Call it good timing, fortuitous luck, or being in the right place at the right time, but the cannabis industry seems poised to become the most technological industry ever to develop.
While the assembly line revolutionized auto manufacturing in 1913, this sole technological advance did not immediately change other elements critical to the car business, such as logistics, distribution, financing, vendor input and the vertical integration of manufacturing, sales, customer services and suppliers.
Flash forward 150 years, and the emerging cannabis industry is poised to benefit from faster, cheaper and more flexible computer, web and cloud, and servo technology than any industry ever launched. With these technologies now readily available and more affordable than ever, the cannabis industry has an added benefit: It is able to attract investors via crowdfunding, as well as more traditional methods to use technology from the first day of any new cannabis company’s grand opening.
Now, the industry is poised to make a giant technological leap forward.
The reason: High technology is going to make sure the near future of cannabis will change significantly. Tech companies based on to Uber, Grubhub, Snapchat, Salesforce.com, Yelp and others already exist to provide the next generation of consumer marijuana business apps and services that will disrupt and streamline the business. This includes changes in every element of the cannabis industry ranging from extraction, cultivation, vaporizers, and POS, CMS, auditing systems and even deliveries to customers.
The upcoming NewWest Summit to be held in San Francisco (November 20-21, Parc 55 Hotel) bills itself as the “first conference to focus exclusively on the game-changing, disruptive developments in technology, investment and media within the Cannabis space.” According to conference organizer Jim McAlpine, cutting-edge new technologies already exist to propel the industry forward to make it more attractive to investors and customers alike.
Examples of the disruptive technologies that will be at the conference include Eaze, a cannabis delivery service that could take business away from dispensaries by serving as a one-stop shopping experience that includes delivery; a smart vaporizer that is going to be the Fit Bit of the marijuana space because it self-monitor the volume of oil and then sends a note to the user that the supply of oil is low and also to the dispensary to order a refill. “These are just some of the tech shopping and delivery technology that will re-shape existing business platforms,” McAlpine said.
The event itself will also have panel discussions, including one on how the older, pre-technology cannabis business model can co-exist with new businesses that could bypass dispensaries or the larger entry of major multi-national corporations (including those from the tobacco industry), who are preparing to enter the cannabis on an unprecedented scale. This topic, among others, will be discussed by panelists of active, accredited investors and successful entrepreneurs, including Steve DeAngelo of the Harborside Health Center, the world’s largest dispensary and Kevin McArty of the Eaze delivery service. The event is expected to attract about 40-50 exhibitors and 500-1,000 people over two-days.
Follow the Money
McAlpine noted that the legal cannabis industry is projected to have a $10 billion annual economic impact nationally and the sector is “rapidly professionalizing.” Based on a report from a cannabis industry investment and research firm, The ArcView Group in Oakland, California, the U.S. market for legal cannabis grew 74% in 2014 to $2.7 billion, an increase from $1.5 billion in 2013. And despite rumblings by most 2016 Republican presidential candidates to make marijuana illegal at the federal level, the cannabis industry is projected to generate $11 billion in sales annually nationwide by 2019, according to the ArcView report.
To date, four states–Colorado, Washington, Alaska and Oregon–have legalized retail marijuana. Washington, D.C., voters also legalized recreational marijuana use, but sales currently remain banned. Twenty-three states have legalized medical cannabis.
And despite promises from the majority of 2016 Republican presidential candidates to enforce federal law that would effectively repeal existing state de-criminalization initiatives, public opinion shows more people favor the decriminalization of marijuana nationwide than ever before.
Yet the legal uncertainties have not dampened the enthusiasm for this growing market and its adoption of new technology. According to Chris Gromek, CEO, MJIC Media, one major engine behind the fast adaption of technology has been in the number of consultants. Gromek noticed that from attending two industry conferences four months apart, he saw more consultants offering fully-integrated, turn-key services that included everything from automated plant and growing operations to point-of-sales and compliance software. The full-service consulting firms in this space include Aperature Consulting and American Cannabis Co. Aperature offers services for people just entering the business to established operations who want to expand, according to their web site.
While these services can make a business owner’s job easier, they also will make the industry “super-competitive,” Gromek said. More competition also will be accompanied by falling product prices and this will squeeze profits dramatically, he added.
It will also spur the search for new customer services. For example, Gromek said MJIC Media has started to sign up clients for membership packages and is working with clients, such as Lexaria that is expanding its CBD product line due to a new technique it discovered that drastically improves gastrointestinal absorption of cannabidiol, as well as CLS Holdings, an extraction firm.
An Awakening Technological and Social Giant
But despite the legal and political uncertainties, the cannabis industry’s huge growth potential has become a magnet for investors and technologists ready to adapt, sell or develop new automated tools for every aspect of this plant-based business. This includes everything technological from automated greenhouses for cultivators, to pharmaceutical-grade testing laboratories for assuring plant safety and quality, to an electronic product exchange to automated sales and customer services applications and even homes delivery services to patients.
One of the most advanced, core building blocks of any plant-based commodity business is an exchange where price discovery between buyers and sellers can take place on in an open marker. There are currently three such venues, Amercanex, CCX and CHEX. These exchanges match buyers and sellers with a clearinghouse and financial guarantee feature. In the case of Amercanex, the services provided include transportation, storing and quality grading all transacted on an electronic platform, according to Amercanex CEO Steve Janjik.
According to the company’s web site, the Amercanex exchange connects products, pricing, and availability that are all posted from multiple market participants. These include growers, wholesale distributors and retail vendors who are all electronically connected on the marketplace. The best sell and buy prices are shown from the prices received from all participants within the state and network.
The Amercanex system also has anti-money laundering safeguards built into the system and the exchange works like “a banking system” that links buyers and sellers with a payment feature.
Bring It Home
Since this is the age of instant gratification, it only makes sense that someone would come up with the idea of home delivery for cannabis products. While this feature has already been fully exploited by pizza and Chinese food restaurants, it is an established aspect of modern life. The cannabis business is no different. “On the retail end, Southern California has seen a proliferation of delivery services and medical marijuana dispensaries. Hartfield says there are about 1,800 dispensaries in and around Los Angeles, which is almost half of the approximately 5,000 dispensaries nationwide, according to a report in The Forward.
Another report in TechCrunch acknowledges the penchant for immediate gratification and the willingness of people to pay for it. “With mobile usage comes the right-now economy. Anything you want today will come to you on-demand, when you want it — and so shall cannabis. Enterprises are popping up everywhere that promise to deliver your medicine within the hour, and some will even provide a medical consultation via your mobile device. Hungry after you’ve consumed cannabis? Partnerships and cross-marketing opportunities with the $70 billion food-delivery and takeout industry are huge.”
I think technology will define the cannabis industry.