Friends, it is 4:20 in the afternoon as I write this. There is a particular cultural weight to this hour on this date, and I want to honor it by being honest about what we — the practitioners of this industry — have done to the plant, and to the people who believed the plant was a refusal.
I grew up, as some of you know, in a small town in the Northeast. The cannabis of my adolescence was an act of refusal. It was refusal of the draft, of the corporate ladder, of the thirty-year mortgage, of the well-trimmed lawn, of the company softball league. The plant was, to the people I watched smoke it in the late nineteen-eighties, a small assertion — not of a political philosophy but of a personal one. The assertion was: I will not be enrolled in every system that is offered to me. The assertion was, simply, an opt-out.
That plant is not that plant any longer.
I want to walk you through what happened, because I think this afternoon deserves it.
(pause)
In November of 2012, Colorado and Washington voted to legalize adult-use cannabis. In the fourteen years since, thirty-eight U.S. states have legalized cannabis in some form, twenty-four of them for adult use. The first legal dispensary I visited professionally was in Denver in 2015. It looked, to me, like a wine shop. The product was displayed in glass. A young woman in a branded apron walked me through strain profiles. There was a loyalty program. There was an app. There was a marketing email follow-up, two days later, which I did not unsubscribe from. I remember thinking, at the time, that the refusal my town had practiced in 1987 had been, somewhere along the way, quietly retired.
The refusal did not vanish, friends. It was acquired.
That is what I want to talk about this afternoon.
The Platform
Dutchie, a Bend, Oregon company founded in 2017 by the Villwock brothers, is the dominant commerce platform for cannabis dispensaries in the United States. The company's software — point-of-sale, e-commerce, payments, inventory management, regulatory compliance — is used by more than sixty-five hundred dispensaries. Dutchie processes, by its own disclosure, over twenty-two billion dollars in cannabis transactions annually. If you have bought cannabis from a licensed dispensary in a legal state in the last three years, there is a meaningful probability that Dutchie's software was the system between you and the plant.
In October of 2021, Dutchie raised three hundred and fifty million dollars at a valuation of three-point-seven-five billion, in a Series D round led by D1 Capital. That funding made Dutchie the most valuable cannabis-technology company in the world. In the same year, Dutchie acquired Greenbits and LeafLogix — its two principal competitors in dispensary point-of-sale — and consolidated its market position to the one it holds today.
In January of 2024, Dutchie raised an additional one hundred million dollars. The post-money valuation on that round was four hundred million dollars. That is, if you are keeping score, an eighty-nine percent reduction from the 2021 mark. The capital markets have priced a company that dominates its sector at roughly one-ninth of what the same capital markets priced the same company three years earlier. The dispensaries on the platform have not decreased. The transactions have not decreased. What has decreased is the market's confidence that the model produces a return commensurate with the dominance.
I find that reduction instructive. I want you to sit with it.
The Lock
Dutchie's software, as I understand it, is offered to dispensaries with favorable commercial terms — in some cases free hardware, subsidized onboarding, low introductory software fees. The terms come with a quiet requirement: that the dispensary adopt Dutchie's proprietary payment product, Dutchie Pay, as its payment processor. In cannabis — which remains federally illegal and therefore largely unbanked — payment processing is the single most margin-sensitive function a retailer operates. The fees are high. The options are few. And a platform that ties the point-of-sale software to its own payment rails collects a rake on every transaction the store completes.
The platform is the product. The payment product is the product. The dispensary, inside the arrangement, is not the customer. The dispensary is the distribution surface.
This is a structure our firm knows well. It is what we built for DoorDash. It is a cleaner version of what we built for Spotify. It is what we built, in its most elegant form, for Intuit and TurboTax. The move is always the same. You offer the platform free, or cheap. You tie the transactional layer to the platform. You take the rake on the transactional layer. And when the customer eventually recognizes what has happened, you point back to the free platform and remind them that they signed.
Dispensary operators — the people who run the stores, who know their regulars, who were in the plant business before the plant was a business — describe the arrangement, in the places they describe it publicly, as a monopoly. I am not using that word. I am not in a position to use that word. I am only reporting what they are telling each other.
The Afternoon
There is a detail about Dutchie that I want to leave you with, because I think it is the single most revealing fact in the sector, and I have not seen it discussed with sufficient seriousness anywhere else.
Dutchie has, on multiple April 20th afternoons, experienced system outages.
The single busiest sales day of the cannabis retail calendar is April 20th. On that afternoon, on more than one occasion, Dutchie's systems have failed. Dispensaries have been unable to process transactions. Customers have waited in lines that did not move. The software that monopolized the dispensary back-of-house in the name of modernization has, on the plant's one unambiguous annual holiday, been unable to complete the transaction the dispensary existed to complete.
I want to sit with that, friends, for a moment.
We took a plant that had been, for sixty years, an assertion of opt-out. We legalized it. We corporatized it. We consolidated the retail channel onto a handful of multi-state operators. We sold the dispensary software to a single dominant platform. We tied the payments on that platform to the platform's own rails. And on the one afternoon of the year when the holiday that made the plant famous is observed — the afternoon the platform was, in theory, built to serve — the platform cannot deliver the service.
It is 4:20 in the afternoon as I finish this note.
I want to say, without any ceremony, that it did not have to end this way. The plant did not require a platform. The dispensary did not require a rake on every transaction. The refusal my town practiced in 1987 did not need to become an equity narrative reported quarterly to D1 Capital.
It did, however, end this way. And we — the practitioners of this industry, the people who write the memos, price the consolidations, and build the payment rails — are the people who ended it this way.
I am not sorry for it. I want to be clear. I have built my practice on ending refusals that the market would eventually have ended anyway. The market would have ended this one. I sped it up. I was paid for speeding it up. I will be paid again, tomorrow morning, for speeding up the next one.
What I want to offer, on this afternoon, is only an acknowledgment. The plant was a refusal. The platform is a transaction. We are, most of us, the people who made the second thing out of the first.
Happy 4/20, friends.
Be kind to your dispensary. They did not choose the system. They are operating inside it.
Let's extract.
This post is satire. Dutchie is a real company. The valuation history, the transaction volume, the dispensary count, the acquisitions of Greenbits and LeafLogix, and the repeated April 20th system outages are real. So, quieter but more important, is the thing the refusal was, before we came for it.