The Rise of Cannatechs

01/09/2018 10:26 am ET

The original California gold rush of the 1880s made plenty of miners wealthy. But another group of entrepreneurs made off even better: those who sold picks and shovels to the miners. These forward-thinkers never touched the product, but found great success equipping those who did.

<strong>The Rise of Cannatechs</strong>
The Rise of Cannatechs

The ‘legal marijuana’ industry is rather new and everyone operating in this zone is a startup. Working in this space you will find two different kinds of startups,

  • One which are offering end to end delivery of marijuana products,
  • Second which are building the data backbone to power the legal cannabis industry

The second kind of startups, the ‘pick and shovel’ kind, are the ones of significance here, also referred as the Cannatechs (companies that don’t “touch the plant”).

The Cannatechs focus on a wide range of cannabis pursuits, from science, research, finance, medicine, government policy, tech innovation, agriculture, and the collecting and aggregating of cannabis-related data.

By utilizing data, these startups are trying to build user confidence, regulate supply chain and overcome the stigmatization marijuana industry has been facing for quite some time.

This ‘quantifiable cannabis’ is a rather exciting opportunity for these startups to bank upon, given the industry will thrive as more states of U.S.A push for the legalisation of this marijuana industry.

If they are able to achieve a perfect balance between the risk vs. reward model they are operating in, they have a massive potential to capitalize on this rather new marijuana tech industry.

But of course the risks are high. With such stringent federal laws, there is very limited possibility of error, but an unlimited opportunity.

Another huge benefit for the Cannatech industry is the lower likelihood of being targeted by regulators, who appear more focused on standardizing the distribution and sale of cannabis. Of course, nothing is guaranteed.

The Future of These ‘Cannatechs’

According to a report published by Washington Post, if legalized on a federal level, the cannabis industry can generate a whopping $35 Billion by 2020. Colorado, one of the first states to have recreational marijuana legalized, had generated an income of $270 million by 2016 alone.

There are a number of VCs investing in marijuana related ventures following the wave of legalization which is spreading all through the United States and now to its neighbouring countries as well. When asked about what future do these ‘cannatechs’ hold, an angel investor says, “With technology, you’re betting on something that you think is really good. You hope that the mass market will adopt it and see the value in it at some point in the future. With cannabis investments, you know the demand is there. It’s a product that already sells.”

Realizing that you don’t need to be growing or selling cannabis to be a marijuana startup, the future for these cannatechs appears endless.

And It’s Not Only About Profit

As this legal cannabis industry proliferates, there will arise a massive demand for data which will turn this ‘fringe’ product to a legal mainstream product.

Eg. Currently, there are no regulations with regards to what ‘quality’ means for marijuana. There are organizations such as FDA and USDA which carry quality control on cannabis products.

Colorado for example, before legalization had the genetic data of only 3 strains sequenced in its database, and currently there are more than 300 strains available. This has, therefore, resulted in a tremendous amount of information being unleashed onto this budding legal marijuana industry, with no capacity and system to manage it.

Similar is the case with manufacturers of legal marijuana, who are cultivating products without any knowledge of market trends. A system which could provide them useful insights and help them refine their produce based on customer reviews, will be welcomed in coming times.

Dispensaries on the other hand, do have information about their clients, however, this information, stocked up in their file cabinet isn’t analyzed to figure out user trends. This shortcoming often results in their marketing efforts being wasted leading to a poor ROI.

These factors, combined with the fact that marijuana industry has always been on the other side of the order, are inviting these contrarian entrepreneurs to bring about a change. Working in this space, these entrepreneurs will either make cannabis one of the biggest breakthroughs in the history of medicine, or at least one of the biggest American industries.

It’s rare to find an opportunity better than this, of stepping into this (potentially) $20 billion market and hence, Budbo an emerging leader in the Cannatech space is implementing blockchain technology to provide security, transparency, industry-wide data, and business intelligence for the entire cannabis ecosystem. Providing manufacturers and retailers market information after careful trend analysis, giving authorities the information required to monitor cannabis quality, and in the end giving information to consumers for informed decision making, Budbo is planning to build a backbone for the cannabis industry to be used now and in future.

To learn more about Budbo visit, https://budbo.io/

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