Culture

Which huge tech companies are touching cannabis?

October 11, 2017
Michel Euler
This April 12, 2016, file photo shows the Microsoft logo in Issy-les-Moulineaux, outside Paris, France. (AP Photo/Michel Euler, File)
SOURCE: Michel Euler

While analysts forecast that America’s legal cannabis business will exceed $7 billion in sales this year, for corporate America, it remains a no-fly zone. Marijuana is illegal under federal law, which has led many banks and other companies to sit out the green rush so far. President Trump’s selection of an antipot attorney general, Jeff Sessions, hasn’t helped.

“Federal illegality is keeping some of the household names out,” said Leslie Bocskor, founder of cannabis advisory firm Electrum Partners.

But tech companies and investors have become an exception. As the biggest tech firms get bigger, they touch more and more parts of the economy and can’t help but pick up some legal pot-related business as well — whether that involves facilitating weed deliveries, online retailing or data services. Major tech investors also can’t help but place some weed bets as they chase sky-high profit far beyond traditional sectors. Here are nine of them:


Microsoft

Background: Global software giant, based near Seattle

Last year, the Southern California company Kind Financial said that its software, which governments can use to track marijuana, would be available through Microsoft. Kind CEO David Dinenberg said his company’s association with Microsoft is “a great introduction” to potential customers, since it can piggyback on the software giant’s reputation and infrastructure. So far the only customer of this partnership is Rhode Island’s government, but Dinenberg said it expects to announce more customers in coming months. The two companies do not have a marketing partnership.


Instagram

Background: Photo social media site owned by Facebook

Unofficially, Instagram is the most important marketing platform for the cannabis industry. Nancy Whiteman, co-owner of Colorado edibles maker Wana Brands said, “In an industry like ours with such limitations on how we can advertise, (Instagram) in particular provides ample opportunity to engage with loyal customers, attract new ones and achieve brand recognition on a national level.” Officially, Menlo Park’s Facebook has been a source of frustration for cannabis businesses. Facebook’s company policy states, “We prohibit any attempts by private individuals to purchase, sell, or trade ... marijuana.” Who gets purged often seems arbitrary and capricious. In July, for example, several legal Alaska cannabis businesses lost their Instagram accounts, possibly because they were reported by competitors.


Amazon

Background: World’s largest online retailer

Gigantic Amazon has become, by default, a head shop to the world. In addition to the impressive array of glass pipes, herbal grinders and gardening equipment listed on the site, Amazon sells equipment like a $5,913 Buchi Rotovapor that can be used by professional manufacturers to make cannabis extract. Serious amateurs might enjoy a $796 NugSmasher rosin press for making concentrates using heat and intense squeezing, also sold on Amazon.


OnFleet

Background: Logistics software

OnFleet software helps companies manage deliveries, such as food, flowers and now cannabis. According to CEO Khaled Naim, “Dozens (perhaps even hundreds) of dispensaries use our software to dispatch, optimize, track and analyze their local deliveries.” Its services include recommending routes for drivers and delivery updates for customers. Its customers include licensed dispensaries as well as larger services like San Francisco cannabis software company Meadow.


Alexis Ohanian, venture capitalist

Background: Co-founder of Reddit

Ohanian is part of a $2.1 million investment in Meadow, which powers the online menus and delivery services for dozens of cannabis retailers. Venture capitalists like Meadow, because the underlying technology can grow globally. Meadow CEO David Hua met Ohanian at Burning Man. “He has this affinity for founders, what they have to go through,” Hua said. “When he says, ‘This is good,’ we think ‘OK, cool, we’re headed in the right direction.’”


/r/trees

Background: Reddit’s section for all things cannabis

With more than 1 million subscribers, readers can expect everything from discussions of legalization to health and law enforcement issues. This being Reddit, there’s goofiness as well, like the guy who inhales a very large dose of hash and reaches a “whole new level of stoned.” There are other pot-related threads on Reddit, like /r/Cannabis, which focuses on legalization, but /r/trees is the more eclectic “home of the ents.” Ents, by the way, are a race of “calm and deliberate” tree people created by “Lord of the Rings” author J.R.R. Tolkien.


Founders Fund

Background: San Francisco venture capital firm that has backed Airbnb, Lyft, Spotify and Stripe

Founders Fund got attention in early 2015 when it became the first institutional investor in a $75 million fund for Privateer Holdings, the Seattle parent company of online weed guide Leafly, as well as Marley Natural — a cannabis brand with the reggae star’s imprimatur — and also Canadian medical marijuana producer Tilray.


Yelp

Background: Online business directory

As dispensaries and cannabis doctors have proliferated, they’ve begun to appear and receive reviews on the popular, if controversial, site Yelp. A Yelp spokesman says that the site strives to recognize all legal local businesses. With cannabis, businesses can list on the site, receive reviews and use a kit of free business services, but they can’t purchase search advertising. This approach left an opening for Orange County’s Weedmaps to enter the directory market; it’s being called the “Yelp of cannabis.”


AngelList

Background: Tech investment and employee recruitment platform

Despite feverish interest in cannabis and cannabis-tech companies, few mainstream venture capital firms have been willing to go green. This has created an ideal situation for AngelList, a Silicon Valley site for companies to recruit employees and seek investments from individuals.

Alex Halperin is a Los Angeles freelance writer.


Hot investments in pot tech

Forget the grass; as the cannabis industry grows, it’s creating more opportunities for “picks & shovels” technology plays.

  • Ag tech: LED lighting and soil-less growing techniques called aeroponics “is going to completely transform how we do our future farming,” said Ben Larson, co-founder of Gateway, an incubator for cannabis startups in Oakland.
  • Biotech: The industry’s holy grail, Larson said, is advancing understanding of the individual chemicals found in cannabis to customize the high it provides, and potentially its medical benefits as well. Cannabis-based biotech products like a tobacco cessation chewing gum and an acne treatment are in the FDA pipeline.
  • Disrupting deliveries: Larson also sees room for an upscale delivery service. He compared San Francisco service Eaze to Macy’s, and said he would like to see a Neiman Marcus more focused on the customer experience.
  • Enterprise software: Major software-as-a-service providers like Salesforce don’t need potentially problematic pot customers. That’s created a competitive market for enterprise software where companies like Baker, Treez and Trellis (a Gateway company) are performing well.
  • Payments systems: Cannabis companies keep getting their bank accounts shut down, and Leslie Bocskor of Electrum Partners said he’s hearing a lot of interest in cannabis-oriented cryptocurrencies. “I’ve had a lot of conversations about cannabis and the blockchain,” he said.