cannabis software stack · 2020. 7. 15. · 3 | page introduction for five years, cannabiz media...

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Cannabis Software Stack

Executive Summary

ThisExecutiveSummaryisbasedoffofacomplete53-pageCannabisSoftwareStackwhitepapermadeavailabletoCannabizMediasubscribers.Formoreinformationonhowtoreceivethefullversion,reach

[email protected].

EdKeating

ChiefDataOfficer

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ContentsIntroduction 3

Background/Methodology 4

WhyisThisImportant? 6

WhereareBusinessesLocated? 7

ConnectedCannabizLeaderboard: 8

Sectors–WhoaretheLeadersinKeyCategories? 8

BackOffice 9

Transactional 9

Activity 10

Advisory 10

Conclusion 11

AbouttheAuthor 12

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IntroductionForfiveyears,CannabizMediahasbeentrackingglobalcannabisandhemplicenses,andwenowcountover100,000inourdatabase.Overtheyears,wehavesupplementedthelicenseinformationwithotherkeydatapointsthatincludesocialmedia,facilitysize,numberofemployees,andpoint-of-saleandaccountingsoftwarechoicesoflicenseholders.

Inthiswhitepaper,westartwiththeregulatorandtheirchoiceforstateseed-to-salecontractorsandsharewhatwe’velearnedfromreviewingthe332companieswefoundconnectedtotheseed-to-saleecosystem.

Currentlytherefivecompanieswithstateseed-tosale-contracts:

• METRC• Akerna/LeafDataSystems• BiotrackHelix• KindAgrisoft• BioMauris

Thefollowingtable,sortedbyvendor,showseachcompany’sfootprint,andthenumbersoutlinedinredarethetotalactivelicensesinthestate:

StateSeedtoSaleVendor State ActiveLicensesAkerna/LeafDataSystems Pennsylvania 118Akerna/LeafDataSystems Utah 18Akerna/LeafDataSystems Washington 1758Biomauris Iowa 6BioTrack Arkansas 25BioTrack Delaware 7BioTrack Hawaii 24BioTrack Illinois 138BioTrack NewHampshire 6BioTrack NewMexico 125BioTrack NewYork 49BioTrack NorthDakota 11BioTrack PuertoRico 129KindAgrisoft RhodeIsland 52METRC Alaska 398METRC California 7972METRC Colorado 2338METRC DistrictofColumbia 16METRC Louisiana 11METRC Maine 13METRC Maryland 130METRC Massachusetts 179

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StateSeedtoSaleVendor State ActiveLicensesMETRC Michigan 550METRC Missouri 2METRC Montana 359METRC Nevada 625METRC Ohio 70METRC Oregon 2295 Arizona 141 Connecticut 29 Florida 278

Minnesota 10

NewJersey 15

Oklahoma 8584

Texas 3

Vermont 6

Copyright©2020byCNBMediaLLCdbaCannabizMediaSource:CannabizMediaLicenseDatabasewww.cannabiz.media

Background/MethodologyWefound332uniquecompaniesthatconnecttoMETRCorLeafDataServicesinWashington,andcollectively,theyareresponsiblefor949connections.Basedonthetableabove,thataccountsfor16,716activelicenses–highlightedinred.KIND,Biotrack,andBioMaurisalsohavewonstatecontractsbutdonotprovidepubliclyavailablelistsofapprovedvendors.AkernadoesnotmakethemavailableforUtahorPennsylvania.

METRCisthemostprolificvendorwith14stateswhileAkerna/LeafDataSystemsonlypublishestheirWashingtonStatelist.ItisimportanttonotethatOklahoma,hometo8,584licenses,doesnotyethaveaseed-to-salesysteminplacebutanRFPisunderway.ThisinformationwasgatheredinMayandJune2020.

Todeterminelicenseopportunity,weaddedActive,Pending,andAppliedlicensesfortheappropriateactivity.Forexample,tocomeupwiththelicenseopportunityforpoint-of-salesoftware,weincludedActive,Pending,andApplieddispensariesandretailers.LicenseOpportunityishowweshowthepotentialaddressablemarketinastate.

