Square enters the Cannabis Industry
Financial services platform Square has entered Canada's cannabis market in partnership with online ordering platform service for cannabis dispensaries Jane Technologies.
The partnership involves Jane enabling cannabis dispensaries to use Square to supplement their brick-and-mortar business with an online store, allowing customers to browse through an updated product list and place orders for either pickup or delivery.
This marks a significant advancement in the joint effort of the two companies to develop improved business solutions for the recreational cannabis sector in Canada. It's worth noting that the partnership will start only with authorized cannabis sellers in Ontario and is expected to expand to all Canadian territories.
The recreational cannabis market in Canada generated $3.5 billion in sales last year, according to Statistics Canada, and forecasts suggest that it will continue to grow.
Socrates Rosenfeld, CEO of Jane Technologies, explained that this partnership with Square allows Jane to leverage its eight years of experience in the cannabis industry.
Jane has built a universal product catalog for cannabis, featuring nearly 2 million stock keeping units complete with standardized photos, descriptions, serving sizes, brand details, taxonomy, and more.
"What dispensaries will get is, if they use Square's point of sale through Jane, they will have complete real-time integration, full content, millions of SKUs [stock keeping units], all the reviews, and all the photos automatically generated due to the partnership between Jane and Square. Therefore, no manual entry is required," he said.
From the consumer's perspective, individuals can now browse cannabis products online, knowing that each product is identified and currently available at the respective store.
Roshan Jhunja, Head of Retail at Square, explained that the company recognized that Canadian cannabis retailers share common needs with other businesses regarding integrated omnichannel solutions.
Cannabis sellers often face limited options, and Square saw the opportunity to assist them by offering dependable and integrated commerce tools to meet their requirements.
"We both have this common goal of making sure that brick-and-mortar sellers have access to best-in-class tooling. In the case here, it was Jane's offer of digital tooling to complement what Square already has in terms of a powerful ecosystem for brick and mortar. The combined offering allows cannabis dispensaries using Square in Ontario to enhance their traditional brick-and-mortar businesses with an online store. Our collective focus is to ensure we provide a compelling omnichannel experience to the customers of these sellers," he said.
Rosenfeld explained that the partnership with Square is a sign of the cannabis industry maturing in Canada.
"You would have never thought Square to move into this cannabis space five years ago. But now Square is taking a bold step into this space. The partnership with Jane stands as a testament to our accomplishments. We are thrilled to collaborate with Square to expand access to cannabis and create a fair digital ecosystem for generations of users and sellers," he said.
When asked if similar partnerships could be replicated in the United States, Jhunja explained that federal cannabis regulations restrict companies like Square from offering payment options, thereby limiting their ability to provide a comprehensive solution. In contrast, Canada, which has federally legalized cannabis, enables companies to provide such offers.
"We'll expand to other provinces as regulations permit, prioritizing compliance and peace of mind for sellers. Our partnership with Jane emphasizes simplicity, convenience, and accessibility for both buyers and sellers. We're committed to delivering a seamless omnichannel retail experience, combining in-store and online sales. Jane's expertise in the online component of retail aligns with this vision and will continue to enhance our offering," he said.
Square has been operating in the Canadian market for over a decade. During this time, it served a wide range of businesses, including small coffee shops, various retail establishments, and even large stadiums and venues. The evolution of cannabis sales for cannabis retailers is a natural progression for Square as it aims to continue supporting diverse types of sellers in Canada, according to Jhunja.
Following Canada's legalization of adult-use cannabis in 2018, legal cannabis dispensaries have emerged as the predominant source for purchasing cannabis among those who have used it in the past 12 months, with a percentage increase from 53% in 2021 to 61%. In contrast, only 2% reported making cannabis purchases from illegal websites, 1% from illegal dispensaries, and 1% from street dealers. Additionally, individuals who have used cannabis in the past year reported an average monthly expenditure of approximately $65 on cannabis products from legal dispensaries.
While raw flowers remain the preferred method of cannabis consumption, there has been a gradual transition toward packaged goods such as vapes, edibles, tinctures, and mints. These packaged products provide consistent dosing, branding, and convenience, making them increasingly attractive to a wide range of consumers.
Rosenfeld explained that Jane Technologies offers two significant improvements for consumers. First, it eliminates the hassle of outdated information by ensuring that every cannabis product you view online is currently in stock at the store, saving you the inconvenience of making fruitless trips. Second, it introduces a product-centric approach akin to Amazon, allowing you to search for specific products, compare prices, and read reviews, revolutionizing the cannabis shopping experience.
Therefore, the partnership between Jane and Square aims to streamline cannabis sales and enhance the shopping experience.
