Could this be the new standard?
By Liz Gold
If you’re in the cannabis industry and you’re working with cannabis clients, you've likely had your fair share of experiences with point-of-sales systems. Like all technology, some platforms work better than others and the key is to find the right system for your company’s particular needs. Often it’s a compromise or giving up a function for a feature that is more important.
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Strimo dubs itself as “a single platform to manage your business performance.” The cloud-based software integrates cultivation, manufacturing, accounting, and dispensary management all on one platform.
With a background at Ernst & Young and in business performance and corporate and financial management, Santucci started a consulting firm 10 years ago in Maine focused on performance management. During the same time, the medical marijuana law passed and shortly thereafter in early 2010, licenses became available. He was hired to help a group with applications – and the group ultimately won four out of the eight licenses in the state and became part of the founding team of the Wellness Connection. He served as CFO at the company until late 2017.
Santucci also continued to help other cannabis companies with their applications and operations around the country.
“The thing that really stuck with me as I was doing research for applications was that there were no systems for the industry, and the existing companies were not using the usual accounting systems or usual inventory management systems,” he says. “They were all going toward seed-to-sale systems and to me that wasn’t making any sense. Seed-to-sale is a word invented by the cannabis industry to make sure they show they are tracking every piece but really it’s what other industries call inventory management.”
Ultimately, he didn’t want to use any of the systems emerging in the cannabis industry because he says they weren’t powerful enough for a growing company – they were lacking essential functions that addressed compliance and costing, as well as robust accounting features and data analysis.
Strimo aims to rectify this by offering a workflow that tracks not only the units that are being sold, but the cost and other data that impact it.
“Seed-to-sale systems never talk about costing,” Santucci says. “When you look at the market where prices are coming down, it’s one thing to know the average cost of growing a plant is $2 a gram overall. But when you look at the number of products those companies are producing, you have so many items and methods that you need to know how much each of those are costing you and that is the part we are addressing.”
Launched in 2018, Strimo is in the process of raising capital. According to MaineBiz, Santucci raised almost $1.5 million in 2018 and is now looking to raise $8 million to create a national sales force, as well as additional developments to the software.
He’s also reaching out to CPAs to explain the software and let them know a viable alternative is now on the market.
“Usually when I talk with a CPA, the first thing we identify is that their clients are not sophisticated enough yet to have a logical chart of accounts, organized processes reliable cost segregation and inventory management,” he says. “They know how many units they have but the valuation is the problem. They don’t account correctly for cost allocations, for instance, electricity. Electricity is one of the primary drivers of the cost of goods, but it’s not allocated to a harvest or batch of products. The tool we give them is the core of good accounting, costing, gathering data in one single platform. It can even help with the execution of their 280E strategy.”
Strimo’s goal is to become a system of engagement and a standard platform so the cannabis business can be optimized. “There are no standards in the industry yet,” Santucci says.
He added, “It’s robust because the industry is going to need it. The industry is maturing. There is going to be more and more mergers and acquisitions and the market is going toward lower prices and lower margins.”
In terms of customers, Strimo’s sweet spot users are those companies and operators – integrated across multiple verticals such as extraction processing, manufacturing, and retail – that are in multiple locations or large entities in multistate. The system is cloud and subscription-based, hosted on Microsoft Azure. Santucci described it as “secure and scalable,” sold by packages based on the number of users.
The system is flexible and adaptable as it can integrate with diverse accounting platforms as well as major track-and-trace compliance systems. And while many of the clients Strimo works with initially are on QuickBooks, those customers are quickly realizing they need something else. “They need something more robust,” Santucci says. “I would think within the next couple of years our clients will see their CFO and controller needing reliable data connected to the accounting package to be able to make better decisions.”
Moving forward, he says the goal is to continue to expand their reach in the market while developing a national sales team and expanding internationally with the industry. “Then we are going to continue to listen to what the market needs and continue to improve our product. We are going to add features and set standards.”