I remember when the internet was new and the possibilities were limitless. The world wide web was this mythical space where you could conduct fast research from the comfort of your living room and convenience of clicking. Sure, we had to buy minutes from AOL, lock up the phone line, and navigate archaic systems like Netscape, but it was so new that most consumers looked past the inconveniences of the early days (just like cannabis).
Unfortunately, this lack of attention let early internet companies grab power and influence everything from your browsing experience to ultimately which programs your personal computers came loaded with, none of which were intended for anything more than to increase profits at the expense of user experience. Then Web 2.0 happened, and suddenly there were more providers dedicated to enhancing the internet experience and giving consumers what they wanted, such as forums, community groups, systems for feedback, and the general ability to have easier access to more information.
Currently, we’re in the end stages of Cannabis 1.0, where several early adopters have attempted to grasp control of the cannabis technology industry, and just like Web 2.0, a fundamental shift in the way cannabis data is used is on the way.
A quick primer on how data works in cannabis: information regarding the cultivation, processing, transportation, and sale of all cannabis and cannabis derivatives in regulated markets requires the use of a seed to sale tracking system. The software programs record plant and product interactions and report data points related to quality assurance, security, and taxes to the state organization charged with regulating cannabis, generally a newly formed cannabis board or offshoot of the liquor control board. The problem, aside from privacy which we’ll save for another day, is that once all the data is collected and reported, very little is done with it. There’s very little, if any, systemized data sharing between technology providers, API integrations are shaky at best, and, rather than integrate, most companies are hoarding customer data from what they consider competition instead of sharing it to promote a smarter, stronger industry. TL:DR There’s a lot of cannabis data collected, but the industry can’t take advantage cause of greedy companies.
So, what’s Cannabis 2.0? I predict that as plant acceptance and enthusiasm continue to rise, there are going to be more tech solutions created and companies that fail to innovate and integrate are going to be left behind. The first mover advantage is all but gone, and even established companies boasting thousands of customers are at risk of being quickly overtaken by new and more nimble operators. These new solutions will share information across secure networks and allow cannabis business operators to complete a deep data dive without multiple file downloads, conversions, and hours working with spreadsheets. In Cannabis 2.0, your automated irrigation system will talk to your seed to sale tracking program and provide notifications if particular plants are below the ideal hydration level or receive too much of a specific nutrient.
Cannabis 2.0 will also significantly enhance the patient/customer experience. Currently, there are loyalty programs and strain trackers, but the next wave of solutions will take the consumer behind the scenes and allow them access to more information about the products they’re consuming. Cultivators will be able to connect with consumers and follow along as a plant makes its way from clone to veg or watch as the rosin they’ll buy next week is pressed live and in 4k on a social media platform that probably doesn’t exist, yet. What I mean to say is, the changes that are coming will create a more streamlined and transparent system, which will be better for businesses, enthusiasts, and regulators while helping dispel the lazy stoner myths that our government has been so effective in propagandizing.
Similar to the shift from web 1.0 to 2.0, I predict that not everyone is going to make it. Here are 15 of the largest cannabis tech players and my cannabis 2.0 prediction for each.
More commonly known as METRC, Lakeland, FL based Franwell is the company behind the tracking software used by Colorado, Oregon, Alaska, and soon to be California. If you work in cannabis you know them from their RFID tags used to monitor cannabis production from seed to sale. If you work in cannabis you probably don’t like them either. A necessary evil in the industry, Franwells Marijuana Enforcement Tracking Reporting Compliance tool (METRC) is required by licensed operators, some of which are paying a monthly fee in addition to the per tag fee. This all adds up to a company with a huge reach with little to no industry presence at trade shows or networking events. It’s all a little worrisome from a big brother perspective, but don’t expect this quiet giant to go anywhere anytime soon. Having won the state tracking contract for the world’s 6th largest economy, Franwell stands to make millions off the tags alone before even considering the value of the data captured. Expect this company to purchase a front-end Point of Sale and Commercial Grow Management system in the near future to make the move from government contractor to ancillary software provider behemoth.
The team behind Baker consists of proven executors with elite educations poised to bring a much-needed boost in professionalism to the industry. From their beginnings in 2015, Baker has focused on integrating their Customer Loyalty and Online Ordering with existing companies point of sale systems resulting in a better experience for the customer and dispensary. By creating solutions in which everyone benefits, Baker provides added value when so many software as a service providers seem too concerned with protecting what’s theirs. To that end, Baker recently released an API being heralded as the Rosetta Stone of Cannabis Data Flow. Well, I’m calling it that, cause that’s what it is- a simple to integrate with API that any capable programmer can use to provide software solutions for the cannabis industry. Having recently surpassed 1,000 dispensary clients, Baker boasts one of the largest sales data sets in the game and seems to be just warming up. On top of that, Baker just purchased their largest competitor- GrassWorks, a move that increased their market share while sending a strategic shot across the bow of cannabis business. I predict Baker continues to purchase smaller competitors that fill a niche while reinforcing own their already impressive software platform.