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Foreachsoftwareprovider,wegatheredheadquarterlocationalongwithallthestatestheyhavebeencertifiedtooperatein.Tothat,wedeterminedwhichsectortheybelongedin(BackOffice,Activity,Transactional,orAdvisory)andfinally,whichsoftwarecategorywasthebestdescriptorforthatcompany.Thesecategoriesroll-uptothesectorsdescribedbelow.

Herearethefoursoftwaresectors:

1. BackOffice(95)–ThissectorincludessolutionsdesignedforcomplexoperationsthatcouldbeusedbydifferenttypesoflicenseholderslikeERPs,seed-to-sale,compliance,andsupplychain/logistics.

2. Activity(68)–Thesearecharacterizedassolutionsdesignedforspecificlicenseholderslike

point-of-sale,growsoftware,delivery,andlabinformationmanagementsystems.

3. Transactional(31)–ThesesolutionsresolvearoundtheB2BandB2Ctransactionsandincludefinancialinstitutions,financialcompliance,marketplaces,andpaymentprocessing.

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4. Advisory(60)–Thisgroupiscomprisedofconsultantswhomayadviseonhowtotechnically

integrateanddataanalyticsfirms.

Weresearchedthesecompaniestodeterminewhatthesoftwarestacklookslikeinthecannabiseconomy.BylimitingourfocustothosecompaniesthatconnectedtoMETRCorLeafDataSystems/Akerna,wewouldbeevaluatingcompaniesthathadtoovercomespecificregulatoryandtechnicalhurdlestobecomecertifiedorapproved.Thesecategoriesandsectorsaresubjectiveandarebasedonourinterpretationofacompany’sprimarybusiness.

Basedontheabove,themarketmaplookslikethis:


Therewasasurprisingnumberofcompanies(78)thatappearedtobeoutofbusiness,orwecouldnotdiscernwhatbusinesstheywerein.Often,theirURLshadexpiredandtheirphoneswereoutofservice.Thesecompaniesarenotpartofouranalysis.

WhyisThisImportant?Theinformationinthiswhitepaperisusefulforavarietyofstakeholdersinthecannabiseconomy.Forregulators,itprovidesinsightintothesizeandscopeofthesoftwarelandscapeandintroducesthemtomanyofthecompaniestheymaybeworkingwith.Forexistingvendors,itwillbeusefulforbothcompetitiveandbusinessintelligence–andinfindingfuturepartnersandacquisitioncandidates.Forinvestors,itservesasarosterofpotentialacquisitionsorpartnersfortheirportfoliocompanieswhileexistinglicenseholderscanuseittogaugethefootprintofsoftwarevendors.Withthisdata,theycanseewhichcompaniesareone-state-wonders.

ThisisalsoimportantforCannabizMedia.Overthelast18months,manylicenseholdershaveclaimedtheirlicensesonourplatform,andthisresearchprojectwillhelpusbuildourvendordirectorysothatlicenseholderscanlearnwhoamongtheirpeersisusingtheseproductsandservices.

BackOffice

Transactional

Advisory

CannabisSoftwareStack-MarketMap

ß SeedtoSaleà

ßBroad-Specificà

ERP/SupplyChain/Logistics/Seed-to-Sale

Analytics/Consultants

B2BTransactional

ActivityGrow

SoftwareLIMS POS Delivery Consumer

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TheotherkeyfactorinouranalysisisthatsinceCannabizMediatracksthenumberoflicensesineachstate,wecangeneratesomesenseofcompetitiveintensity.Forexample,ifthereare40point-of-salevendorschasing400licenseholders,therewillbealotofcompetitiveinfighting.

