Latest / Reframe First / Cagdas Ucar, VP of Technology at FundCanna | AI and Regulation Shape the Future of Cannabis Industry

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Cagdas Ucar, VP of Technology at FundCanna | AI and Regulation Shape the Future of Cannabis Industry · Reframe First

• Oleksij Rak: Hey guys, welcome to another episode of Reframe First. I'm Alexey, the host of the podcast, and let me welcome our today's Chedash Ukar. ⁓ Chedash is VP of Technology and a fund cannot. So hi, Chedash. It's great having you here. Cagdas Ucar: you Very nice to be here. Thank you, Oleksandr. Oleksij Rak: And thanks a lot for joining. from what I learned, Fund Kena is the leading source of capital for the cannabis industry nationwide. So that's a really interesting field to be in. We already had one guest from cannabis industry. So I'm really looking forward to discuss about like what you do. So could it like let's start from like, could you tell us a bit more about Fund Kena, what you do and what your mission is? Cagdas Ucar: Yeah, yeah, of course. Yeah, from Canada is the as you said, the leading provider of financial ⁓ products in the cannabis industry. And ⁓ I think, you know, to this date, we had about 4500 some funded ⁓ applications. And, ⁓ you know, the cannabis industry is not huge. So we ⁓ operate in a very Oleksij Rak: Yeah. . Cagdas Ucar: tight space, the total number of dispensaries in the US is probably between 10 and 15,000 dispensaries. And if you add the ancillary businesses and other businesses that are in the cannabis manufacturers, MSOs, the total market is probably about 50,000. That's it. So that puts us in a very ⁓ specific set of challenges. Oleksij Rak: you . . Cagdas Ucar: We actually have to like in a lot of the e-commerce industries out there, you look at things in bulk. You know what I mean? Like it's the big data. You know, you have like millions of shoppers coming in. What percentage actually took action here? What percentage is out there? For us, it's like every single customer counts. Like we track everything from the moment of click. Like as soon as they click, you know, our salespeople are getting notified. We're watching like. Oleksij Rak: Yeah, for sure. Yeah, yeah, yeah. ⁓ Cagdas Ucar: What are they doing? Like what did they click and what are their challenges with our interfaces? So yeah, I'm the person that oversees the technology operations in Fontana and we're building very exciting products. Oleksij Rak: With regards to customers, this is something new and I didn't look at it from this perspective. Amazon does millions of sales every, like transactions every single day. And you mentioned that you do not have that many customers, which is obvious, but still, what is the expected volume of customers that you do have? How many of them are out there? Cagdas Ucar: Yeah, yeah, I think per month like we found about 10 million dollars or so ⁓ like that that that corresponds to about 150 to 200 ⁓ customers per month getting funded through Fontana. And ⁓ yeah, I you know, we I think to this date we funded about 4500. But like I said, because it's a small market and you're growing. Oleksij Rak: Mm-hmm. Mm-hmm. Cagdas Ucar: by the way, so we actually have ⁓ new initiatives that will actually increase our marketing exposure through a partnership called ⁓ Apex Trading. Apex is basically the eBay of the backend industry ⁓ of cannabis. like, you see all these ⁓ e-commerce stores ⁓ that are geared towards the customers, ⁓ the consumers. Oleksij Rak: Mm-hmm. Cagdas Ucar: But you know, we don't we don't deal with those what we deal with is the the back out like when the when the providers of cannabis wants to they need to shop for inventory Where do they go and there's like this one? Big and there are there are two main market marketplaces for that one of them is called leaf link and the other one is called apex trading and Yeah, we're basically both in partnerships with both of them and we're building integration that's going to be increasing our translation. Oleksij Rak: By saying fund, do you mean like you're selling inventory or you're also like helping them fund their, I don't know, back office operations or whatever? Cagdas Ucar: ⁓ yeah, yeah, yeah, yeah. We fund their back-office operations. Yeah, that's exactly it. I mean, like, think from the dispensary perspective, right? I mean, you're opening up on dispensary. ⁓ In cannabis, everything is cash-based, right? In other industries, ⁓ you have banks that you can work with. You go to Authorize.net, Bank of America, Wells Fargo. They all have their own integrated e-commerce solutions. Opening up a merchant account is no big deal. You go to Stripe and everything is handled for you. For us, it's nothing like that. I mean, in the cannabis industry, a lot of the banks don't want to do business with you. so like 95 % of our customers are working with smaller banks and credit unions. And, you know, that basically makes it a lot harder for them to integrate with these big operations. So. Oleksij Rak: Yep. Yep. Cagdas Ucar: Yeah, we're working with all of those smaller companies and ⁓ providing ⁓ loans to them. They basically need to, because everything is cash based, ⁓ they can't grow their business. In other industries, loan ⁓ debt is basically part of business. That's just