Cannacurio: Cannabis Software Stack – Revisited (Nov. 2020 Update)

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Introduction

This summer we published our first Cannabis Software Stack Report. We juxtaposed state license counts against the 320 companies that connect to METRC and Leaf Data Services in WA. Since compiling this data– we took an updated look and found 43 new companies are now part of the software stack.

Catch up on the original Cannabis Software Stack Report before reviewing these updates, or listen to the author, Ed Keating, discuss this data and insights in his Cannacurio podcast.


Key Findings

  • 20 of the new entrants (47%) are headquartered in California with Massachusetts a distant second at 12%
  • 28 (65%) are trying to break into the California market; 7 in Massachusetts and 4 in Colorado
  • FolioGrow is the biggest mover – entering 7 markets since midyear
  • 5 companies entered the delivery software category: 4 in California and 1 in Massachusetts

Sectors

We grouped all the companies we found into four sectors as shown in the market map below:

Cannabis Software Stack Market Map

We also categorized 12 firms as Miscellaneous – they tended to be license holders, or may be in stealth. Let us take a look at each Sector:

Back Office (100)

This sector includes solutions designed for complex operations that could be used by different types of license holders. Applications may include ERP, seed-to-sale, compliance, and supply chain/logistics. We found five new companies in this space bringing the total to 100 vendors:

New Back Office Companies

All but Saffrondo (Massachusetts) are trying to crack the California market. It is also notable to see Zencanna.io coming in to compete with players like TaxNexus and offering a bundled Point of Sale solution with tax compliance.

Activity (79)

These companies offer solutions designed for cultivators, manufacturers, retailers etc. Applications would be point-of-sale, grow software, delivery, and lab information management systems. There are 11 new ones that we discovered and five center on delivery while three provide grow software. Not surprisingly, there is only one new Point of Sale provider.

New Activity Companies

While 10 of these vendors went into only one state, FolioGrow went big and entered seven including Massachusetts, Ohio, Louisiana, Washington DC, Michigan, Oregon and California. Four of the five Delivery vendors have opted for California with Zip Run aiming for Massachusetts.

It is not surprising that only one new Point of Sale provider has appeared on the list in the last six months. In our 2020 Point of Sale Report we highlighted the intense competition in this market with 68 vendors battling it out and 50% of the market owned by just three firms.

Transactional (36)

These solutions revolve around the B2B and B2C transactions and include financial institutions, financial compliance, marketplaces, and payment processing. There are only five new ones here which brings the total to 36. There are three in financial compliance and two are marketplaces.

New Transactional Companies

Each of these companies has only entered one state so far. Bespoke and Cbidds are in California, Left Coast is in Oregon, Safe Harbor is in Colorado and Cannalist is in Massachusetts.

Advisory (70)

This group is comprised of consultants who may advise businesses on how to technically integrate and data analytics firms provide insights to a license holder and use METRC/LDS data as an input. In this last review, we added nine consultants and one analytics firm.

New Advisory Companies

Alpha & Omega Cannabis Solutions entered three states: California, Louisiana and Missouri while Balance Point Technologies focused on Colorado and California. The rest entered only one state with California being the favorite.

Miscellaneous (90)

Of the 43 new firms there are nine that are in stealth or it is not evident what business they are in. If anyone can share their insights on these companies drop me a line.

Miscellaneous Companies

Conclusion

Many pundits have claimed that cannabis was the big winner in the 2020 election. With five new states coming online thanks to the voters in Arizona, Mississippi, Montana, New Jersey and South Dakota; this industry will continue to expand. Based on this analysis it appears that the ancillary software providers are growing right along with them.

Also, the 320 incumbents we researched this summer did not stand still. Forty-three of them have moved into additional states since midyear. In total, we found 61 “moves” from these companies. By move we mean a company is certified by Leaf Data Systems or METRC in that state. The most moved to state is Maine where 18 companies set up shop. Michigan is a distant second with six new companies followed by five in Massachusetts and Missouri. Four companies expanded into three states including Roshi, a logistics solution; and three point of sale purveyors: Posabit, IndicaOnline and Viridian Sciences.

West Virginia and Oklahoma are both now contracted with METRC so we will be keeping tabs on the one state wonders and multi-state providers who will soon connect in those states.


Cannacurio is a weekly column from Cannabiz Media featuring insights from the most comprehensive license data platform. Catch up on Cannacurio posts and podcasts for the latest updates and intel.

Ed Keating

Ed Keating is a co-founder and Chief Data Officer of Cannabiz Media and oversees our data research and government relations efforts. He has spent his whole career working with and advising information companies in the compliance space. Ed has overseen complex multijurisdictional product lines in the securities, corporate, UCC, safety, environmental and human resource markets and focuses on workflow products over the last twenty five years. During that time he has worked for both startup and established information companies where he has led marketing, product management and sales organizations. These companies include Wolters Kluwer/Commerce Clearing House, CT Corporation, EDGAR Online and Business & Legal Reports. At Cannabiz Media Ed enjoys the challenge of working with regulators across the globe as he and his team gather corporate, financial, and license information to track the people, products and businesses in the cannabis economy. Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University.

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