Ever hear the strategy be an inch wide and a mile deep? That’s Greenbits. Starting back in 2014 Greenbits was just getting off the ground and their iPad centric Point of Sale could have come off as intimidating. But that’s the genius of Greenbits and founder Ben Curren, he knew the industry would catch up, and it did. Combined with the simple nature of the system and the growing comfort of touchscreen operation, Greenbits has become the defacto Point of Sale for licensed operators despite having a higher price point, more costly equipment, and a flashier appeal. Why? Because it works and it’s easy. Stoner simple and super clean. Simply put, they know their customers and created a solution that is intuitive, accurate, and matches the aesthetics of their shop. Greenbits hasn’t delved into other verticals, yet, but their recent 17 million capital raise might change that. Or maybe they’ll continue to dominate the Point of Sale space while creating strategic partnerships with other pot powerhouses. I’d bet on saturating the POS market one state at a time and then leveraging that market share and data for something really cool with Baker.
Trellis is currently making waves throughout the west coast cultivation scene by offering an intuitive cultivation tracking software solution that’s receiving rave reviews from growers of all sizes. The Trellis platform combines ease of use with powerful reporting tools to give even the most data driven business operator enough numbers to satisfy their analytical itch. Where early seed to sale software providers like BiotrackTHC and MJFreeway were programmed based on the compliance heavy needs of the early days, Trellis has created a platform based on the daily operational needs of cultivators and extractors. Instead of seed to sale as a required headache, Trellis users are rewarded for logging plant interactions with detailed reports that actually make their lives better and plants healthier. Having already established a strong reputation in California, Trellis is positioned to use that experience to leverage new accounts across the country whenever they decide to. They also have Snoop in their corner. Expect Trellis to continue to expand strategically and organically while eating competitor market share until they decide it’s time to take on more funding to power their acquisition of newer entrants.
Of all the niches to fill, I would think there would be more attempts at creating a wholesale marketplace for cannabis. Compliance complications and interstate commerce aside, the vast majority of bulk cannabis sales are still made based on personal relationships. Leaflink aims to change that by letting vetted operators list cannabis and cannabis products online for other licensed operators to source and purchase. Leaflink recently received 10 million from a fund that includes Casa Verde, which should allow them to penetrate new markets aggressively. There are limitless partnership opportunities for Leaflink as well making them the ideal target for an additional investment to combat or buyout any competitors that might emerge. Their only real threat, wholesale market place Tradiv, recently shut down operations after going through some rather weird times involving ayahuasca and a revelation from God. It’s off topic but worth reading here. Anyway, Leaflink could be the biggest opportunity no one is really talking about and a key player for cannabis 2.0.
There wasn’t a lot of noise coming out of Flowhub or CEO Kyle Sherman lately, until they dropped the HP partnership bomb. A true sign of the times, a public announcement of this magnitude sent shockwaves through the industry and raised eyebrows outside of it. With the exception of a quasi-transparent relationship between Agrisfot and Microsoft, this is the first time an established Fortune 100 technology company has so visibly entered the greenrush. The exact terms of the partnership aren’t available, but Flowhub is now strongly positioned to continue competing in the Point of Sale space as huge markets like California and Massachusetts enter the recreational cannabis era. I’d guess Flowhub will attempt to strengthen its sales and business development arm to better position themselves for another round of investment, this time with HP in their corner.
A relative newcomer to tech cannabis space, but well established in customer loyalty, SpringBig aims to become a player, and quickly. Their first move was raising 3 million for the move followed by integrating with MJ Freeway, which is a great way to get access to a solid pool of point of sale users. Now they need to deliver and define where they’re better than Baker. The good news for Spring Big is that, while they lack cannabis experience, they have a proven track record in the hospitality industry and should be able to scale services without dropping quality. The question is, will their business acumen be able to compensate for their lack of cannabis expertise? Do they know what a gram is? Do they even like weed? I’m guessing they have plenty of runway to make a go at ganja, but they’ll need to bring in the right people or they’re gonna waste a bunch of money getting their first degree in THC.
Leafly made major headlines with their groundbreaking advertisement in the New York Times in 2014. At the time, the company was focused on changing the stigma around cannabis while providing educational content. Over the last few years, they’ve offered a marketplace and added an online menu directory to add more value for dispensaries. Now, I’m not really sure what they are, and if they want to maintain their position as an industry leader in cannabis 2.0, they need to figure that out. If they’re trying to be a news source, there are much better alternatives who specialize in news. If they’re trying to be a service provider for menus and online ordering, they need to move fast cause Baker is already there. Most of the original team has moved on to other projects, so I’m left to believe that Leafly, which is also part of the Privateer investment portfolio, will become an advertising channel for other Privateer backed companies, and I don’t think there’s a lot of value to be had in that.
The team at WeedTraQR is nothing if not industry first. Having been operating primarily in Washington, WeedTraQR is often voiced the uncomfortable but needed opinion and spoken out against the Washington liquor and Cannabis control board, BiotrackTHC and now MJ Freeway. This company is known for going the extra mile for clients and has established a loyal tribe as they continue to expand. I hope WeedTraQR gets bought out, they deserve to get paid. I don’t know if founder David Busby shares that ambition, but there’s a software consolidation coming and those that don’t accept a payout risk getting starved out.
