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Bringing Transparency to Cannabis
An interview with Larry Levy, CEO of Lucid Green, about building a traceability platform for the cannabis industry
Rahul Berry & Aryaman Banerjee
October 29, 2024
🚀 Welcome to this week’s SCALE founder interview!
In this week's edition, we're thrilled to feature an exclusive interview with Larry Levy, CEO of Lucid Green!
🧳 Company overview: Lucid Green is developing a platform that provides trust and transparency throughout the cannabis supply chain, from manufacturing through to consumption. They use unique QR codes to enable item-level tracking, regulatory compliance, and consumer engagement.
🫅 Founder: Larry Levy
🌎️ HQ Location: New York, US
💻️ Website: https://www.lucidgreen.io/
🤑 Amount raised: $17.6 mn raised to date
🏃 How Did They Get Started?
Larry Levy is a serial entrepreneur who has founded and sold multiple technology companies.
After exiting his previous startup in 2015, Larry was exploring new opportunities at the intersection of Internet of Things (IoT), digital out-of-home advertising, and blockchain.
The inspiration for Lucid Green came when Larry was introduced to a Canadian cannabis retail startup. He quickly realized the cannabis industry presented a unique opportunity:
Cannabis is a burgeoning market with immense growth potential. Unlike established industries entrenched in decades-old practices, there’s no need to thaw permafrost here
Larry saw that the cannabis industry's lack of established systems actually made it ideal for implementing new supply chain technology. He decided to focus Lucid Green on the cannabis market with a clear thesis:
Become successful in the cannabis market and have a demonstrable impact, showing that you can build item-level tracking at scale. Then we can extend into any market - food, clothing, beverages
👷 How Did They Find Product Market Fit?
Lucid Green's journey to product-market fit didn't follow a straight path.
The company's initial vision revolved around a blockchain-based system to track cannabis products "from seed to consumption."
While ambitious, the approach faced early skepticism:
We encountered major roadblocks. At the time, combining crypto with cannabis was like waving two red flags. Nobody wanted to touch it
Realizing the need to pivot, Lucid Green shifted its focus from blockchain and zoomed in on an immediate, tangible pain point: supply chain traceability and compliance.
Rather than trying to overhaul entire systems, they decided to integrate seamlessly with retailers' existing point-of-sale (POS) systems.
A key innovation came with the development of their LucidID and LucidRetail LITE Chrome extension, which allowed retailers to integrate Lucid Green’s traceability system without requiring POS vendors to make any changes.
This clever move addressed one of the cannabis industry's biggest bottlenecks: managing compliance without the tedious and error-prone manual process of stickering each product.
By using Lucid Green’s QR-based system, retailers saved time and money by only requiring a single label to manage inventory and supply chain traceability.
Retailers saved anywhere from $9,000 to $20,000 per store each month because they no longer needed to sticker every individual product for compliance
🤑 How Do They Make Money?
Lucid Green's business model has evolved as they've gained traction in the market.
Their current revenue streams include:
Per-item fees ($0.02): "Every time a Lucid ID gets printed onto a label, and that label gets put onto a product, and that product then gets cased, we get paid two cents."
Reporting and analytics ($150 pm): "They pay $150 per brand for reporting and analytics a month."
Consumer engagement ($0.30): "If they want a loyalty program, they pay us every time a consumer scans a product and claims a reward. They pay us 30 cents."
We had to prove to the brands that they were getting a net benefit, including the two cents we were charging them, from using our platform to put these regulatory labels on."
Importantly, Lucid Green made a strategic decision not to charge retailers:
We assured retailers that there would be no cost on their end. All benefits, services, and advancements were covered entirely by the brands. This approach compelled us to demonstrate convincingly to brands the substantial net benefits they were receiving.
🤝 How Did they Raise Money?
Raising capital for a cannabis-related startup presented unique challenges:
I've raised over $100 million across all my companies. I could not go to any of those investors. No VC can invest in a market that is federally illegal. And currently, cannabis remains illegal at the federal level
This meant Larry had to seek out investors specifically focused on the cannabis industry.
However, initially he found an early group of investors willing to invest in the nascent cannabis space:
Those (cannabis) VCs saw a unique opportunity in cannabis, driven by a compelling purpose to invest where others couldn’t, recognizing the potential and growth in this evolving industry
For Lucid Green's more recent rounds, Larry has been able to work with more mature cannabis-focused funds.
Today, Larry believes that the investor landscape has improved significantly:
Comparing now to five years ago, the landscape has evolved significantly. Investors now view cannabis businesses as legitimate enterprises. We’re now in a phase where building a profitable and sustainable business is the key.
