In northern California, the Emerald Triangle is as synonymous with cannabis as Silicon Valley is with technological innovation. Thus, it seems almost inevitable that cannabis and tech would eventually merge and now there are clear signs that “CannaTech” is the new trend to watch in the marijuana market.
First came the ancillary businesses, tech-based startups that service cannabis companies but do not actually touch the plant themselves. Instead, they provide support to California growers and collectives through web-based platforms and the streamlining of processes making it easier to run marijuana companies as well as easier to purchase medical marijuana in California than ever before. For each tech success story (think Facebook, Yelp, and Uber) there is a cannabis equivalent. For example, WeedMaps is the equivalent of Yelp for cannabis. In fact, if you’re looking to start a new CannaTech company, you can check out this Buzzfeed infographic to see if your cannabis startup idea has already been taken. In addition, there are also tech startups providing services specifically tailored for the cannabis industry; such as Meadow and FlowHub, which both provide tech-based solutions to make seed-to-sale tracking easier for cannabis companies.
With the emergence of these ancillary businesses came the investors. For investors, businesses that support but do not directly sell cannabis are seen as a safer way to get a stake in the fastest growing market in the United States. However, securing investments in the cannabis industry is more difficult than in other industries, as conventional investors are sensitive to putting their money in a market still largely a legal grey area. So where can a new CannaTech business find investors? One option is the ArcView Group, which holds events where cannabis startups can pitch to a panel of investors in the style of the reality television show, Shark Tank. Also launching late last year was Gateway, a business incubator that helps new cannabis startups by providing office space, mentoring, and an initial investment in exchange for a stake of the company.
Finally, a new startup can attend one of the many cannabis conferences that take place each year around the world. Forbes estimates that the number of marijuana conferences increased from a single conference in 2013 to over 30 conferences scheduled for 2016. In addition, there are now conferences focused on narrow sectors of the industry, such as the New West Summit that includes speakers and panels targeting the media and technology sides of the cannabis market. However, it seems that CannaTech startups are not receiving a warm welcome from the entire tech industry. At the International Consumers Electronic Show (CES), the tech industry’s largest trade show, both organizers and participants of the conference did not approve of cannabis-related companies taking part in the conference’s startup contest. In fact, cannabis-related companies were specifically banned from the CES show floor, though that didn’t keep a few businesses from renting booths to showcase their technology for its non-cannabis uses.
But not all in the tech industry are against the growth of the cannabis market. Some are even footing the bill to push forward the legalization of marijuana throughout the nation. For example, billionaire Sean Parker has donated over $500,000 to the Adult Use Marijuana Act initiative, which seeks to legalize the recreational use of marijuana in California during the state’s upcoming 2016 elections.
Whether you believe the tech industry’s response to these new CannaTech businesses is good or bad, one conclusion that can be drawn is that this is a good time for cannabis-related tech companies to enter this fast-growing market. The opportunities to secure investments are increasing and there is currently less competition from the larger and more conventional tech companies, which leaves room for smaller businesses to emerge and grow.