Bryan Sullivan, co-owner of CannaScore, interviewed by Lynn Fosse, Senior Editor, CEO/CFO Magazine.
Published – December 21, 2015.
CEOCFO: Mr. Sullivan, what is the concept behind CannaScore?
Mr. Sullivan: There are many dispensaries opening up in Colorado and now as we see, all over the country. Everything is happening very quickly at a fast pace. One thing we find that people seem to be missing is ensuring that their stores and grows are fully compliant with all the different laws and regulations that they have to abide by. We are finding that there are many absentee owners in this business that have put up the money to get the business going, but do not actually show up at the shop every day. What CannaScore does is allow one of our auditors to go in and in a couple of hours and they are able to go through every single line of the code of every different rule and regulation, to make sure that everything is being followed correctly. For those things that are not, they make sure that there is a detailed report explaining what they have done wrong, what potential fines they could face for these violations, and really put the owner on notice in terms of how compliant their store is. We are also looking at doing this for banks or businesses that deal with these dispensaries. There is a great deal of due diligence that a company has to do in order to work with companies in this industry. We find that many times, the amount of work they are doing just consists of getting some sales data reports that do not tell them anything.
CEOCFO: Were you surprised to realize that even people that were active day-to-day in the store were not concerned enough about compliance?
Mr. Sullivan: I have been very surprised, because the ability to have these stores is almost like a gift. We have run into situations where there was not a great deal of concern and we have had to explain that this is a really big deal and their business could absolutely be shut down if it was the MAD coming through here instead of us. It has been very surprising what we have found, and eye opening for these owners.
CEOCFO: How are you able to put together all of the needed regulatory information? What was the challenge in putting it all together so you could provide an assessment as easily and quickly as you can?
Mr. Sullivan: The real challenge was just going through the code and making sure that each line appeared as a question, and that every single aspect of the code was being asked in the audit. CannaScore gives a score at the end of the audit. For those things that the MAD does not really care too much about, we do not weight too heavily on those, but those things that affect public safety and are a big concern to the MAD, we have added considerable weight to those. In terms of weighting the questions and also putting down the fines that people could potentially face was a bit of a challenge. It did take us quite some time to develop the software.
CEOCFO: Would this typically be a onetime event or might you contact with someone to review every three or six months or annually? What has been the plan and how might it change?
Mr. Sullivan: We tell people that quarterly is a good minimum because so much changes. There are so many changes to the rules, and we feel that three months is a minimum, but getting a monthly audit is well worth the money to insure that everything is continuing to operate correctly.
CEOCFO: How are you reaching out to potential customers?
Mr. Sullivan: What we are doing in Colorado is licensing the software exclusively to four different companies. We have Denver Consulting Group as one of the licensees. The List has signed up as a licensee and the American Cannabis Company is a third licensee. We do have room for a forth, so what we are doing is getting the word out through traditional print advertising, we are going to trade shows and explaining what we do and making all of the information available. Through our contacts and associations in the industry, we are doing everything we can do get the word out.
CEOCFO: Do you have some customers directly with you in addition to the licensing or are you educating people then referring them to an organization to provide the service?
Mr. Sullivan: We are having the license go out to the four licensees essentially, so CannaScore does not always go out and do the audit itself. We are looking at other states and gauging it and organizations in those states, to see who is going to be a good fit to push and do these audits in other states.
CEOCFO: The cannabis industry is one where information is being thrown at people involved from every direction. Many have jumped in to offer solutions. How do you get through that clutter so that attention will be focused on CannaScore?
Mr. Sullivan: We have definitely seen many different players in the game, many different companies that want to take advantage of this new industry and promote themselves as consultants, but what really puts us ahead of everyone else is the fact that we have had a dispensary since 2009 and we know what we are doing. This is something we have been working on and are very familiar with. Compliance was such a key issue with us, that the dispensary Dank next door has always been known as the leading dispensary for compliancy. For that reason, what we have done is trained employees from the MAD at our dispensary, because they recognized how compliant it was, and for a while we were giving out free advice to other dispensaries that needed help and assistance. We said this is something we are good at. First we started the Denver Consulting Group to go out and assist people that needed help in making changes, but then we said this industry needs compliancy software. We started CannaScore soon thereafter to be able to go out and do these audits.
CEOCFO: CannaScore was the winner of 2015 Top New Technology for the Cannibas industry award. How helpful is recognition?
Mr. Sullivan: It definitely does because it shows that there is truly recognition for those that are in the industry and have actually gone through and worked in it and done well. Any time you get any type of recognition, it is very much appreciated and people that usually see these types of things realize that company is legitimate, has really been working hard and knows what it’s doing.
CEOCFO: How are you deciding where to go next? What are the criteria?
Mr. Sullivan: Currently, we are getting the software up and running for Washington, Oregon and Nevada. We are looking for those states that have good systems in place and are really trying to further the industry. Rules and regulations are the only thing that is going to allow this industry to survive. For instance, we are not even looking at California right now because in a sense, there are not any regulations. They are looking to change that and recognize they have been lacking in that. We expect California to move along with rules and regulations here soon and once they do, we definitely want to get involved, but for right now, we are concentrating on the states that have good systems in place.
CEOCFO: Your site mentions landlords and realtors as potential customers. How do you reach a group like that, who may not even recognize that they should be concerned?
Mr. Sullivan: It is really about relationships, meeting with those in the industry, trying to educate those that have a real stake in this, because this is their property. They own it. They stand to benefit by insuring that they only rent to those that are fully compliant. It has been a little slow getting the word out, but we’re trying to reach those in the industry through groups or meetings. We have been trying to do that slowly, but surely.
CEOCFO: What sets CannaScore apart?
Mr. Sullivan: Cannascore is owned and operated by those that have not only been in the business since the beginning, but by those that really have the passion, those that have for years, seen the medicinal benefits. They have seen how good this product is in terms of being able to get people off prescription drugs and have a passion for insuring that this industry survives. The team that we have put together has been incredible. The actual process of what it does, insuring that business are compliant, is always being updated. We are on top of the rules and regulations, so nobody else has to do it. It saves people so much time, but more importantly, it protects their business and allows them to stay in business.
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