Entrepreneurs Enter the Green Rush with Technology
If most of the money during the Gold Rush was made from ancillary businesses, then technology is one of the most important ancillary sectors to look at in the Green Rush. The technology panelists at the Marijuana Investor Summit in Denver had plenty of experience among them, but as the panel moderator Michael Mayes pointed out, the bulk of the experience was in technology and software. The panelists had experience with many companies spanning a number of industries.
The technology panel, which took place in the Crowne Plaza hotel on April 21, 2015, the second day of the three-day summit, began shortly after breakfast. While the panel was advertised as an analysis of the cannabis tech sector, it consisted mainly of the experts on stage answering audience questions. In addition to Mayes as the moderator, the panel included Chris Walker of Heliospectra, Daniel Yazbeck of CDx, Inc., Jack Abbott of Intelligent Light Source and Jeff Foster of JaneFour20.
Mayes, who is CEO of Quantum 9, a Chicago-based cannabis business consulting and software firm, said he was inspired to enter the industry through compassion after hearing stories of cannabis saving lives, in spite of the cautions of his parents.
“I did it anyway, I couldn’t be happier,” Mayes said after describing how his parents told him there was too much risk associated with the marijuana industry, a Schedule I narcotic according to the DEA list of controlled substances. Mayes, who was a SharePoint developer, saw the new industry as a chance to be innovative.
“Out of innovation comes optimization. When you start to innovate, you can see all areas of optimization,” Mayes said. Essentially, there needs to be something to optimize; thus, the importance of innovation.
Innovation was the overarching theme of the panel. Yazbeck previously worked for Pfizer as a chemical research and development scientist. Now, CDx is developing the MyDx, which is a handheld chemical analyzer that Yazbeck compared to a “digital nose” in the way it works.
Walker, who works for Heliospectra, a Swedish grow light company, said he focuses his innovation on energy efficiency. Walker said Heliospectra’s “drive [is] to replace inefficient, archaic lighting sources found in most commercial horticultural grow operations.” Walker’s background also includes biofuel, where he has had success in building a biodiesel refinery and storage facility in Arizona.
“Marijuana is driving innovation in lighting,” according to Abbott, who like Walker, is involved in grow light technology. Abbott also has over 20 years of experience in online marketing for “blue chip clients,” and suggests investors and people looking to get involved in the marijuana industry look for a niche.
“Think about the craft brewers,” Abbott said, “Don’t try to be the Budweisers,” mainly because that is a level at which most businesses won’t be able to compete. It is easier to find loyalty through a carved out niche rather than putting the energy into building a monolithic brand.
Foster, whose JaneFour20 system is a cash-management kiosk designed for the cannabis industry, said he has years of experience in the business of payment and credit card processing systems. Foster said he has worked with the world’s largest banks and retailers. He is considered an expert when it comes to the marijuana industry and banking. Foster said JaneFour20 markets the kiosk as a pathway to compliance for dispensaries and cannabis-related businesses to begin using banks, based on FinCEN regulations and the Cole memo.
“At the end of the day, there’s a huge legal and regulatory burden that will not go away,” Foster said when asked if looser regulations on or rescheduling of marijuana could pose a threat to the kiosk business. “What’s laid out in the FinCEN guidance and Cole memo is not going anywhere. And that fits very squarely into [the JaneFour20] solution,” he added. The JaneFour20 kiosk monitors inventory from seed to sale, and provides reports dispensary owners can submit to the bank to prove the origin of every dollar made.
FinCEN is the Financial Crimes Enforcement Network and the Cole memo was a letter from the U.S. Department of Justice outlining a strict manner in which a cannabis-related business might be able to use a bank. That is, if the banks even allow it after cannabis businesses prove compliance.
Technology is important to any industry, and that is being recognized by people getting involved with marijuana businesses. Also attending the summit, but not on the panel, were Eddie Miller and Lawrence Michelson from InvestInCannabis, who describe their business as an Alibaba Group for the marijuana industry.
“Alibaba’s prime business model is to create a marketplace where people can buy and sell goods,” Miller said. “Our businesses are platforms for the [cannabis] industry to sell their wares to each other.” The InvestInCannabis equivalent to Alibaba.com is TheCHEX.com, which stands for The Collective Haze Exchange.
Another nod to technology came during CannaPitch, a live pitch session on April 21 that took pitches from prospective cannabis businesses for potential investment. Three of the four businesses pitched in the session were rooted in the tech sector, including HerbFront, HelloMD and Ēdn tech.
Long gone are the days when marijuana technology meant creative ways to build a smoking apparatus—weed has gone digital.
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