the standard business model. I would challenge anybody to show me a business in US that does not have debt. Right. They're probably taking financing somewhere. mean, like the old school cash based operations in the US is like ⁓ minimum. There are only a few industries that are that this is happening and cannabis is one of them. you know, basically, Fontana stepped in ⁓ to a need in the space where people are like, well, if I could just access capital a little bit, I can grow my business. Oleksij Rak: Yeah, that's really interesting. Again, new perspective for me. How do you survive? How do you live in these conditions of restrictions from anywhere? Cagdas Ucar: And ⁓ that's basically what Funkena is providing the capital for the businesses to grow their ⁓ exposure and customer base. Oleksij Rak: So you cannot put your goods on Amazon, you cannot get loan, it's like cash based and you cannot probably buy the Shopify store, know, web front. How do you live in this condition? Like in the pre-call you mentioned that there are like some challenges in terms of the technology, like could you tell us more? Cagdas Ucar: Yeah, yeah. Yeah. Yeah. Yeah. Yeah. Yeah, yeah, it is. It is very challenging. Like a lot of our customers, they want to do e-commerce, for example. There is Jane Technologies and a few other stores like that that do provide such services. But as far as the actual capital goes, financial access goes, I think we're one of the few. I mean, there are a few other companies out there. think LeafLink used to have their own financing. I think at this point it's ⁓ Fontana providing most of that capital to their customers. ⁓ That used to be another company in this space. They actually are no longer ⁓ here. And ⁓ I think Fontana is one of the biggest supplier in the space of financial products. Oleksij Rak: Okay, okay, yeah. ⁓ How do you go to market in such an industry? Like you fund from 150 to 200 entrepreneurs every month. How do they go to You cannot put your ads on Google or on Meta. You will be banned immediately. Cagdas Ucar: Yeah, yeah, that's the very first. Yeah. Yeah. Yeah. ⁓ yeah. Yeah. Believe me, we tried. We tried. We tried to put Google ads. They don't accept it. ⁓ Yeah. I mean, that's a unique challenge to the cannabis industry. And I can tell you the biggest thing like, you know, like I said, we track basically every customer that's coming in. We do have marketing operations ⁓ where we collect, we buy, you know, marketing data. Oleksij Rak: you Cagdas Ucar: from third party companies, but it's very limited in the cannabis space. You can't just go and say, give me all the cannabis companies in the US. There is no such service. So we actually had to build everything ourselves. A lot of this is built through the partners. So I think something like close to 45, 50 % of our business is coming from the partners. Actually, I would say probably schools 100%. Because at this point, Oleksij Rak: them. Yeah. Yeah. Cagdas Ucar: In the cannabis industry, I think there's very few companies that have not heard of us. And it's all about word of mouth in the cannabis. you have to reach out to people, you have to build credibility. you know, we have, think our partner network at this point is like 200 or 250, something like that. And, you know, you have to maintain good relationships with every single partner. Oleksij Rak: Yeah. Cagdas Ucar: And you have to keep them happy. You have to keep them referring to new deals. ⁓ And that's a challenge. And we're trying to do right by all of our partners. And we're trying to build good products. And yeah, so that's the secret sauce, partnership. mean, in this ⁓ environment where there is a few customers and you have to make every sale count, partnerships become very, Oleksij Rak: Awesome. And what does it take to be a VP of technology in this field? Like, what kind of, like you're saying about building products for partnerships, what kind of products are there and like, what is there technology wise? Cagdas Ucar: Yeah, yeah, absolutely. The core, like I said, the main product that we offer is financial, right? So we don't want to call it a loan per se because loans are, mean, Fontana's business model is a little bit different than standard financial loan companies where, you go to, for example, Bank of America, you say, oh, you know, I need a million dollars. Bank of America says, OK, well, your APR is X. Oleksij Rak: Yeah. So. Cagdas Ucar: and you're going to be paying back this much and if you don't pay back, then we're going to come and repossess something and we're going to take whatever you have. So that's the typical loan model. ⁓ The Funcana operates in a different model. It's called more like a pay advance. I don't know if you saw those, there are some companies, ⁓ they provide financial assistance to consumers and there's ⁓ business versions of these as well. But the idea is that it's revenue based, right? So when we actually ⁓ provide loans to these companies, we say, okay, well, how much revenue do you have? So it's all about the revenue. And they say, okay, well, I do a million dollars a year or $10 million, whatever it may be. And then we go like, okay, well, based on, ⁓ we look at all their, ⁓ Oleksij Rak: Mm-hmm. . . Cagdas Ucar: credit score, clear all fact checks, there's a lot of checks. And