WeedBay.org Business Plan
Costs and Break Even
Despite the large growth in the Cannabis industry there is still a very large portion of the market that is not being served by brick and mortar dispensaries or delivery services. There are a variety of reasons why this population will not or can not use the current services for their needs.
Weedbay aims to develop an online service which allows safe and trusted peer to peer Cannabis distribution and related products.
This done through an online platform in which providers upload product data directly to the site. Providers can have basic listings or a variety of enhanced listings up to and including own shop on the site. Consumers are able to order directly from the provider through a provided multi-user cart.
A mobile app will be developed in conjunction with the site. The app will provide conveniences to the user such as push notifications alerting them to new product which meets their criteria.
Trust is built through a rating system that allows consumers to rate product as well as provider.
Multiple fulfillment options will be available and provide convenience for the consumers. These may include:
In person fulfillment
Producer provided Fulfillment
Partnerships with delivery companies
Developing a fulfillment network
Filters will be in place to allow consumers to specify product type, location, rating, provider rating, and fulfillment options.
Ancillary services such as product testing can be integrated.
Monetization will occur through a variety of means to include
Premium Listing Fees
Advertising buys will be very targeted due to the data collected from users. This increases the ad value.
In January of 2010 we registered the domain weedbay.org and began work on developing a proof of concept website application. This was completed in May of 2010. A minimal marketing effort ensued.
Initial response was very favorable.
We soon realized operations would necessitate far more personal interaction than a typical web application. Authorizing users become overwhelming.
We soon found that the needs required to operate the site in a manner that would provide the needed service levels were beyond our current capabilities.
Although the initial design and back end is functional there is a need for more user friendly and more administration friendly processes.
As a proof of concept the site is a success. But to operate in the best manner possible, a complete overhaul and relaunch is necessary.
The website application will be a peer to peer marketplace.
Product producers will be able to list products in individual listings, enhanced listings, or in their individual store fronts.
Product producers will have profiles.
Consumers can leave ratings both on the product listings and on the producers profiles. Negative feedback will be put through a system that allows the supplier a chance to satisfy the customer prior to the review going public. this will ensure happier customers and better overall ratings for suppliers.
Social interaction between consumers and suppliers will be encouraged. The use of commenting systems, forums, and groups will be used to encourage social interactions.
We want to consumers and suppliers to interact to naturally inspire trust and reputation. Trust and reputation are a key element and will provide the main market advantage.
Producers profiles will have the ability to be content rich. Providing spaces for displaying grow rooms, curing rooms, videos, and any other part of the production process. In this way consumers will feel connected to the grower and the grow.
In progress grows can be featured. Teasing out the quality of the upcoming product. Smart growers can market their product very early on and build anticipation.
Product listings can be filtered and sorted by strain, grow type, and the growers rating. Further sorts can be done for geographical areas for in person fulfillment. Sorting for fulfillment type will also be available. Consumers can optin to be notified when product meeting their criteria are listed.
This system will allow consumers to find the strain they want with their required fulfillment method.
One of the important features of the website application will the ability for users to “follow” growers and strains. This will produce a “River of News” stream unique to each user. This News stream will feature new product from favorite growers or favorite strains. This news feed will also push out in real time or aggregated to each user via email, SMS, and push notifications to the mobile app. These communication methods will be used according to the users selected preferences.
Bitcoin will be the preferred payment system to eliminate problems associated with banking.
A mobile application will be developed to serve a number of purposes. However the primary purpose will be for push notifications. Push notifications will be used to alert the user of new products from selected strains or growers.
Future features of the app will mimic site functionality to include
Some application platforms may limit functionality by their specific terms of service. So functionality may be limited on some platforms. However any user, regardless of platform, will be able to get SMS notifications which fulfill the primary purpose of the app
Weedbay is not a medical marijuana dispensary or medical marijuana cooperative but instead is an online collective which allows patients and caregivers to interact online directly with each other and to facilitate the distribution as necessary between those who legally cultivate medical marijuana and medical marijuana patients with a doctor’s recommendation for the treatment of terminal and chronic illness.
Weedbay is a unique model which uses the efficiencies of modern technology to ease the hassles of acquiring medical marijuana and to reduce it’s cost by a more efficient peer to peer model. Those who have legally grown cannabis may list their excess medication on weedbay. Patients can acquire medical marijuana by providing the cultivator with a cultivation fee.
