Kraft Heinz Leads $23 Million Investment in a Weed Company

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If you’re in the snack business, what better way to ensure steady profits than by investing in the nascent weed industry? Kraft Heinz, the fifth largest food company in the world, just made a massive bet on pot-induced munchies.

Through its venture capital arm Evolv Ventures, Kraft Heinz led a $23 million investment round into Flowhub, a cannabis retail management platform. International Business Times described the first round of investments as “the largest Series A funding round for a cannabis-related tech.”

Flowhub is a cloud-based platform that tracks a dispensary’s weed sales and ensures all transactions follow state laws. The software streamlines inventory tracking and analyzes purchasing trends, too.

“What we are experiencing right now is an end to cannabis prohibition, and Flowhub is on the front lines of this movement,” said Flowhub’s CEO and founder, Kyle Sherman, in a press release.

“With this investment, we will continue to automate the cannabis supply chain, retail, and reporting processes and bring to market technology solutions that are not only shaping the cannabis retail business, but also driving forward the future of legalization and de-stigmatization.”

Gallery — Maybe Heinz Will Create a Medicated Ketchup?

Founded in 2015 in Denver, Flowhub’s revenue doubled over the past year as it expanded its platform across 11 US states. Evolv Ventures’ $23 million investment, which included contributions from e.ventures, 9Yards Capital, and Poseidon Asset Management, brings Flowhub’s total investments to $27 million.

Evolv Ventures currently controls $100 million for business investments on behalf of Kraft Heinz. Kraft Heinz has traditionally only invested in food companies, so the switch into the marijuana industry — which is still federally illegal — came as a surprise to investors.

Kraft Heinz is likely playing a long-game with its massive investment into a disruptive industry, however. On Thursday, the company reported lower-than-expected earnings for Q3, falling short of sales projections by 5 percent. For the entirety of 2019, Kraft Heinz has underperformed and lost 55 percent of its operating income. In other words, the world famous ketchup company may be in big trouble if it doesn’t change course soon.

“The level of decline we experienced in the first half of this year is nothing we should find acceptable moving forward,” Kraft Heinz CEO Miguel Patricio said in August. “We have significant work ahead of us to set our strategic priorities and change the trajectory of our business.”

Why should a food company waste money on creating new products no one wants to eat when it could just invest in making its customers hungry with weed munchies instead? 

Exactly.

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