Exclusive: Square Exec Unveils Cannabis Delivery Partnership Details - A 'Huge' Market

Canada's cannabis market is buzzing, and it's not just about the product. It’s about finding new and smart ways to sell it. And this is where Block Inc SQ's Square, a tech company you might know from the payment systems at your local coffee shop, comes in.

Square recently announced it is teaming up with Jane Technologies, an online ordering service for cannabis dispensaries, to bring something new to the table. Together, they’re cooking up fresh and practical commerce solutions to help the growing recreational cannabis industry in Canada navigate through its unique challenges and opportunities.

Sitting at the helm of Retail at Square, Roshan Jhunja is both a visionary and a pragmatist. “At Square, we’re always looking to solve sellers' pain points,” he says in an exclusive interview with Benzinga Cannabis, emphasizing a core tenet that seemingly drives the company's ventures into diverse markets.

The entry into the cannabis market in Canada, he reveals, is not merely opportunistic, but a carefully considered move aimed at alleviating the specific challenges faced by cannabis dispensaries, particularly the limited options they navigate in the realm of “reliable and integrated commerce tools.”

Navigating The Cannabis Maze: Square's Strategic Inroads

While legal at the federal level in Canada, cannabis struggles with a complex, multifaceted regulatory landscape. With cannabis retailers authorized at the provincial level and each province crafting its own unique set of regulations, the industry navigates through a labyrinthine regulatory environment that is further complicated by the pandemic-induced uncertainties and subsequent adjustments to retail conditions.

But, for Square, these intricacies and challenges are not deterrents. Instead, they are seen as catalysts that have propelled them towards “better and more robust solutions” for merchants and customers alike in this post-pandemic, regulated market.

Square’s journey into the cannabis sector aligns with its broader strategic visions, anchored in its established presence as a technology leader that services a diverse range of industries.

“With cannabis representing such a huge emerging market in Canada, the U.S. and globally, we’re committed to being at the forefront of providing the tools and services necessary to help cannabis sellers succeed,” Jhunja shares, delineating Square’s forward-looking commitment to this burgeoning sector. The emphasis, he notes, is on “focusing on continued expansion” of its program into more provinces in Canada and exploring ways to offer sellers more products at competitive price points.

Potential, Partnerships And Prudent Planning

Exploring the horizons beyond Canada, particularly peeking into the U.S. cannabis market, the strategy takes on a thoughtful pause and deliberate calibration. “We don’t have any immediate plans to share given the different regulatory environments in other markets. However, should regulations change this is a conversation Square would be open to having,” Jhunja explains, indicating a judicious global perspective that is not impulsive but adaptive to varying regulatory climates.

While Square's calculated discretion prevents the sharing of specific numbers and projections, the substantiality of the legal cannabis market, estimated to be worth over $4.5 billion and projected to experience more than 18% annual growth through 2024, offers a tantalizing vista of possibilities and potential for substantial impact in Square’s growth narrative.

The collaboration with Jane Technologies is integral to this journey. “Jane and Square share the common goal of empowering brick-and-mortar sellers with best-in-class digital tools so the partnership made sense,” Jhunja says, presenting a unified front that seeks to synergize both companies’ strengths. Together, they herald a significant opportunity to “create better business solutions for the recreational cannabis industry in Canada.”

Unique Challenges Breed Unique Solutions

While addressing the unique challenges and regulatory hurdles of the cannabis industry, Square demonstrates a nuanced understanding of the sector’s particular needs. “Cannabis dispensaries, just like other retailers, are looking for an easy-to-use, fully integrated omnichannel solution to help them run their businesses in person and online,” Jhunja explains. He underscores the necessity for cannabis retailers to have access to tools that not only offer valuable insights for managing their inventory but also assist in ensuring compliance in a “highly regulated” space, while simultaneously enhancing customer experience and product selection in a fiercely competitive market.

The early footsteps of Square in this industry, through its Early Access Program, reflect a strategic, grounded approach that allows select cannabis dispensaries to begin testing the Square for Retail POS in stores ahead of a wider public launch. While it’s still “very early days,” as Jhunja notes, and with the offering currently only available to Ontario's government-authorized retailers, the program represents a cautious yet determined stride into the market, with a keen eye on collecting feedback and iterating on the offering to finely tailor it to sellers’ needs.

Jhunja sheds light on the challenges anticipated by Square, particularly in maneuvering through the regulatory and supply chain constraints of the cannabis industry. He delineates the complexity, explaining how the transition from illicit to legal businesses in various markets, such as the U.S., is often accompanied by stringent regulations aimed at ensuring businesses adhere meticulously to the legal frameworks. This “overly cautious approach” by regulators, while prudent, does place a considerable burden on sellers, subjecting them to unique taxation and requiring detailed sales reporting, for instance, on a SKU-by-SKU level, which can be "difficult and time-consuming."

Navigating these complexities, Jhunja underscores the priority of the venture. “Our first order of business is to focus on building a strong solution for dispensaries and providing the tools and services necessary to help them succeed.” This encapsulates a mission that is as much about fortifying the operational capacities of dispensaries as it is about fostering a symbiotic relationship that propels the entire industry forward.

For Square, the objective is to alleviate these burdens, to make operations and payments for cannabis retailers as “easy and seamless” as possible, mirroring the accessibility offered to other retail sectors. And while certain aspects, such as the “buy now, pay later” functionality through Afterpay remain under wraps with no details shared, Jhunja emphasizes that the primary focus is on building a “strong solution for dispensaries” and providing the tools and services necessary to propel them towards success.

Strategic Patience: Square's Calculated Entry Into Cannabis

In moving through the timeline of Square’s decision to venture into the cannabis market, it becomes evident that the wait until 2023 was not one of hesitancy, but of strategic patience. The pandemic and subsequent uncertainties and shifts in cannabis laws and regulations necessitated a pause, allowing Square the time to forge “better and more robust solutions” in response to the evolving post-pandemic retail conditions.

Through the intricate weave of this narrative, what emerges is a picture of thoughtful strategy, of a technology leader not rushing to capitalize on an emerging market, but rather, moving through its complexities with careful consideration and a steadfast commitment to offering robust, integrated solutions that address the specific pain points and challenges of cannabis retailers.

Square, with Roshan Jhunja at the retail helm, enters the Canadian cannabis market not merely as a participant but as a proactive solver of challenges, weaving a tapestry that binds together technology, commerce and regulatory compliance into a holistic solution for a burgeoning industry.

Image: Unsplash.