Dutchie Secures $200 Million in Series C Funding

Dutchie, a technology company based in Bend, Oregon, has successfully raised $200 million in Series C funding. The company, established almost four years ago, provides a comprehensive suite of services to cannabis dispensaries. These services include website creation, order processing, and inventory management for pickup orders.

This funding round values Dutchie at $1.7 billion. This represents a significant increase from its valuation in August of the previous year, when it secured $35 million in Series B funding. Notably, the current valuation is approximately eight times higher than the $200 million estimation from last summer.

Strategic Acquisitions Fuel Growth

The substantial valuation jump can be attributed to several factors, including the current investment climate. However, Dutchie’s recent acquisitions of Greenbits and Leaflogix have been pivotal. These acquisitions are designed to solidify Dutchie’s position as a complete technology solution for its clientele.

The financial details of these acquisitions remain undisclosed. However, both Greenbits and Leaflogix – specializing in enterprise resource planning and point-of-sale software, respectively – will be integrated into Dutchie’s operations. This expansion adds 150 employees, effectively doubling Dutchie’s workforce to a total of 300.

Favorable Market Conditions

Dutchie is also capitalizing on positive trends within the cannabis industry. The COVID-19 pandemic spurred increased usage, and recent elections saw five additional states legalize recreational marijuana. Furthermore, there are indications that the federal government may be moving towards decriminalization, despite its current classification of marijuana as a Schedule I drug.

This shift could potentially grant cannabis companies access to traditional banking and insurance services, which have historically been unavailable.

Future of Direct-to-Consumer Sales

Considering the company’s evolution and changing regulations, discussions have arisen regarding a potential shift to direct-to-consumer sales. The question is whether dispensaries will remain essential once cashless transactions become commonplace.

Dutchie CEO Ross Lipson believes dispensaries will continue to be vital. He emphasizes that, despite the growth of online ordering, the industry’s nature favors a “retail-first model.” The localized cultivation and processing of cannabis plants support the continued success of brick-and-mortar retail locations.

Expansion Plans and Investment

With the new funding, Dutchie intends to develop innovative products, including tools for product discovery and consumer education. International expansion is also on the horizon, according to Lipson.

Tiger Global Management spearheaded the latest funding round, with participation from Dragoneer and DFJ Growth, both of which are new investors in the cannabis sector.

Existing Investors Show Continued Support

Early investors, including Casa Verde Capital, Thrive Capital, Gron Ventures, and former Starbucks CEO Howard Schultz, also contributed to this funding round.

When questioned about a potential initial public offering (IPO), Lipson stated that Dutchie is currently focused on its existing priorities.

Regarding discussions with special purpose acquisition companies (SPACs), Lipson confirmed that the company is not currently engaged in such talks. However, he added that all business opportunities will be carefully evaluated based on their potential to benefit both dispensaries and customers.

Any decision will be made if it demonstrably adds value to these stakeholders.