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Cannabis Software Stack
Executive Summary
ThisExecutiveSummaryisbasedoffofacomplete53-pageCannabisSoftwareStackwhitepapermadeavailabletoCannabizMediasubscribers.Formoreinformationonhowtoreceivethefullversion,reach
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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Copyright©2020byCNBMediaLLCdbaCannabizMediaSource:CannabizMediaLicenseDatabasewww.cannabiz.media
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:
Copyright©2020byCNBMediaLLCdbaCannabizMediaSource:CannabizMediaLicenseDatabasewww.cannabiz.media
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%
Copyright©2020byCNBMediaLLCdbaCannabizMediaSource:CannabizMediaLicenseDatabasewww.cannabiz.media
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.
Copyright©2020byCNBMediaLLCdbaCannabizMediaSource:CannabizMediaLicenseDatabasewww.cannabiz.media
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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.
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