From California Attorney General’s Guidelines for the Security and Non-Diversion of Marijuana grown for medical use:
“A collective should be an organization that merely facilitates the collaborative efforts of patient and caregiver members – including the allocation of costs and revenues. As such, a collective is not a statutory entity, but as a practical matter it might have to organize as some form of business to carry out its activities. The collective should not purchase marijuana from, or sell to, non-members; instead, it should only provide a means for facilitating or coordinating transactions between members.”
We believe that weedbay follows not only the letter of the law but also the intent of the law, as stated by the California Attorney General. As such it does not fall under the licensing requirements of a dispensary. No licensing is required for merely facilitating the collaborative efforts of patients and caregivers. However we will consult with an attorney to verify this.
There is a very large but disorganized marketplace. Providers post on Craigslist and other classified ads websites.
Ads are quickly flagged and removed. Scammers are rampant in the system. There are no trust indicators and consumers are wary for obvious reasons.
Distribution is mostly through physical meetups in public places. Both consumers and providers regularly deal with no shows as a part of the process.
Despite all of the difficulties and dangers it is still an extremely active marketplace. Regular consumers regularly and readily purchasing directly from providers and avoiding the dispensaries.
Although market size is indeterminate due to the nature of the market there are indicators.
In 2011 we setup a system to scrape craigslist postings offering Cannabis for purchase. The system we devised emailed the posting to a dedicated email address. Postings were collected for all major cities in California.
This system resulted in collecting between 500 and 2000 postings per day. Quickly inundating our email systems.
In addition we watched websites which allowed classified style cannabis listings. These listings were added at a very high rate. Indicating a very active although disorganized marketplace.
We also tested posting listings on Craigslist to find out if there were responses. Our listings typically received 10 to 20 responses before being flagged and removed. Indication a great deal of consumer activity.
Consumers choose to purchase in this manner for a variety of reasons. These consumers have legitimate recommendations yet choose to purchase through channels other than dispensaries. Reasons for preferences may include
Not wanting to be seen entering or leaving a dispensary
Not wanting to be on a dispensaries customer list for fear of that list being revealed.
Accustomed to black market dealings from the past Desire face to face interaction with the grower. Many consumers want to feel like they are connected to the product.
*Feelings that dispensaries may be profiteering
In addition to the consumers who prefer to purchase in this way are also consumers who do not have access to regular dispensaries due to location or lack of transportation.
Each of these consumer types have slightly different needs but all of these needs will be fulfilled by the service.
One of the most important customer needs is the need for trust.
Consumers must be able to trust the origin of the product, it’s potency and quality, and it’s purity.
Consumers also need to trust that the product will be delivered and that there is not a dangerous scammer on the other end of the transaction.
In such a wild and chaotic marketplace there is a severe lack of trust indicators and consumers take a risk with each transaction.
This service seeks to eliminate that risk. Providers will be vetted through consumer rating systems. An escrow service may be provided if deemed necessary. Transactions will be secure. Identity will as secure as possible.
If deemed necessary personal identification can be stored in a separate and encrypted database for further security. The main application would simply ping the secure database to ensure the user has a valid recommendation. Future versions may interact with current databases ensuring higher security and ease of use. Measures will be taken to avoid falling under HIPAA guidelines or to follow the guidelines as necessary to be compliant.
Presently we are confident that this model will fit into California regulations. We have not investigated the legal landscape in other states and will wait for legal counsel to make a determination whether other states are worth pursuing.
Rural areas and cities where regulation has prevented dispensaries have a large need.
Direct competitors include three categories
Websites that allow classified postings of Cannabis ads
Websites that claim to operate with extreme encryption. These websites openly distribute in illegal ways and claim to circumvent the law with encryption technologies
*Out of country websites which ship internationally
Classifieds Sites include:
These are simply classified ads software installed for the purpose of hosting Cannabis ads. There are no trust indicators. Anyone can post. There are many postings which openly state they will carry out illegal activites such as shipping across state lines or providing product without a recomendation.
These sites state that consumers should be aware of scammers. Persons posting ads have not been vetted.
These are very risky for consumers.
Encryption based sites:
Both use encryption (or claim to) to protect consumers. Both offer worldwide shipping and do not require a midical ID card. Consumers who deal with these sites are dealing with people who are openly carrying out criminal activity. A very risky behavior.
Out of Country
Like the encryption sites, these sites ship worldwide without proof of a recommendation. Shipping through customs. Also very risky behavior.
Craigslist is an involuntary indirect competitor. Listings are regularly posted on Craigslist. In some locales these listings persist. In other locales they are quickly flagged and removed.
