Ahead of this week’s Marijuana Business Conference in Las Vegas, cannabis POS software company Treez is getting ready to bring its version of the future of retail cannabis FINtech to market with a series of product innovations.

John Yang, Treez’s CEO, tells Cannabis Business Executive the company will be unveiling its new retail data analytics product (formerly AskTreez), as well as a new “Integration Hub” that is designed to help companies “streamline their supply chain operations, to the CRM, to the point-of-sale (which we represent), down to the analytics, … and ultimately to some kind of financial or GL- [general ledger], ERP-like system” at the event.

The Integration Hub, Yang explains, is designed to help companies navigate the consolidation period that the cannabis industry is going through by addressing what he views as the main pain point during the process: tech integration. “When a market is facing headwinds, access to capital is lacking, it’s going to force everyone to consolidate,” he says. “But when you consolidate a bunch of companies, the first bottleneck, the first breaking point is actually all the systems, the tech stack behind the scenes.”

Yang knows those troubles well, having worked as a consultant helping businesses integrate ERP systems and business intelligence for both small- and medium-sized businesses and Fortune 500 companies. The latter, he says, often fell into this tech trap during acquisitions despite their apparent size and capital, and ended up with “all these disparate systems they invest millions of dollars into” leading to “very poor decision-making.”

“That Integration Hub … allows us to normalize an industry via a tech stack lens,” Yang says. “That’s what an MSO, … a large operator, … a public operator … cares about a lot.  Because if the systems don’t talk to each other, it’s hard for them to make more rapid consolidations.”

Yang stresses this hub goes beyond open APIs, instead simplifying the software integration process in an approach similar to Zapier, a popular workflow automation software that connects more than 5,000 apps through a drag-and-drop interface. Using the company’s Integration Hub, retailers can connect other software tools to Treez, creating time savings and reducing labor hours by not requiring employees to manually connect or input data between systems. “That’s gonna really streamline the tech stack,” Yang says.

POS At Its Core

Treez’s Integration Hub is a direct result of the early lessons Yang and his team learned when the company launched in California in 2016. Yang is the first to admit that Treez ran into some issues in its first year of operation–namely, trying to be an all-in-one platform. “Anytime you try to build it all, it’s always surface level,” he says. “So our lesson learned over the last six years is you can’t possibly do it all, so let’s just stay focused on one core customer profile, with one purpose-built system. 

“That, for us, is the retailer, and the system is the point of sale,” Yang says. He views POS software as the center of the cannabis value chain at the retail level, as nuanced state regulations on taxation and audits make that portion of a retailer’s tech ecosystem the most difficult, in his view. As such, all other systems need to support the POS platform.

“Supply chain operators need to sell to retailers. Therefore, the point-of-sale needs to receive it,” Yang explains. “When sales happen outbound or to the consumer, it needs to tap back into the point-of-sale. And then at the end of the night … the POS has to report to all the traceability systems out there.”

Since building its software depth in the California market, Treez has expanded to 14 states (California, Arizona, Michigan, Colorado, Oklahoma, Missouri, Massachusetts, New Jersey, Illinois, Maine, Oregon, Nevada, Mississippi, and South Dakota), up from six at the start of 2022. The company is looking to add six more states to its operations by the end of 2023, including New York and Florida.

As it expands its geography, Treez also is building out POS-related offerings to its retail partners. On Nov. 2, the company announced its acquisition of Swifter, a payments solution platform built for the cannabis industry. TreezPay will evolve through this acquisition, Yang says, with Swifter becoming one of the first integrations available on the Integration Hub.

“The Swifter acquisition is to unlock more FINtech use cases, workflows, and kinds of offerings to our retailers,” Treez’s CEO says. “It’s not us reinventing the wheel. It’s not us creating an ACH solution in order to be a bank. Far from it. It’s more about how we leverage the partners that want to come into the space, be a provider, and serve our retailers.”

Building the Tech Stack

Treez also is pivoting its AskTreez product into a new retail analytics platform that Yang says will “get to the point” with actionable insights that will help retail operations at the store level. For example, “if I’m thinking about assortment and planning, [the analytics platform is] telling you exactly when you need to order [a product], when to reorder, when to possibly get rid of [a perishable], and then when you need to discount [a product] to help get rid of [it] and then when you shouldn’t discount because it’s gonna hurt your margins,” he explains.

“It’s more about how [to] provide simpler analytics that [are] a lot more actionable to our retailers and retailers only,” he continues.

The analytics platform, the payments software, and the Integration Hub can be bundled with Treez’s POS software. As retailer needs–and budgets–can vary drastically, the company offers a custom price to its partners on a monthly SaaS subscription model that also varies based on the number of locations.

Treez markets itself to the larger operators in the space–single-state operators with several locations, and MSOs with large presences across multiple states, or, as Yang puts it, “anyone that has growth aspirations, that has multi-location, multi-state aspirations, a lot of volume aspirations, or just trying to get the foundations right from the start.”

In the interest of easing integration, Treez’s software is “fairly hardware agnostic,” Yang says, although he strongly recommends business-grade rather than consumer-grade equipment, especially for retailers with larger volume sizes. “There’s a reason a Nordstrom or whatever has PCs that are hardwired in: because at a certain volume, you don’t want the wifi to screw up. You don’t want a consumer-grade tablet to screw up. So, we do have our preferred choice, but ultimately, to win business, we’re gonna use whatever they have to start.”

Organic, and Inorganic, Growth

Following a $51 million Series C raise in April 2022 (valuing the company at $260 million and bringing its fundraising totals to ~$75.5 million to date). Treez is going to be focused on building out its technology partner roster for its Integration Hub, including major enterprise software companies. “We’re going to also invest in more of a cannatech stack, like our kind of partners in the loyalty space, etc.”

Yang believes Treez is bringing its Integration Hub to market at an opportune time. In addition to the consolidation happening on the licensee side, which brings common company integration issues, “more and more banks and FINtech providers want to help the [cannabis] space cuz they also now see what we saw six years ago: It’s gonna be a $100 billion industry. 

“But it’s not easy [to get into cannabis] because targeting dispensaries directly isn’t easy. So they [banks and FINtech companies] need a distribution partner, a conduit to allow their offerings to easily and seamlessly get activated within the platform.”

The Swifter acquisition thus plays a dual role for the POS platform: it’s both a value-add for its retail partners, and a use case showing how easy it can be to integrate into the cannabis industry through Treez’s Integration Hub.

The Series C raise also is fueling the company’s organic growth, something Yang acknowledges that has been held against the company. “The only knock on Treez so far is just we’re not in enough states, and now we’re starting to be in a lot more states,” he says, adding that the company isn’t limiting its growth trajectory to purely organic methods (i.e. being in a position to make further acquisitions).

“If we have a good foundational business, then we’re gonna be in that anchor position to do something more that’s inorganic,” he hints. “But let’s make that an opportune event in the future.”