WhereareBusinessesLocated?Wefoundthesesoftwareprovidersspreadacross36differentstatesandprovinces.Asweoftenseewhenwetallyfigureslikethis,concentrationistobeexpected.CaliforniaandColoradoaccountfor48%ofthevendors,andtheParetoPrinciplealmostholdstruewiththetop20%ofthestatesaccountingfor79%ofthesoftwareproviders.Herearethetopeight(completelistavailableinthefull-lengthreport):

Rank State Count % Cumulative1 CA 114 34.3% 34%2 CO 45 13.6% 48%3 OR 28 8.4% 56%4 WA 28 8.4% 64%5 MI 16 4.8% 69%6 FL 15 4.5% 74%7 AZ 8 2.4% 76%8 MA 8 2.4% 79%


Theobviouscorrelationsherearethatthetopfourstateslegalizedearlyorhavecannabisaspartoftheculture.Also,Californiahasalwaysbeenhometotechnologystartups,sothatcertainlyhelpedvaultthestatetothetopofthelist.

Wehaveidentified169differentcitiesthathostthesecompanies,andthesearenotsurprisinggiventhestatelistabove.Thebigtakeawayisthatfivecitiesaccountfor26%ofthecompanies.TheEastCoastdoesnotshowupuntilNewYorkat#19.Herearethetop10cities:

Rank City Count1 Denver,CO 272 Portland,OR 163 LosAngeles,CA 154 SanFrancisco,CA 155 Seattle,WA 146 Oakland,CA 117 SanJose,CA 98 Boulder,CO 79 Bend,OR 610 Chicago,IL 5


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ConnectedCannabizLeaderboard:Theapproachwehavetakenistofirsttallywhichstateseachvendoriscertifiedin,andthen,wecalculatedthelicensesthattheyhavethepotentialtoserve.TheLeaderboardcontainsthetop20andissortedbythenumberofactive,pending,andappliedlicensestheycanconnectto.

Sectors–WhoaretheLeadersinKeyCategories?Tohelpusmanagethe17categories,wegroupedthemintofoursectors.Thefollowingsectionsdelveintoeachsectorandtheincludedsoftwarecategories.PleasenotetheMiscellaneousSectorincludeslicenseholders,vapemanufacturers,andcompaniesthatappearedtobeclosed.Wedidnotincludetheminthisreport.


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BackOfficeThissectoristhelargestinourstudy.ItincludesthosecompaniesthatprovideERP,seed-to-sale,andsupplychain/logisticssolutions.Wegroupedthesetogetherbecausethesolutionstendtobecomprehensiveandareusedbylicenseholdersindifferentpartsofthevaluechain.

• Weidentified95companiesintheBackOfficesector• Theymake419connectionsto15states• 77ofthe95companies(81%)connectinCalifornia• BackOfficeiscomprisedofthefollowingcategories:

o Seed-to-Saleo ERPo SupplyChain/Logisticso Complianceo RegulatorySolutions

TheBackOfficeLeaderboardcontainsthemostconnectedcompanieswefound.Bythenatureoftheirproducts,theseseed-to-taleandERPprovidersbenefitfromservingcustomersinmanystates.Theirsolutionsarerobustandcomplex,andthismakesthemattractivetomulti-stateoperatorsthathavetomanagefar-flungoperations.

TransactionalWehaveincludedseveralkeycategoriesaroundtransactionsincludingfinancialinstitutions,paymentprocessors,financialcompliancecompanies,andmarketplaces.Allthecompaniesinthissectorareinvolvedwithmoneymovingthroughthevaluechain.

• Weidentified28activecompaniesintheTransactionalsector• Theymake56connectionsto12states• 14of28(50%)connectinCalifornia• TheTransactionalsectoriscomprisedofthefollowingcategories:

o FinancialInstitutionso PaymentProcessorso FinancialComplianceo Marketplaces

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ActivityTheCannabizMediaLicenseDatabaseorganizeslicensesbyactivitiesthatcoverthesupplychainforbothhempandcannabis.ThesixcategoriesinthisActivitysectorarefocusedonsolutionsforcultivation,manufacturing,laboratories,retail,delivery,andconsumer.These68vendorsareresponsiblefor226integrationsnationwide.

• Weidentified68companiesintheActivitysector• Theymake226connectionsto15states• 48ofthe68(71%)connectinCalifornia• TheActivitysectoriscomprisedofthefollowingcategories:

o Point-of-Saleo Deliveryo Consumero GrowSoftwareo LaboratoryInformationManagementSystemso Manufacturing

AdvisoryThereweretwotypesofcompaniesthatfitintoourAdvisorysector:AnalyticsandConsultants.TheanalyticscompaniesrepresentsomefamiliarnameslikeBDSA(BDSAnalytics),CannabisBigData,andHeadset.TheyprovideinsightstoalicenseholderanduseMETRC/LDSdataasaninput.