then we do all that checks, and then we decide, okay, well, we're gonna be paying, we can loan you this much. that loan, let's say we say, okay, well, we can give you 400,000. That 400,000 is like, it's based on your revenue. So let's say you got 400,000 from us and you're going to be paying it over six months. Typically it's short durations. These are not like five, six year loans. It's more like six months to 18 months. That's the spot. And so you take your loan and then you're paying, let's say on the month five, all of a sudden something catastrophic happened. Oleksij Rak: . Cagdas Ucar: I don't know, some personal event, ⁓ some competitor came in and swept all your customers away or something happened and all of a your revenue dropped down to almost nothing. Right? So we call that a concession. And at that point, you don't have to pay us back. You don't. Like at that point, you're good. Like if you don't have revenue, you don't have to pay us back. That's basically the difference from the loans that you would see out there. Oleksij Rak: Mm-hmm Cagdas Ucar: ⁓ But on the flip side, know, they go like, well, you have revenue. As long as you have revenue, you continue to pay. Oleksij Rak: It's interesting to work with you guys. But it's like, it's safe to fail. Probably it's safe to fail with you. Cagdas Ucar: Yeah. Yeah, yeah, yeah, absolutely. Oleksij Rak: In terms of your operation, what usually breaks? What parts of your operation usually break? Technology-wise, business-wise, don't know, finance-wise? Cagdas Ucar: Yeah. Yeah, that's the that's the toughest part. So the most difficult part of being in this industry is, like I said, because the number of customers is so little compared to the other industries. Right now we have a product called ReadyPaid, right? And this ReadyPaid is basically the e-commerce like when you're when you go to Apex, you're trying to buy something for your company or you go to LeafLink, you're trying to buy something. The idea is that you're checking out at the time of the checkout and ⁓ you You may have seen this in a firm clarin the consumer versions of this as you're checking out where they go like ⁓ You know, would you like to finance this purchase? Right and then they come in and they enter certain Okay. Well ⁓ Information they go through the checkout process with us and then we go like, okay. Well, we approve you for this much Oleksij Rak: . . Cagdas Ucar: But then because the number of customers is so little, we're like, ⁓ know, the customer hits something and it's an issue. ⁓ okay. Well, we fix it. And then the next day another customer hits another issue, like completely different. And then every single customer is a different scenario. And like, if he, if he had like, you know, a thousand customers per day, all of these, would be like, ⁓ okay. You know, we found out and we fixed that, we fixed that. But then, you know, when you have so little. users, every single one in a different scenario, that makes it very challenging, right? So that's why we had a lot of, like we actually came out with ReadyPaid last year. Well, it's been, yeah, it's been almost a year at this point. For a year, we've been like, you know, we've been, ⁓ you know, this customer had this problem, this customer, I mean, it's working fine for the most part, but occasionally, you know, you hit like these issues and every single one is a different issue. So that's the main challenge of being in. Oleksij Rak: Yeah. Cagdas Ucar: this technology space where the number of users is so little and figuring out the bugs, ⁓ it's like every single one is a different issue. Oleksij Rak: Yeah, yeah, yes, I see it. But you still, it's not so few users, so few visitors. If you say you have like 200 sales a month. Cagdas Ucar: This is. Oleksij Rak: That's about five to 10 sales a day. And that's already decent. means funnel wise, it should be few hundred visitors. Cagdas Ucar: Yeah, yeah, yeah, it's good. It's good, but not, yeah. Yeah, yeah, but that's not all e-commerce, right? A lot of them are just, they're calling us through other channels, through email, through text, through word of mouth. So the actual e-commerce volume that we have is probably about 10 % of our volume right now, but. ⁓ As we move into the Apex partnership, like I said, that really paid product that we're preparing, which is exactly what we're working on right now. They're literally at this time working on integrating with us. once that is ⁓ available, I mean, they have over 4,000 sellers on their platform. ⁓ And if we can get like... I don't know, like just 10 % of that, that's like 400 customers per ⁓ month. That will be a huge boost for us. Oleksij Rak: Yeah, for sure. what is the most labor intensive part of your business? Is it customer's acquisition or because from what I'm hearing is word of mouth and usually it's not really much labor intensive. what's the most labor intensive? Cagdas Ucar: Yeah. ⁓ I don't know. mean, I think all of them are ⁓ pretty much equally labor intensive. Like marketing is definitely hard, right? Like I said, because of the, ⁓ you know, available customer base being ⁓ small, ⁓ like, you know, we're working on this and at some point you just keep hitting the same people over and over and then they go like, you know, if I don't want to hear anything about