A new Chicago startup is working to make the process of buying marijuana from dispensaries easier and more transparent with a new smartphone app.
CannaTrac just launched its app this month, which operates as a marketplace where dispensaries can sell marijuana products and consumers can purchase them using a secure payments platform. The app operates similarly to the Starbucks app in that it allows users to load money onto physical or virtual cards, and pay with them in person or electronically.
CannaTrac’s platform simplifies the cannabis-buying process because dispensaries cannot accept traditional debit or credit cards, and paying in cash can be dangerous, said CEO Tom Gavin.
“The whole goal is to take cash out of the [cannabis] industry and offer transparency,” Gavin said.
The company was originally founded in 2014 by Terrence Patton, a former member of the Chicago Board of Options Exchange, and he has been developing the platform since. (Gavin joined in 2015 as CEO.)
Before officially launching, CannaTrac was beta-testing its platform at Kush Gardens in De Beque, Colo., mainly because marijuana is legal in the state. CannaTrac’s platform is HIPAA-compliant, so it can be used in states where either medical or recreational cannabis is legal. But right now, Kush Gardens is the startup’s only dispensary client.
“We chose Kush Gardens because of its location,” Gavin said. “It was a very secluded dispensary but had regular clientele and some tourist traffic, so it was a very controlled environment for us to be able to get a good read as for what everybody was looking for.”
Though CannaTrac is focusing on the cannabis industry, the platform is universal and could be used in a variety of retail settings. Gavin said the company chose the cannabis industry because it’s a niche not really being filled.
“Our main focus is on the cannabis industry because there’s a major need for it,” Gavin said. “With all the cash in the system, there’s not only issues with transparency and obviously money laundering, there’s also safety issues any time you have that much cash on hand.”
CannaTrac derives revenue through charging consumers a 95 cent fee each time they load their cards and keeps 2.45 percent plus 50 cents of each transaction from the dispensaries, Gavin said. The startup has three full-time employees and is looking to hire more this year.
As for expansion, the startup has plans to launch into Canada, where CannaTrac has a satellite office, and countries in Europe.