Rufus and the team at GrowFlow really care about their customers and the cannabis community at large, and it shows in their product. GrowFlow is designed for cultivators and processors to manage inventory, track production, and report necessary compliance data. Essentially the Greenbits for growers, GrowFlow provides a simple to use platform that makes it easy for new employees to use the system quickly without making mistakes. By ignoring the Point of Sale aspect of cannabis traceability, GrowFlow has created solutions that make life easier for the people touching the plant. I wouldn’t put GrowFlow in the same power position as Trellis, but they’re not far behind and are a few moves away from expanding from regionally loved company to national force to be reckoned with.
Offering sales data and analytics, Headset’s goal is to help dispensary owners make better buying decisions based on sales data and business intelligence. The program analyzes customer sales behavior and makes it easy to identify key point indicators like best selling items, peak hours, and top performing team members. The niche that Headset fills is both its advantage and its potential problem. Their offerings are in line with several providers like Greenbits or Baker, so a potential buyout is likely. It’s also likely that they have some next level algorithms happening under the hood that will be difficult to replicate. The next couple months will be very telling- if they get an injection of funding they’ll be positioned to expand and compete, but if they’re left to operate on their monthly recurring revenue, even if in the black, then the goal should shift to a windfall acquisition when the big money starts acquiring cannabis tech properties like vacation homes.
Probably the most recognized company on this list, Weedmaps shot to prominence by being the first mover and having impeccable clarity of product- a map with places to get weed. Early on, Weedmaps leveraged their online directory into a decent point of sale market share with their MMJ Menu product. I don’t know why they let that product fall into disrepair, but the first to market advantage and flashy branding are only going to take this company so far if they don’t start innovating. Here’s the thing- there are going to be a lot of new software companies operated by tech savvy millennials coming online soon due to the low barrier entry, industry growth, and lack of other awesome jobs. That means that software or web services like menus, news sources, and directories are going to be saturated with new offerings. Weedmaps has name recognition and a huge database of clients paying several hundred dollars per month, but competition is slowly chipping into that and I’m not sure that a white collar professional pothead is going to want “weedmaps” in their search history. Weedmaps will survive, but they’re also an early target for a buyout for the customer list alone.
My how the mighty have fallen. What used to be the front runner for the marijuana software monopoly, BiotrackTHC has seemingly lost its groove. Several long term employees have recently left to pursue other new ambitions. Be that jumping to faster growing canna-tech companies, starting consulting services, or simply getting poached by large scale operators, losing team members with years of cannabis experience is going to take its toll. While BiotrackTHC has recently been awarded contracts in Arkansas and North Dakota, they continue to miss out on the larger, more lucrative contracts, like Michigan, Ohio, and Massachusetts. Additionally, while the rest of the established software sector players are getting funded at a rapid pace, a reverse merger with Helix Transportation Services could be cause for concern. I’d guess they regret not taking better care of the Washington traceability system better, now that they’re no longer the state tracking system, rumor has it even the most loyal customers in Washington are jumping ship. I’m predicting further disruption at BiotrackTHC, and not the good kind. The kind where the best bet is to get bought out before the money runs out.
You could call 2017 a bad year for MJ Freeway due to their security issues, botched state system rollout in Nevada or loss of several key team members, but that would fail to take into account that their 2016 was pretty bad, and 2018 hasn’t been kind either. All that being said, MJ Freeway isn’t dead yet, they’re backed by Privateer Holdings and I don’t foresee them letting their 8 million dollar investment go out with a whimper. Just like BiotrackTHC, by splitting time competing for government contracts and improving their seed to sale software they succeeded in neither and struggled mightily in both. MJ Freeway still has loyal customers in their home state of Colorado and a chance to right the government ship in Washington and Pennsylvania, but I’d start building a raft if I worked there.
MassRoots posted a loss of 44 million dollars in 2017. I’ll give you a minute to let that number sink in. Damn. I don’t care what type of blockchain they announce or how many times they revamp their business portal, MassRoots relied on users who were tired of getting judged on Instagram to build their business and they totally dropped the ball. MassRoots had promise, early on it was pretty useful for cannabis networking and influencer marketing. Then they started sponsoring events and transitioning to more of a media company and it all went to mids. The stock is currently struggling to crack .30 after sitting around $1 for most of 2017, mostly due to over paying execs, wasteful investments, and the high costs associated with being publicly traded, even if that’s just on the pink sheets. MassRoots once had over 30 employees and was a legitimate threat for a potential buyout from Facebook, now it’s a ghost town that’s struggling to find its way. The best case scenario results in a buyout just for the user data, but I’m guessing shareholders patience will run out before they execute on their proposed canna crypto currency nonsense and this whole thing will burn out like a poorly rolled joint.
Comments? Concerns? Complaints about where your company was placed? I suppose we won’t know until it happens, but decriminalization seems all but certain and there will be a new wave of cannabis enthusiasm that comes with it. That enthusiasm will attract a lot of money and even more competition, so it’s going to get fun, real fast. Feel free to send me a message, I’d love to hear from other cannabis enthusiasts, especially if you have a different opinion.