The Uber of medical cannabis delivery has arrived, and the venerable accelerator Y Combinator has given its rubber stamp of approval. Meadow, a San Francisco–based startup, allows card-holding medical marijuana patients to browse different types of cannabis from nearby dispensaries and place an order, and within an hour the goods will be delivered to the patient's door.
If you don't have a medical marijuana card, you can schedule an in-home consultation with one of the doctors Meadow has partnered with and get a recommendation to use medical cannabis.
Meadow was founded by a team of tech startup entrepreneurs—David Hua, Rick Harrison, Harrison Lee, and Scott Garman—who wrote the first lines of code in June 2014 and launched mid-October of that year. Meadow's main functionality—the purchasing of medical cannabis by licensed patients and the delivery of cannabis by licensed dispensaries—is protected by California's Proposition 215 and the statute known as SB420. The app works only in the Bay Area of California, the first state to pass medical cannabis laws, in 1996, although the drug is still illegal under federal law. When Meadow sent its app for review to Apple's App Store and Google Play, the tech giants denied it. So Hua, Harrison, Lee, and Garman decided to focus on their online app—GetMeadow.com.
While Meadow has a lot of competition from other delivery apps like Nugg, Eaze, Canary, and Nestdrop (which is in a legal battle with the L.A. city attorney), Meadow is the only one with the backing of Y Combinator.
Meadow is technically a software company—it does not grow or sell cannabis. Instead, it simply connects legal patients to 10 legal Bay Area dispensaries. The app's HIPAA-compliant software verifies a patient's state-authorized medical marijuana identification card, which must have been recommended by a California state-licensed physician.* Meadow also sells software to dispensaries to help them manage patients and ensure their business is adhering to the laws. Meadow's revenue comes from a percentage of each delivery and monthly software subscriptions from dispensaries.
While the app works only in San Francisco, Hua says the company's main goal for the year ahead is to expand across the state of California. According to the Marijuana Policy Project, California has 682,814 medical marijuana patients. The state is also thought to grow and consume the most marijuana nationwide, so Meadow has a big market to tap. Like Uber, Meadow provides a service for the customers and for the businesses.
California's medical cannabis industry, although it's the oldest in the nation, does not enjoy the same protections and regulations as dispensaries in Colorado do.
"You'd be surprised, but most of the California dispensaries are small businesses with huge disadvantages—they are constantly under threat of a raid by the authorities, they can't take tax write-offs, and they don't have many tools they can trust," he says. "You have this amazing industry that is ready to grow, but it is lacking the technology and tools to scale. That's where Meadow comes in."
Hua has been in the tech startup industry since 2006. A cannabis user since high school, he's a firm believer in the plant's medicinal benefits. Like the majority of people in the U.S., Hua has come to realize that the war against pot is expensive, unsuccessful, and detrimental to society, and has racist implications. Enforcing marijuana prohibition costs the country $3.6 billion a year, according to the American Civil Liberties Union but has yet to decrease the plant's availability. While rates of cannabis use are essentially equal across races, blacks are 3.73 times more likely to be arrested for possession.
While working at gifting network startup Sincerely, Hua got the itch to learn about how he could start a business in the industry. So Hua went to weed college in February 2014. This isn't a Dave Chappelle joke. Hua attended the Oakland, California-based cannabis college Oaksterdam University, which was founded by cannabis activist Richard Lee in 2007 and offers classes on horticulture, culinary arts, dispensary operations, the history of cannabis and its prohibition, and science and law relating to the plant.
Hua had initially planned to launch an edibles company with his wife, who is a food writer, but after he met Debby Goldsberry, who founded cannabis collective Berkeley Patients Group and is an instructor at Oaksterdam, she told him about the various pain points of running a dispensary and he got a better idea.
"Everything that she was saying struck a nerve with me—the processes, technology, and logistics for cannabis businesses are archaic and outdated," Hua says. "She told me about how the current software companies make dispensaries pay an exorbitant amount of money, take advantage of businesses, and are not ideal solutions."
That planted the seed in Hua's head to focus on things he knows well—software and technology. Hua and three colleagues at Sincerely talked about starting a cannabis-related software company and they all decided to take the plunge. Hua, Harrison, Lee, and Garman quit and started to build Meadow.
"Ultimately, we decided to do what we're good at," he says. "We're not cultivators, we're not dispensary owners. We're good at user interfaces, tech, and we believe we can do the most good in that space because we can get into Y Combinator and pitch venture capitalists who may not have been thinking about cannabis."
The team applied to Y Combinator in November 2014, got into the January 2015 class with 114 other startups, and graduated in April. Meadow is officially the first cannabis-related company to graduate from Y Combinator. With $120,000 from YC, for a 7 percent stake, Meadow has launched the app and is already facilitating deliveries to medical patients from 10 Bay Area dispensaries and connecting doctors with new patients. Meadow has partnered with a dispatch and delivery startup Onfleet to help dispensaries complete the "last mile" of the delivery logistics.
Meadow will not share revenue numbers, number of patients, or how many doctors are in the app's network.
Hua says the company's next step is to help spread the word and educate people about cannabis.
"Marijuana isn't a gateway drug. The drug dealers who are peddling other addictive substances are the gateway to harder drugs," Hua says. "That's why legalization and the legitimization of the industry is so important. When you regulate cannabis, test it, and it's sold from a store, it makes cannabis safer."
The company is staying lean for the time being—the founders work out of their apartments and coffee shops—but it is currently looking for more venture capital. But Meadow isn't going to take just any straight-laced venture capitalist's money. Instead, it is looking for investors like the brother-sister cannabis investment firm Poseidon Asset Management, which made a recent investment in Meadow. Emily and Morgan Paxhia, who started Poseidon after seeing how cannabis helped their cancer-stricken mother, say Meadow is a great tool for dispensaries and a safe and convenient way for patients to receive safe access to medicine. Now, Meadow will be looking for more investors like the Paxhias—venture capitalists who have a passion for cannabis and its medicinal qualities.
"We're looking for progressive investors who don't see us as an opportunity to get into a burgeoning market but understand that cannabis has medicinal benefits and can help spread the word," he says.
*Correction, April 13, 2015: This post originally misidentified the Health Insurance Portability and Accountability Act, or HIPAA, as HIPPA.