Things look pretty quiet around the offices of Trace, the cannabis quality-tracking software startup, these days. That’s because half of the small company’s staff is on the road talking with hemp farmers around Vermont who are getting ready to harvest their crops.
But there’s a lot going on under the surface. On Sept. 10, the nearly 2-year-old company received a patent for its software. Meanwhile co-founder Josh Decatur expects to have an app in Apple’s store in the next few weeks, and the company’s first government contract by the end of the year.
“We have had a lot of interest,” said Decatur. “We have 150 farmers signed up to use our application, waiting patiently to hear from us, in four states.”
Trace is a software company that uses blockchain to provide a guaranteed chain of accountability for CBD and other hemp products. Ultimately, the goal is to enable the industry to assess details such as where, how, and when a plant was grown, and how it was processed before ending up on store shelves. While Trace is working with individual farmers now, its creators would like ultimately to create an industry database that shines a light on the provenance of all commercial hemp products.
One day, said Trace, consumers will be able to scan CBD products in the store to connect them to the bulk lots – including the actual acreage – that they came from. In this future, he said, products that claim to be Trace-verified will be the ones consumers can be confident about buying.
“Trace will be an industry standard for everybody in hemp eventually,” said Decatur. “People see us as a starting point, and rightly so, in making their product verifiably compliant.”
Keeping it local
Decatur, 25, grew up on South Hero, and founded Trace last year with friend Paul Lintilhac, who is chief information officer at the company. Decatur said the two started Trace on their own, without investors, although they have since received capital from angel investors. About 10 employees work out of an office in Burlington; Trace has no paying customers yet.
The hemp and CBD market is growing chaotically in Vermont, as it is in every state that has legalized growing the cannabis plant for medicinal or recreational purposes. Although the state Agency of Agriculture requires growers and processors to register with the state, it’s not very clear how many hemp products are being grown, processed or sold as CBD or cannabidiol, an active ingredient derived from the cannabis plant that has been shown to have health-giving qualities.
Some CBD products are being used medicinally and regulated by the Food and Drug Administration, but most CBD is sold in food, drinks, tinctures, tablets and other forms. It’s up to the consumer to figure out if the product contains what its maker claims.
VTDigger is underwritten by:
“It’s a crapshoot,” said Decatur.” a lot of people are very putting very cheap Chinese-sourced isolates in the products that are branded as if they are a real health and wellness product.”
There are other supply chain management software systems that track the provenance of hemp and CBD products. The supply chain management industry sees the new crop as a chance to build a supply chain from the ground up, instead of integrating new technology into existing systems for crops like lettuce and tomatoes.
Decatur said the company sees the patent as proof that Trace is ahead of its peers. It’s difficult to patent software, and it’s unusual for a company to receive a patent with its first application. Decatur declined to give more details about what the patent will mean for his company.
“It’s difficult to say now what this is going to mean over time, because it’s extraordinarily broad,” he said.
But regarding the software itself, Decatur said Trace will help individuals and the industry at large.
“When we are talking to state agencies, or our users, we always try to have a mindset of what is best for the industry broadly,” Decatur said.
Michael Metz, president of the Generator maker space in Burlington, said Decatur is well positioned to create a transparent market for the hemp industry.
“Josh is really bright and he understands blockchain, which I don’t think a lot of people do,” Metz said.
Decatur learned a lot about what can go wrong with regulation when he worked on a cannabis farm in northern California. Policymakers were establishing rules for the industry without input from businesses, and the resulting tracking systems created trust and liability problems, he said.
“A lot of the influence was coming from bigger money interests in the state,” he said. “A lot of my farmer friends were small mom and pops, they didn’t have enough resources to hire lobbyists and advocate for themselves in the Statehouse.”
Decatur, a long-time cannabis grower, said Trace gets around this by creating a reliable and verifiable system of accounting for the plant and its products that can be used by the industry and regulators as they come up with rules for the creation and distribution of hemp products.
“It’s really just about having an accurate and truthful representation about what it is,” he said. “That’s our role at Trace. Then we put it out for regulators and consumers to decide what the limitations are for what product is allowed or preferred.”
Want to stay on top of the latest business news? Sign up here to get a weekly email on all of VTDigger’s reporting on local companies and economic trends. And check out our new Business section here.