it anymore. And, you know, that's challenging. And then, you know, they're trying to ⁓ obtaining data is difficult. There is like companies out there that provide these disinformation, but you know, there's like 20 different sources that they're using and they're trying to combine all of them, dedupe them and ⁓ create like a stable database of sorts. ⁓ That's challenging for sure. Sales is challenging obviously always. I mean, it's a very small space. So you don't want to be like, Oleksij Rak: Yep. Cagdas Ucar: You can't cold call in this environment. just like the cannabis people are very distrustful of any cold calls, any authority figures out there. They're very evasive as far as the mainstream stuff goes. And so that's why it's got its own challenges. Technology, like I said, because of the amount of customers that we have, something breaks and then it's a different scenario. Another thing breaks, different scenario. And the fact that we're going through, like, there's licensing checks that we do, background checks, business checks, IRS, Secretary of State, we're checking that. We're checking the banking information. And banking information can be checked in two different ways. It can be checked through a plan or you can upload bank statements. Oleksij Rak: Yeah. Cagdas Ucar: And then we analyze all that. We try to determine, okay, well, where are you spending your money on the fly? There's like this analysis going on. And then credit reports, obviously. So you bring all that stuff, like you're checking up. All that stuff is happening in parallel. And so that makes it challenging. You something breaks and then you're like, ⁓ what break now? And then you're trying to fix it. Yeah. Oleksij Rak: Good. Did you try to automate all of these routines? Because they should be quite ⁓ common for every customer. Even though each customer is individual, but all these checks against standardized databases. ⁓ Cagdas Ucar: Go! Yes. Yeah. Yeah. Yeah, yeah, it is. It is. It is. But, you know, you would be very surprised as to what kind of area like one of the common ones is like you build everything and then they go like, ⁓ credit is frozen. OK, now you figure out why is it frozen? And then somebody checks out and they're like, ⁓ you know, the relative was in an old fact list. We're like, OK, should should we decline for that? I mean, obviously, the guy is not old. fault. mean, it's a relative. mean, like, you know, there are all these like different scenarios or you know, you go to plan, for example, and plan is reporting, oh, the bank is banks data is just not does not meet our security standard, standards. What does that mean? Right. So you go like, what? Like, that doesn't make any sense. And then later on, we find out what the problem was. And then you would be shocked. Like, I can Oleksij Rak: You Cagdas Ucar: Like what, what Plaid is doing apparently is something really, really nasty. mean, like they, they, they don't even tell the banks that they're integrated with them. And then, so what they do is they act to scrape their banking portals. So customers, yeah, customers think that they're actually logging into their banking portal and that instead they actually log into Plaid and that Plaid gets their password. then whenever we asked for the customer's balances or transactions, Oleksij Rak: Okay. Cagdas Ucar: Plaid goes in as that customer to their banking portal, fetches that information, scrapes that information, sends it to us. And then when they can't do that, apparently they tell us, ⁓ it doesn't meet our accuracy standards. So there's all these different scenarios. When you have a complex system where there's nine different checks that are happening at every ⁓ checkout, Oleksij Rak: Yep. Cagdas Ucar: Believe me, it's very easy for ⁓ something to break at that point. I mean, it's not a rocket launch like NASA, but it's quite complicated. There's a lot of moving parts. Oleksij Rak: Okay, yeah, and there is not so much volume, so you cannot really streamline everything. ⁓ What does it take to set up a new customer? Not for you, but maybe for the customer. Okay, they got a deal with you, they got the money. What does it take for them to set up the business? Is there some common structure that they are doing that? Cagdas Ucar: Yeah, yeah, that's the challenge. Oleksij Rak: in some common ways, like, you know, franchise ways, or franchise is a structure that's being sold by franchisees or to franchisees. Is there something similar in your area? Cagdas Ucar: Yeah. Yeah, to be honest with you, I'm not I'm not too familiar with it. I because I'm in the industry, I hear these things like there are some big operators in the space. ⁓ Kiva being one of them actually were getting into partnership with them as well. And then there is ⁓ what's the cookie cookies. ⁓ So there are these I ⁓ think jeepers. ⁓ So there are there are a few companies like that. There are like big, right? So we call them multi-state operators. And ⁓ those, yeah, they have very good, you know, streamlined operations of playbooks as to what they're supposed to be doing. As far as like the new customers as to how they build up a new dispensary or how you set up a manufacturing operation, I am clueless. I I just, I have no idea. It's gotta be very difficult. I know that. Oleksij Rak: