What do you think the next phase for Flowhub? What's going to go on? 

Kyle: That's a secret box, a secret black box. I future is going to be interesting in terms of just software providers in the space in general. Yeah. I think you're going to start to see some consolidation in the market. You're going to see bigger and bigger financing. More and more money is going to pour into the ancillary side of the business. Which I frankly has been under nurtured by venture capital and investors for quite some time. I think a lot of the early money went into the multi-state operators that the Canadian LP’s.  I think a lot of capital is going to shift into ancillary tech services, like us. So I think you're going to see bigger financing, consolidation and then I think you'll start to see some really interesting financial services get delivered into these into this vertical, right? I mean to date, a lot of this has been cash. You see cashless ATM and I think there's an evolution there some really interesting products around financial services that will get delivered in the space which is going to be huge for a lot of these SMB’s who are working to compete their communities against multi-state operators or bigger businesses. So they're going to need capital for store, buying inventory, it could be digital payments versus cash. So I think we're going to see a trend in that direction as well. So I'm really excited about it. I think this industry, the cool thing about cannabis because of all these kind of like I'm going to come artificial problems because they sort of are caused just by ourselves in the nature of kind of the war on drugs in general are federal rules. We're having to leverage technology and interesting ways to produce really cool products that I think ultimately are going to make them kind of make their way into maybe more of the mainstream over time. Just because like the things we're doing in cannabis are unique we're solving some really technical problems and some and some really simple ways that I think could serve other Industries. So anyway, t I'm excited about the future of Tech in Cannabis, it's really, it's really exciting. 

Jason: Awesome. So  for the listeners out there who are dispensary owners or employees and they want to see what they can do with Flowhub. What's the easiest way that they can get started? 

Kyle: Yeah, if you go to Flowhub.com, you can watch a demo of the product, you can get hooked up with someone from our team to talk with about what kind of problems are facing as a dispensary? And if we can help, Flowhub, we have a really great team and so I would recommend if anyone's interested in learning more, go to Flowhub.com and click that book demo button. You can view a demo and we even have a chatbot on there too so if you want to get a hold of someone from our team just by chatting with them through text, you can do the same thing on the website but that would be my recommendation. Yeah, you follow us on Instagram, we're Flowhub there, we’re on Twitter, FlowhubCo. You could find us anywhere you get your social media. 

Jason: Awesome, awesome. Well, Kyle, Thanks for coming on. Thanks for your insights. It was great. Again, a lot of thank you for coming out to the show and we're going to see a lot of great things from Flowhub I'm sure. 

Kyle: Yeah. Hey, thank you so much, Jason for having me today. It was a blast. 

Jason: All right. I'll talk to you later. Once again I want to thank Kyle Sherman from Flowhub out for coming onto the show and for all your cannabis news and for other podcasts, like this one visit us at www.TRICHOMES.com. If you want to reach out to the show, email us techincannabis@TRICHOMES.com. I'm Jason Kitamura and thanks for joining us.