Producers continue to post as they know that consumers will collect the information before the listing is removed. There is a large amount of activity on Craigslist even though there is active policing.
Our primary competitive advantage is that we are the first to market. We have deeply analyzed the needs of the market by both data collection, personal interaction, and participating as both producer and consumer in the marketplace. We have bought from and sold to dispensaries. We have bought from and sold to craigslist users. We understand the problems associated with both.
We are experienced in community building and in building community sites.
We are experienced in internet marketing and have developed and carried out marketing plans for our own products and also acted as consultants.
We have clearly identified marketing opportunities in the space.
We have tested the concept and are confident that there is a need and a desire.
Our marketing plan will use a variety of channels and methodologies to include:
Content marketing strategies. Through our proprietary methodology we are able to produce daily content in the following formats
Abstracts - Short summary articles of current interesting news articles or blogs.
Summaries - Collections of abstracts used for posting to social media or promoting as a newsletter
Commentaries - Mid length articles which provide opinion. these are promoted through social media
Full length blog posts - Unique and interesting high quality posts. These will be used for paid organic amplification. With these we are able to market in channels which might otherwise be prohibitive
Memes - We have proprietary systems in place for meme production and can produc high quality and interesting memes which have a possibility of going viral.
Other content will be produced on a weekly or monthly schedule. This will include:
Videos - Videos can include talking head videos, animations, presentations. There is a large community on outube which can be reached through youtube. Our initial launch primarily used youtube as a marketing channel.
Infographics - These will be distributed via outreach
Outreach to Growers
Currently there are a large number of daily postings on sites such as craigslist and budbay. Although they are deleted quickly, scraping them through automated means is a trivial matter. These people can them be contacted on an individual basis through email or SMS. Our plan is to scrape and store this data. We can notify these people and ask if they are interested in getting onto a notification list. Both email and SMS notification lists can be created and built until launch day. At which time we should have a large list and be able to have a large launch.
Paid Organic Amplification
The quality content above can be promoted using content promotion services such as outbrain or facebook advertising. It may be necessary to host this content on separate blogs if there is a possibility of TOS violations. A separate news blog will be maintained for this purpose. The community can be built around the news blog and directed to the weedbay service.
User Generated content - Once the site is launched we will provide many opportunities for user generated content. UGC is natural in this niche as many consider it a culture. Simply providing opportunities for users to create content should be effective. We will also encourage this through automated means and through the use of a community manager.
Press and Blog Outreach
The press and bloggers will be contacted through direct outreach and also through targeting on facebook.
Preliminary inquiries have revealed that the press would be interested in this
Facebook marketing can be highly targeted to bloggers and reporters. This can be used as a distribution channel to reach these bloggers and reporters.
Market size is indeterminate. We only know that it is large. So exact projections are impossible.
However we can make some assumptions based upon evidence in the marketplace.
Based upon the number of craigslist, budbay, and similar postings per day we can give an estimate of transactions. Based upon an average of 1000 postings per day if we assume each posting results in one transaction we can estimate 1000 transactions per day.
From our experienc a typical posting will result in 10 - 30 inquiries. So an estimation of one transaction per posting is conservative.
So if the average transaction value is $100 and our transaction fee is 3% this would result in $3000 per day in transaction fees.
Assuming a $1 listing fee this would result in an additional $1000 per day.
Assuming that 10% of listings purchased a premium listing of $5 this would result in an additional $500 per day.
Transaction fees, listing fees, and premium listing fees total equals $4500 per day.
Some users will have their own storefront. Assuming 100 users with storefronts with a monthly charge of $100 is an additional $10,000 per month.
We plan on keeping banner advertising to a minimum in order to maximize on site transactions and keep useability high. So banner advertisements will be limited to around two banners and three smaller square ads per page. This should result in each major section of the site generating approximately $1000 per month in banner advertising. For a total of around $10,000 per month in revenues
Each site section will have a featured grower. This will be a display at the top of the page and will link to that growers storefront. Sections will be divided by strain, growing types such as organic, indoor, outdoor, etc. This will result in a large number of opportunities for featured growers in each section. Popular section rates should be around $500 per month. this should result in an addition $10,000 per month in revenues.
We will accept paid featured posts. This should result in revenues upwards of $5000 per month.
Site users will subscribe to daily emails notifying them of popular products, specific strains, latest news, etc. With segmentation this could amount to a large number of emails. This segmentation will all be automated and based upon user requests for information. Each of these emails is an advertising opportunity. Since the recipients will be very interested in the content they should have high open rates making the advertising valuable. Email frequency will differ by subject but many will be daily. We will sell one ad at the top of each email. Expected from is $250 per ad. This should generate revenues of $15K or more per month.
