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Colorado: The Race Is On for Marijuana Tech Startup

“My passion lies in cannabis,” says Brett Terry, CEO, of CannaBrokers, a startup which facilitates wholesale transactions between licenced marijuana growers and extract companies with dispensaries. “When I joined the cannabis industry, much to my family’s chagrin, an entire new world opened up to me.” 

At the end of September, CannaBrokers came third in Denver, Colorado’s first Marijuana Tech Startup Competition  and bagged a prize of $500. Yet, this inaugural event seems likely to be the start of something which is replicated across Colorado, Washington… and further afield.

Colorado opened its first licenced cannabis shops on 1st January. Washington had done likewise in July. But by the start of October, the Colorado marijuana legislation had changed yet again. These moves have been rapid and substantial, yet they could represent a legal minefield, as medical use is already allowed in 23 states, and the rules around licencing are extremely complicated.

This means, as more states in the US join the race to legalise cannabis for recreational consumption, the need for relevant technology, to monitor and manage procedures in this fledgling industry, could escalate. In fact, ArcView Group, a marijuana research and investment firm based in San Francisco, has already estimated the Marijuana industry will almost double from $1.5 billion last year to about $2.6 billion through 2014.

Not surprisingly, businesses across the spectrum, are rushing to claim their slice of the action. In mid-July, the New York Times ran an in-depth piece: Next Gold Rush: Legal Marijuana Feeds Entrepreneurs’ Dreams. While in April, Alice Truong from Fast Company wrote a detailed report - In Search Of Greener Pastures, Techies Land In The Growing Marijuana Field - on the entrepreneurs looking to jump on the bandwagon.

Needless to say, Denver’s Marijuana Tech Startup Competition caused quite a media stir and was covered – albeit in passing – by numerous publications. As well as getting brief a slot on Business Matters (7th Oct) on the World Service - which included some amusingly careful responses from the panel.

When we catch up with the organiser, Dan Hunt, the 21-year director of growth and operations of MassRoots – a company that labels itself as the Instagram for the marijuana industry – he confesses that he didn’t really know anything about event organising when he set this up. In fact, based on our chat, you could argue the whole thing was a bit of - waiting-to-happen - fluke.

He tells us that he found some sponsors and released the event on Eventbrite but he was very “surprised” by the reaction. The press coverage started back in August, when the Fast Company reported a bit of fracas over the original name selected, ‘Startup Weekend’, as UP Global claimed the trademark. This meant the title needed to change to ‘Startup Competition’ – as it was billed.

Hunt explains he grew up in Boston, went to James Madison University in Virginia, then moved out to Colorado for this job. He was motivated by the idea of working for an eight-person startup and in “making a difference to the legalisation of cannabis movement”. He believes the data the company is collecting should help do just that and adds: “It is ridiculous that it is not legal.”

Terry, of CannaBrokers, is not originally from Colorado either and arrived about five years ago to work in the financial industry in Boulder. However, he rapidly made the transition to cannabis. “After seeing the good that medicinal cannabis could bring to people,” he tells us “I began to dive head first into the research that had been so easily hidden from me throughout my time in conservative Alabama.”

“I loved helping sick people, caring for the plant, and the excitement of a huge new industry. The potential of a legitimate cannabis industry intrigued me to no end. So I set out to help create just that. There are still so many untapped facets to this industry and the future looks very promising.”

He only found out about the tech competition three days before the event began. “I jumped on the opportunity because I needed help producing a website for my company and noticed there would be enough tech people there for me to accomplish this rather easily.”

Michael Lockwitz is CEO, of CraftedHere, which provides an online directory of cannabis-friendly bars, clubs and dispensaries for tourists and marijuana enthusiasts wants to promote “cannabis as a legal adult consumable that is no different than coffee, beer, wine, or liquor”. His business came second in the competition to win a total of $1000. He tells us the gathering “was a pretty typical business competition, with the exception of legal and encouraged consumption of cannabis.”

Lockwitz was born and raised in Indiana, attended Purdue University and moved to Colorado in 2007 to start his web development career while remaining close to the mountains to pursue his love of snowboarding. “There is an extremely active cannabis industry in Denver and Colorado as a whole that is growing and maturing each year. [But] I think the tech side of that industry is still small and developing.”

There are “not a lot of thriving marijuana tech startups,” agrees Hunt. His hope is to grow and build the community of marijuana tech entrepreneurs with a series of regular and ongoing events. “There is a lack of further tech,” he explains. And like in many industries with a lot of regulation, technology can make a “confusing and complex situation easier.”

Terry believes the marijuana tech scene will grow at the same pace as the cannabis industry. “As the industry legitimises I see tech jumping on board to provide the structure that is so desperately needed,” he says. “As a completely new industry I see there being lots of opportunities for the merger of cannabis and tech.”

“I see the cannabis tech startup scene across the world exploding in the coming decade,” agrees Lockwitz. “Growth of the legal cannabis industry is inevitable and just like other industries they will rely on technology to cut costs, improve quality and efficiency as the market becomes more competitive.”

Whilst “there are many consumer-facing products that have received large amounts of attention because of their visibility,” he continues. “What isn't always discussed are the wide range of business operations software such as point of sale, inventory tracking, employee scheduling, regulatory compliance and other technology that is created to support the industry.”

“The back office software isn't sexy and doesn't receive much attention,” he goes on “which is the same for traditional business software. I think this is the beginning of a range of new business services for an industry that has been unable to benefit from technology in the past because of its legal status.”

“There is a need for all kinds of ancillary industry help,” adds Terry. “Unfortunately the government status of cannabis keeps a lot of brilliant people away from us and hinders our ability to grow. This is all changing.  Four years ago you couldn't get a legitimate news source to cover the cannabis industry.” 

Things are now changing very rapidly and Terry is keen to stress that tech companies should not “be afraid to partner with someone in the cannabis industry because of social taboo. There are a ton of honest, hardworking people in this industry willing to work against the grain to get the cannabis industry legitimatised. We can use all the help we can get.” 

“The industry is booming and there is a much needed place for professionals that can help this flowering industry bloom,” he concludes. “The legal landscape isn't as risky as most presume and the potential is limitless.” 

 

Kathryn Cave is Editor at IDG Connect

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