Yep. Yeah. You Cagdas Ucar: But a lot of the times they actually come to us like we don't we don't do pre revenue. Right. So you want you say ⁓ I'm going to start up a cannabis company. Let me just get some loan and start up a new. No it doesn't work like that. You do a ton of hard work. I don't know how they do it. They do a ton of hard work. They have they build up some revenue and then they go like ⁓ you know I want to grow the business more than they're like OK. Now we can actually. Oleksij Rak: Hmm. Okay, that's an interesting business. In terms of like trends, what major trends do you see that are affecting this guy? I know a thing or two about e-commerce trends, but quite likely they are different here. What ⁓ trends do you see? Cagdas Ucar: Yeah, mean, yeah. Yeah. Yeah, mean, the e-commerce trends in general, everything is leading towards consolidation, right? When I first started, I actually worked for a company called Mifa. We did e-commerce, like that's all we did. And they're still around. They do a lot of e-commerce. ⁓ like 15 years ago, there used to be a ton of e-commerce companies. And now it's just down to a handful, like very, very consolidated. Amazon is probably like 80 % of e-commerce at this point. ⁓ eBay, ⁓ another big player, is still a big player. ⁓ And then, you know, there are a few companies out there, Shopify, ⁓ obviously being one of them, WooCommerce, BigCommerce. But, you know, beyond the top 10, you really don't see a lot, right? And ⁓ same thing is happening to a certain extent in cannabis, but not as much. Oleksij Rak: Mm-hmm. Cagdas Ucar: ⁓ The biggest thing that's going to be happening in our industry is this schedule three. I don't know if you heard of it, but ⁓ President Trump ⁓ recently, ⁓ I think it was like five months ago, he put out an executive order saying that he wants cannabis to be considered schedule three instead of schedule one drug. So schedule one drug ⁓ is basically like ⁓ heroin and ⁓ like really, really hard Oleksij Rak: Yeah. Yeah. Cagdas Ucar: hard stuff, right? Basically, schedule one says this drug has no medicinal value, nothing, don't even touch it. And then schedule three is like, yeah, there may be some medicinal value, it may make sense to do some research on this. So basically, President Trump put out an executive order ⁓ four or five months ago, saying that I want ⁓ DOJ to ⁓ investigate ⁓ if they can actually make this schedule three or not. And then like I think last week ⁓ he actually made that happen. So they actually made it schedule three and it impacts a lot of ⁓ like rules of the business. Like one of the key things that that that makes cannabis difficult is that you cannot transfer cannabis across state lines. Right. So you're a seller in New York. You cannot get your supplies from California. Oleksij Rak: Yep. Cagdas Ucar: and sell it in New York. just is not allowed. That's not legal. Yeah. Yeah. Yeah. Yeah, exactly. So that with schedule three that is expected to change. So that's going to lead to a lot of consolidation in the cannabis space as well. So all of a sudden you're going to start seeing some companies, oh, you know, now that I can actually transfer Oleksij Rak: Yeah. Grow and sell in the same state, yeah. Produce and sell in same state. Cagdas Ucar: stuff from across the state lines, I don't have to pay high prices to my local manufacturer. I can get it from California or some other place that's cheaper. And then all of a sudden, some businesses are going to be going up, some businesses are going to be coming down. But yeah, it's going to be leading to consolidation in our space as well, but in a very different way, not like the e-commerce consolidation where it's driven by the... Oleksij Rak: Yeah. Cagdas Ucar: the amount of customer companies is just growing beyond the business, but this is more like, ⁓ you know, as a result of the schedule today. Yeah. Oleksij Rak: Specialization because of the change of logistics probably, logistics changes and therefore there will be specialization. Cagdas Ucar: Yeah. Oleksij Rak: ⁓ yeah, yeah, awesome. That's interesting. Like this trendy nowadays topics like AI, does it affect the whole industry? I hear from my friends that it affects industries that are absolutely non-technical and really, really far from AI. But does it affect your industry and in what way? Cagdas Ucar: Yeah. Yeah. Yeah, think I mean it is starting to affect us. mean like our CEO is, you know, obsessed with AI. I would say he's he's he literally like grades everybody like if you're not using AI, you're not doing your job right? Like, ⁓ did you use AI to write this? Did you use AI to do that? And they are using AI all the time. I mean, like at this point, 90 % of our code is written with AI. Oleksij Rak: Yeah. Cagdas Ucar: If anybody is telling you anything different than that, either they're in Stone Age or they're like, you know, at this point, 90 % of all software is written with AI. Like, and I'm not saying this from a live coding perspective, like I'm professional of 20 plus years doing, you know, software development. And, you know, the way that I use AI or, you know, my team uses AI is very different than the Oleksij Rak: Mm-hmm. Hehehehe Yeah. Cagdas Ucar: you know, somebody non-technical ⁓ using lovable, for example. I mean, the way that we actually ask