With all of these revenue opportunities in place the total estimated revenues are $185,000 per month.
This is based upon indicators such as the number of craigslist postings. This does not account for the customers who would enter the market in a safer, more secure, and more convenient such as the one we propose.
Alternative Market Size Estimation Methodology
Another methodology for estimating the current size of the market is to look at USPS seizures. The USPS reported seizures of 45,000 pounds of marijuana. This is in 9,100 packages.
Of course much of this is interstate commerce. Weedbay will not operate across state lines but will segment markets within legal marketplaces. But it does give some scope.
Investigation conversations in forums reveals that a large percentage of these people consider USPS to be a “safe” delivery method. Many claim 100% delivery rates. Considering these claims and comparing them with USPS seizure rates seems to reveal a very large existing ongoing trade.
We are not recommending USPS as a delivery method. Only pointing out that there is enough existing commerce to warrant developing in house delivery services or partnering with existing services. And to point out the scope of the existing underground marketplace which could be converted to legal commerce methods. As this conversion happened many more consumers will enter the marketplace as risk is removed.
Start marketing, development, and outreach concurrently
Three Months - Announce prelaunch. Tease features. Open selection process for beta testers
Four Months - Limited prelaunch to selected beta testers.
Five Months - Full Site Launch
Six months - App Launch
Seven Months - Begin expansion to other geographical markets as determined by legal council. Goal of expanding to a new market every 30 days. As some markets may have differing technology needs we will expand to similar markets first. Move into each market with website service first followed by mobile app service.
Eight Months - Begin enabling wholesale transactions on a per market basis.
Nine months - Have partnership with delivery service in place or begin building fulfillment and distribution network.
Eleven Months - Begin outreach for partnerships with dispensaries.
First Phase of website. This includes development up to launch date and monitoring and development of regular features after launch. Does not include development for other geographical markets or wholesale markets.
First Phase of Mobile App development. Includes development of app up until app launch and regular development of new features after launch. Does not include development for new geographical markets or wholesale markets.
Legal and Business structure Costs
Marketing Costs for First Nine Months
With a strong marketing strategy beginning concurrently we expect to enter the market with a very strong showing. In the beta launch phase we will offer incentives such as free listings and transaction fees.
At the time of full launch we will have an active and trusting user base. With this in place new users will feel comfortable with the system and begin actively making transactions.
We expect these transactions to grow rapidly. The system should have a large, active, and comfortable user base within three months of launch. Revenues should match or exceed future development or legal costs at this point. In the tenth month we project revenues will match all costs plus will exceed the initial investment.
Each month thereafter should match or exceed the projected revenues of $185,000 per month. At that time development costs will be minimized. These leaves site management costs, ongoing marketing, and sales. Approximately $10k per month. Leaving $17,000 in profit.
Growth should continue to occur in the California market as we then move beyond the early adopters. New growth will be available as we enter new markets.
Website application is to be built on the Drupal Open Source Content management system. Drupal provides constant security alerts and is very stable.
The site will be hosted on a dedicated Server and this server will be maintained by an in-house professional.
Minimal IT requirements are necessary. All development work will be done by our team who all work remotely and provide their own technology. A minimal amount of technology such as laptops and phones will be needed for key employees.
Conversion Split Testing
Split testing is essential to knowledge gain. Split testing services such as convert.com, luckyorange.com, and kissmetrics.com will be implemented and regularly monitored to gain insight into customer behavior.
Key performance indicators will be constantly monitored and used for decisions on development using an agile development philosophy
Google analytics will be properly setup. Funnel visualizations will be put in place to analyze site usage. All external advertising will include tracking urls when possible. Analytics will be used to measure the efficiency of each channel
We have developed proprietary content development systems and workflows. These systems and workflows are capable of producing large amounts of engaging content with minimal oversight. The system relies on content management systems, workflow systems, social publishing and management systems. This limits human interactions to only the necessary tasks. Minimizing cost. Work is segregated between Mturk works, lower pay scale workers, and a minimal amount of highly qualified writers. This ensures that the lesser tasks are done by lower pay scale workers or machines and frees up the writers for writing.
An example workflow can be sen here.
An example meme generation engine can be seen here
Other content types have similar workflows
Systems and Automation
Key Support Processes
Management Team Members
Management Team Gaps
Board of Advisors
Type and Quantity
Quality Assurance Practices