Cannabis point-of-sale platform Flowhub announced on Tuesday the closing of a $19 million round of strategic funding, including significant participation from venture capital firms Headline and Poseiden as well as a personal investment from entrepreneur and hip-hop billionaire Shawn “Jay-Z” Carter.
The new round of funding for Flowhub brings the total amount of capital raised for the company to $50 million with a valuation of $200 million, according to a statement from the cannabis dispensary payment transactions processor.
“We are thrilled to announce this capital raise,” said Kyle Sherman, founder and CEO of Flowhub. “Headline is an incredible, Silicon Valley-based venture capital firm, Poseidon is a pioneer investor in the cannabis industry, and Jay-Z is a cultural and creative global force no matter the industry he is involved in.”
“I couldn’t think of a better group to be working with as we take this company to the next stage,” Sherman added. “This funding not only underscores the significant value that Flowhub provides to our customers, but also the maturation of the cannabis industry at large. We remain committed to developing innovative products that help our retail customers run better businesses.”
Flowhub processes in excess of $3 billion in cannabis transactions annually, providing more than 1,000 marijuana dispensaries a retail sales platform to serve their customers while maintaining compliance with strict regulations. The company will use the new round of funding to accelerate its expansion into emerging cannabis markets while developing new products for its expanding line of services.
Supporting Cannabis Social Equity
The company also plans to use the new funding to support and grow its social equity program, which was launched by Flowhub in June to invest in communities adversely impacted by the War on Drugs.
Through the program, eligible social equity cannabis business owners can receive Flowhub’s POS retail management and compliance software for only $4.20 per year, which represents a reduction of 99.97 percent over regular pricing. The discount is available for up to three years at the social equity owner’s first cannabis dispensary business location.
The Flowhub social equity program also provides participating cannabis retailers with the company’s Stash inventory management and Greet customer check-in mobile apps, as well as the View mobile analytics app and free implementation of the technology.
To date, Flowhub has awarded more than $1 million worth of software products to eligible cannabis entrepreneurs participating in the program. More information about the Flowhub cannabis social equity program is available online.
Software Allows Debit Transactions at Cannabis Dispensaries
Because of the continued illegality of cannabis at the federal level, most banks, credit card companies and other financial institutions do not offer traditional banking services to cannabis businesses, even those operating legally under state law. As a result, most dispensaries are forced to conduct transactions with their customers and suppliers via cash.
“We’re still a cash industry, and it’s 2021,” Sherman told Forbes. “It’s hard to believe when we barely have cards in our pocket anymore with Apple Pay.”
Flowhub’s POS software addresses the cash issue by allowing customers to use their debit cards to make sales transactions at cannabis dispensaries. But instead of being processed as a debit card sale, the transaction is technically an ATM withdrawal.
“It’s not really debit, but it feels like it,” Sherman said.
Jay-Z and Cannabis
Jay-Z’s stake in Flowhub isn’t his first foray into the cannabis industry. In 2019, he became the brand strategist for Caliva, where he developed his signature high-end cannabis brand Monogram. The following year, Caliva, Monogram and Left Coast Ventures were acquired through a SPAC deal that produced the Parent Company, where Jay-Z heads the social equity venture fund.
“When Jay says, ‘I’m not a businessman, I’m a business, man,’ it’s true,” said Sherman, recalling a sample of Jay-Z’s well-known lyrics. “He’s got incredible business acumen—he really knows how to surround himself with brilliant people and build great companies.”
CanPay already exists as a cashless Cannabis payment system and it’s used throughout the country already. That being said, I doubt their social equity program is as good as what Flowhub is promising…