the AI, hey, you know, work on this, work on that. Like we target specific sections of the code. We don't go like, ⁓ you know, build me an e-commerce application. You know, that's just not how we're using it. So it is definitely impacting software development for sure in general. But apart from that, Oleksij Rak: Yeah. Yeah. Yeah. Cagdas Ucar: ⁓ We do ⁓ like we do want to use the AI in actual credit decisions ⁓ So one of the ways in which we want to do that is like maybe automatic online checks ⁓ So, you know like when somebody applies, I mean we do a ton of checks. Yes, but we don't check like hey, what's on the internet and you know, let's just try to interpret what's happening So LMS would actually help with that, right? So there's actually services that are starting do that. that's yeah. Oleksij Rak: Yeah, yeah. You mean searching the person over internet and checking. ⁓ Cagdas Ucar: Yeah. Yeah. Yeah. I mean, just check our search with Google and see if there is anything that would prevent us from ⁓ giving loans to this customer or not. No, it's as simple as that. Yeah. So that's that's definitely in the works that that's going to be coming. But more than that, like in the long run, I think that's that's ⁓ like what the Oleksij Rak: Yeah, that's quite doable with LLMs nowadays. Cagdas Ucar: decision rule engine, so to say, like the AI rule engine. I think that's probably six months to a year. It's probably coming sometime this year or early next year at least. But in a longer run, maybe like two years, two, three years from now, I do anticipate most of e-commerce to be AI based. So what I'm trying to say is like at this point, Oleksij Rak: Mm-hmm. Mm-hmm. Cagdas Ucar: people are still like, ⁓ you I want to buy something. They go to amazon.com or wherever and they type in, this is what I want. Click with the mouse, et cetera. That's going to be going away at some point. It's, it's clear as day. So what's going to be happening is people are going to be like, ⁓ you know, ⁓ chat GPT, I need supplies for my store. ⁓ you know, can you just order them for me? They don't even care where they order from. Just find me the best rate. Just find me the best rate. Oleksij Rak: Absolutely. Yeah, find me the best price or just monitor a few stores and find the moment of sale, for example. Cagdas Ucar: Yeah. Yeah. Yeah. Yeah. Yeah. Exactly. And so what? So think about what chat GPT is going to do. Right. Chat GPT is going is going to need to search for this information somewhere. Right. So I mean, then people are going to be like, ⁓ you know, let me get into anthropic. Let me get into chat GPT. You know, I I saw these companies are going to start acting like Google. You know, like right now everybody wants to be on Google. Everybody wants to be on Amazon. Instead, we're going to want to be on Anthropic. We're going to want to be on chat GPT. once ⁓ so chat GPT is going to have these lists of MCP servers. So every single one these ⁓ from websites, we're going to be going into MCP. So MCP is the multi-context protocol. Yeah. So that's basically going to allow the Oleksij Rak: Model context protocol, yeah. Cagdas Ucar: the AI, the chat GPT's of the world to have tools, right? So these tools are going to allow them to be able to order stuff and check the prices and what do you have available? What's the inventory and what's the shipping rate? And do you accept shipping to that, et cetera? It's gonna be able to get all that information and put it in the order. So that's coming. So in the future, we're not gonna be building websites anymore. We're gonna be building MCP servers. So the MCP servers, so we actually have a project for that as well. So we do expect to roll it out early next year, an MCP server specifically for Funcana. Oleksij Rak: So. Awesome. You mean MCP server for potential dispensary owner to ask chat GPT where do I fund it? Cagdas Ucar: Yeah. Yeah. Yeah. Yeah. Yeah. Exactly. Exactly. You know, they're going to be like, Hey, chat, GPT, I need, ⁓ I need a new, machine to be able to help me process the cannabis and, ⁓ you know, find the best price and, ⁓ finance it with Fontana. You know, yeah. Oleksij Rak: Okay, yeah, it absolutely makes sense. Well, what else are you building? Your mind changes, you work with a team, your team is building something. What else are you building in this field in terms of technology? Cagdas Ucar: Yeah, yeah, so what right now specifically what we're working on is like I said that We found out that we recently found out that ⁓ You know, but when the customers come to us, need to check their banking information, right? I mean like we're gonna be ⁓ You know loaning you money and everything is revenue based that we do So we do have to verify that you have the revenue that you're saying you do right? So it makes sense for us to you know, get your banking information Oleksij Rak: Yeah. Cagdas Ucar: So, you know, to get this banking information, we're using this company called Plaid, which is the biggest company that does this kind of service. And the problem with Plaid is that we started experiencing like it's working fine. Like if you're if and especially like but you know, if you're a big company, like if you're working big big banks like Chase, Bank of America, Wells Fargo, no problem whatsoever. It's very smooth. Very