Consultants,fromouranalysis,arefocusedonhelpinglicenseholdersintegrateorconnectwithMETRCortobuildsoftwareandapplications.

• Weidentified60companiesintheAdvisorysector• Theymake116connectionstothe15states• 30ofthe60(50%)connectinCalifornia

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ConclusionIntheprocessofcompilingthiswhitepaper,alotofourassumptionsaboutthesoftwarestackwereconfirmed.Ourpreviousreportsonpoint-of-salemarketshareshowedhowcompetitivethatonecategorywas,andthisresearchpointedoutthatmanyothercategoriesarecompetitivelyintense.

Theteamalsodiscoveredasignificantgeographicconcentrationofthevendors.Thetopthreestatesaccountfor56%oftheproviders–with34%basedinCalifornia.Thismaymakesomefuturecategoryroll-upseasierifthecompaniesareincloseproximity.Itcanalsomakethelabormarketchallengingforemployersandgreatforrecruitersastalentcanmove.

Therearealotoffamiliarnamesacrossthesectorandcategoryleaderboards.Whilethisiscertainlydrivenbythenumberofstatesacompanyisabletoparticipatein,italsoshowstheabilityofthesecompaniestomarshaltheresourcestocompetewithanationalorregionalfootprint.Licenseholders,onthewhole,shouldappreciatetheexpertisegainedfromworkinginmultiplestatesandfactorthatintotheirvendorevaluations.Theseexperiencedvendorshaveexposuretodifferentrules,regulations,andregulators.Weexpectthatwillonlyhelpmarketparticipantsas“onestatewonders”onlyknowwhattheyhavelearnedontheirhometurf.

Inlookingahead,wewillbuildonthisresearchasweplanforourthirdpoint-of-salereportinthefallof2020.Wewillalsotakethelearningsfromthiswhitepaperandusethemtoguidethedevelopmentofourvendordirectory.

Finally,anygoodreportwillgenerateasmanyquestionsasitanswers,andIhavenodoubtthatthisonewillaswell.It’simportanttorememberthatthisExecutiveSummaryisbasedoffofacomplete53-pageCannabisSoftwareStackwhitepapermadeavailabletoCannabizMediasubscribers,whichmightanswersomeofyourlingeringquestions.Formoreinformationonhowtoreceivethefullversion,[email protected],weappreciateyourfeedbackandsuggestionsforhowwecanimprovethisandotherreports.

[email protected]+1-203-826-8620

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AbouttheAuthorEdKeatingisaco-founderofCannabizMediaandoverseesthecompany’sdataresearchandgovernmentrelationsefforts.Hehasspenthiscareerworkingwithandadvisinginformationcompaniesinthecompliancespace.Edhasmanagedproduct,marketingandsaleswhileoverseeingcomplexmultijurisdictionalproductlinesinthesecurities,corporate,UCC,safety,environmental,andhumanresourcemarkets.AtCannabizMedia,Edenjoysthechallengeofworkingwithregulatorsacrosstheglobeasheandhisteamgathercorporate,financial,andlicenseinformationtotrackthepeople,products,andbusinessesinthecannabiseconomy.

EdgraduatedfromHamiltonCollegeandreceivedhisMBAfromtheKelloggSchoolatNorthwesternUniversity.

58,808 CULTIVATORS

10,586MANUFACTURERS

16,323RETAILERS

11,387DISPENSARIES

Connect with more than 60,000 licensed cannabis and 43,000 licensed hemp operations across 48 states and 18 international markets, including Canada

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www.cannabiz.media l 1-203-653-7975

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FormoreinformationabouttheCannabizMediaLicenseDatabase,visitwww.cannabiz.mediaorcontactCannabizMediaatinfo@cannabiz.mediaor(203)653-7975.

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cannabis software stack · 2020. 7. 15. · 3 | page introduction for five years, cannabiz media...

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