His advice to founders raising money in the cannabis space today:
In the current climate, if you don’t have a good answer to how you're going to make money and become profitable, it's going to be impossible to raise capital
🧑🤝🧑 How Did They Build Their Team?
Lucid Green’s employee ethos is structured around 4 tenants:
Passion
Mutual Respect
Inquisitiveness
Resilience
If you don’t fit the Lucid Green mould - it's not going to work
Initially, Lucid Green avoided hiring from within the cannabis industry to ensure that they were finding talent that was driven and fit their archetype:
Up until probably three years ago, we had a rule, which is we're not going to hire from the cannabis space. And the reason for that is that we wanted people that could help scale an enterprise software platform and that talent pool didn’t exist in Cannabis at the time
However, as the industry has matured, they've become more open to candidates with cannabis experience.
🎤 SCALE ADVICE COLUMN
Validate your business model before taking outside capital: "I don't take external money until I see something's actually going to work."
Be cautious about over-funding: "I have a lot more success and have a better opportunity to create a successful business if you're not sitting there with a massive hurdle because you've gone out there and raised a lot of money at a high valuation."
Ensure non-founders can sell your product: "If I'm the only one that can make the sale, then I can't take external funding."
Be willing to adapt your organizational structure: "Don't always think that you're going to bring a manager in and it's going to make the business more successful."
Focus on measurable impact when hiring: "If you can't make a measurable impact in the first 60 days at this company, then there is a question mark."
📖 Lucid Green Fact Sheet
Seed: $2.6M in 2019
Team Size: 8
Key Challenges: Product market fit in a dynamic and changing market
Series A1: $3.1M in 2021
Team Size: 15
Key Challenges: Retail adoption in the face of POS vendors resistance to integrate with Lucid Green
Key Achievements: Over 200 Brands on the Lucid Green platform
Series B: $10M in 2022
Team size: 36
Key Challenges: Scaling a consistent set of operating procedures in multiple markets that were had inconsistent regulatory requirements
Key Achievements: Full end to end supply chain visibility across multiple markets
Series B1: $1.4M in 2024
Team size: 18
Key Challenges: Drive to profitability
Key Achievements: Having over 90 Million LucidID’s printed on regulatory labels across 8 markets.
💹 What's Next?
As Lucid Green looks to the future, Larry sees the company evolving from a traceability platform into a comprehensive data and analytics powerhouse:
Every one of these little LucidIDs is a data pump. Every time somebody scans it, whether it's a distributor, retailer, or consumer, it pumps data. The data we’re collecting is incredibly valuable—data that even Amazon would covet.
The company's strategic priorities include:
Monetizing Data Intelligence through real-time analytics (e.g., sales mix/velocity tracking, product age monitoring)
Reaching profitability by putting efficiency first
Market Expansion As cannabis moves toward federal legalisation, Lucid Green is positioning itself for broader opportunities (e.g., building partnerships with major ERP providers, expanding into adjacent regulated industries)
If you are an investor or would like to work with Lucid Green, get in touch at [email protected].
📖 Startup stories of the week!
Founder news:
Passionfroot raises $3.8M funding (PS, we’ll be featuring Jen on SCALE in a few weeks!)
Passionfroot raised $3.8 million to launch its AI-driven marketing platform, designed to help creators grow by automating administrative tasks and optimizing campaigns for better engagement and ROI
Vinted raises €340mn EUR, reaches €5bn valuation
Lithuanian second-hand marketplace Vinted has raised €340 million, reaching a €5 billion valuation in a funding round led by TPG, with participation from several major investors
Bret Taylor’s AI Startup Sierra Valued at $4.5 Billion
Sierra has raised $175 million, achieving a valuation of $4.5 billion. Sierra aims to enhance customer service automation with conversational AI agents
Investor news:
Bessemer, Index, and a16z alum launch VC firm Chemistry
Former Bessemer, a16z, and Index Ventures partners recently launched a new venture capital firm, Chemistry, with a debut fund of $350 million focused on seed and Series A investments
General Catalyst Raises $8B in New Capital to Venture Beyond
General Catalyst has structured its new $8 billion fund into $4.5 billion for seed and growth-stage ventures, $1.5 billion for new business creation including venture buyouts, and $2 billion in separately managed accounts focused on pioneering technologies
Venture capital compensation breakdown
Ever wondered what European VC investors make? Learning VC has put together the latest salary trends in Europe!
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See you next week!
Rahul & Aryaman
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