smooth, no problems. But when you're working with credit unions, you're finding out that it doesn't work so well. So we just found out about that like last month. And then all of a sudden, as soon as we found that out, we were like, oh, OK, we need to have an alternative method for processing banking information. And that's basically the bank statements. So right now, one of my engineers is working on that. That's the biggest project that we have. Oleksij Rak: Mm-hmm. Cagdas Ucar: ⁓ She's working on uploading bank statements and automatically analyzing them and doing fraud checks. mean, obviously you can't be uploading some fake bank statements saying that you have a lot of money, right? So ⁓ the company that we're working with is called Oculus and they do all that ⁓ check and then analyze the revenue, et cetera, and then they report it back to us. So that's what we're working on on that side. Another one, ⁓ Oleksij Rak: Mm-hmm. Cagdas Ucar: that we're working on is the portal. So we're basically updating our portal. ⁓ The portal was actually written as a multi-page application. So we're just converting that to a single page application and we're consolidating the APIs between two products. Ultimately, what we want to do is just have a very simple widget that we can give to ⁓ our partners. Oleksij Rak: Okay. Okay. Cagdas Ucar: hey, put this widget on your website or on your portal or whatever, customers can basically finance their purchases or even if they're not doing a purchase, they can come back to us and we can tell them what they qualify for. That's another ⁓ product that we have, pre-qualification. So customers come in and they don't even have anything to spend money on, just wondering, hey, what do I qualify for? Oleksij Rak: Mm-hmm. Cagdas Ucar: And then they go through a process. We tell them, okay, well, we qualify for this much. And then we actually, ⁓ we just recently made it possible for continuous pricing. So that's basically called ⁓ like, you know, our current rules are basically like, you know, if you fit this and this and this criteria, then we're going to do X. If you fit this in this additional criteria, we give you Y. If you fit this additional Z, Oleksij Rak: Mm-hmm. Cagdas Ucar: So we have like ⁓ three or four different tiers like that, especially for fast decisioning. ⁓ But for the bigger amounts, we didn't really have like a continuous pricing. ⁓ So now we actually have a really good continuous pricing engine. We just recently built that. It's basically based on the payment to income. So we basically look at their FICO scores and a bunch of other factors and do they have clear what they. Do they have any debt? You know, etc. And then based on that we determine the PTI that we accept that that is acceptable to us based on that Circumstances that not be say, okay. Well, you qualify for exactly this much Oleksij Rak: Yeah, awesome. That's a lot in production. One of my questions like... where we were discussing, is there room for technology in this business? Cagdas Ucar: Yeah. Yeah. Yeah. Yeah. Yeah. No, it is. It is very challenging. mean, because we're very, very small. The total technology team is like seven people and we're like, very creating like a lot of work for just seven people. think per sprint we're pulling out about 80 user points. So that's quite a bit. Oleksij Rak: Mm-hmm. Yeah, Great. Stepping back, still in terms of AI, ⁓ what we discussed, how it changes the behavior, changes the market. But these were kind of general observations, like what's happening all around the e-commerce. Is there something specific to this industry? Do you see something? Just out of curiosity, you know. Cagdas Ucar: Yeah, yeah, I do. I do think so. Yes, I mean, especially for dispensary operations. I mean, not not something that is going to be directly impacting us or e-commerce, but I do expect that the a lot of the dispensaries that are using, you know, human labor, they're going to be needing a lot less of that as AI becomes more and more accessible. Like right now you can. There are some stores out there like you go to you can go to restaurants you you just order everything from a menu I mean, this is not so much AI but more automation so that automation is coming to the cannabis companies as well and as You know the AI piece is more like, you know, hey, what is your preference? What what kind of strains do you want? Oleksij Rak: Mm-hmm. Cagdas Ucar: ⁓ What are the strains that you prefer? ⁓ you like blue cream before then you might like this other sativa flavor, etc. So you that may be I mean, there's probably going to be things like that coming up. ⁓ That's going to be impacting the shopper behavior and probably driving more revenue. What I what I did notice is ⁓ like there's this one company that I've seen what they're doing is I think they're Oleksij Rak: Yep. Cagdas Ucar: At the end of the checkout if the customer gets declined for whatever reason Then they go like okay. Well, what can we do? ⁓ Like what can the customer ⁓ fit in better? Like is there another way that we can collect the money? So they're actually doing that analysis with AI and they're saying they're reporting some some good numbers apparently Oleksij Rak: Awesome. Yeah, that's interesting. ⁓ In terms of like future bets, what is your company betting on right now? Where do you see the market will shift? Other than like changing regulations, which is already huge, But what are your bets and what you're trying to build towards? Cagdas Ucar: Thank you. Yes, yeah. Yeah, yeah, that is that is absolutely what the company is thinking about. mean, the current plans are that cannabis is going to be legal. Right. I mean, that's like clear as day. It may not be immediate. It may take another three, four years. ⁓ We're not entirely sure, but it's going to become ⁓ more and more ⁓ like ⁓ commonplace and closer to the legal space. It's going to be similar to. ⁓ Oleksij Rak: Yeah. Yeah, for sure. Out of caffeine, nicotine, spirits, cannabis is probably the lightest drug. Cagdas Ucar: Yeah. Yeah. Yeah, yeah, yeah. So it's going to be something like that. so, mean, we are anticipating something like that to happen in the cannabis space where, you know, it's going to be, you know, the big beads, as they call it, is going to get bigger. That's the anticipation. you know, the space is going to be opening up to the banks, which will actually start being able to give loans to the cannabis companies. Right. Oleksij Rak: Yeah. Cagdas Ucar: And ⁓ so what does that tell for us? So, you know, yeah, ⁓ but, you know, I think they're in a really good advantageous space ⁓ for two main reasons. Like I said, the first one is cannabis ⁓ people, business people are very, very distrustful of established there. They just don't want to do any business with like. Oleksij Rak: It's spread. You Cagdas Ucar: Even if Bank of America came to them and said, yeah, here you go. I'll give you this much for this cheap price. They may not reject it. They may not accept it because, you know, like, like I said, they're very distrustful of anybody and everybody. And the second reason is, you know, let's say, you know, Wells Fargo or Chase, they come to the space and they're like, okay, well, we're going to be lending to the cannabis people. They don't know who they are. They don't. It's not easy to find them out. Like, it's very difficult to find these people out. So we have that information. So that's basically our mold, right? That's basically our advantage. So as we're getting into the ⁓ legal space, we're basically the first one out the gate, you know, with a lot of established relationships and a lot of trust that is happening between us and the partners and the ultimate customers. Oleksij Rak: Yeah, that should give you immediate boost. But in the end, the market will stabilize and people will like, if it becomes legal in like five years time, five years after that, people will get used to be working with banks and the databases of the people in the industry will become kind of not available, but will be much easier marketable. Cagdas Ucar: Yeah. Oleksij Rak: At that point, you should find your new niche because otherwise it's probably a threat for you. Because like big bl... like Bank of America, they are big. Cagdas Ucar: Yeah. Yeah, yeah, mean, yeah. Yes, yes. No, there is definitely, ⁓ you know, working ⁓ projects for psychedelics. I don't know if you heard of that, but Trump basically just put out another executive order saying that he wants psychedelics now to be. So so there is there is that space as well. But more than that, I mean, I think, you know, we do have a lot of advantage, like I said. Yes, at some point it may ⁓ Oleksij Rak: Okay. Cagdas Ucar: become more ⁓ commonplace for these companies to take loans. But like I said, it's not as easy to reach these people even if they're around, even if they make their products available. I'm not entirely sure if there's going to be a lot of takers, but we'll see. Oleksij Rak: Yeah, but what your company is doing great is you're able to operate near the borderline of being legal versus illegal. The borderline will shift and you will find a new place because you know how to do that well. Awesome. Chidash, it was really, really interesting discussion in terms of the... Cagdas Ucar: Yes, yes. Yeah. Yeah. Very good, yeah, thank you. Oleksij Rak: Because it's interesting industry in terms of the challenges it brings. It's not usual e-commerce. Is there anything else you would like to add on top of what we discussed before we wrap it up? How do you feel? Cagdas Ucar: Yes, yes, for sure. No, like I said, I think the future is bright in terms of I mean, I do want to say that, you know, there's a lot of fear of AI as to what what it's going to be doing and what does that mean? ⁓ Is that going to be like people are going to be out of jobs, etc. I don't I don't think that that's going to be the case. I think it's going to be like AI is definitely helping. I see it as a productivity boost in general. I don't see it like, ⁓ my God, this is like the society breaking down, et cetera. So I do believe that, you know, we are heading into better times as far as technology goes and as far as AI goes. And I'm excited to see that. Oleksij Rak: Yeah, for sure. Me too, because the world is changing and it's changing a lot. We live in stressful but interesting times. Also, thanks a lot for coming and thanks a lot for this conversation. I wish you the best luck in what you build. Cagdas Ucar: Yes, yes, for sure. Thank you, Alex. Thank you. I appreciate that. Oleksij Rak: Thank you and have a great day. Cagdas Ucar: Thank you.