Tech, AI, and Big Data are transforming the dynamics of most modern industries as entrepreneurs seek to maximise efficiency, product/service quality and legitimacy, and that of cannabis is no exception.
With more countries legalising cannabis, a new opportunity is presenting itself, attracting investors and Silicon Valley entrepreneurs. It is these trail blazers, and their projects, that have come to be known as ‘CannaTech’.
What is CannaTech?
CannaTech is the product of modern technology’s introduction to the cannabis industry. It comprises of the collection and management of data and tech-enabled services intended to improve products, modernise customer experiences and cement customers’ and producers’ ability to comply with regulations. Given that the legal cannabis industry’s value is expected to hit $84.0 billion by 2028, increasing numbers of entrepreneurs and investors and exploring the industry, with a particular focus on the technology that will form its backbone.
The historic prohibition of cannabis has made impossible the collection of data and consequently contributed to an information gap between consumers and suppliers leading to both problems and missed opportunities. For example, without the collection of data, it’s impossible to know how and why medical users are consuming cannabis, but this data could be used to guide clinical research. Another important example is the use of data for streamlining supply and demand cycles; a vital function of any efficient market. The list goes on...
Ultimately, in order to ensure the safety, legitimacy and efficiency of this growing industry, it is imperative that the dynamics of the market are better understood. CannaTech firms are enabling this by providing tools which optimise data collection and producers’ decision making processes, facilitate secure payments, secure revenue, and identify market opportunities.
What does it mean for the industry?
The legal marijuana industry has already undergone considerable changes in recent years, with developments in both political legitimacy and market size, which the implementation and integration of tech has facilitated.
“There’s this really rare combination of having this old school industry, this physical agricultural product that is consumed, being reborn in an era of technology. That’s never really happened before, so all the rules are being completely rewritten.”
Steve Albarran, co-founder and CEO of Confident Cannabis
There are still barriers to overcome though. Although in many US states and Canada, for example, the decriminalisation of cannabis and establishment of lawful cannabis industries has unlocked significant capital flows, Chris Jones, Founder of Cannabis Xpress, explains, that “federal laws in the US are still deterring much needed cash injections. This prevents aspects of CannaTech, such as payments, from improving the quality and pricing of their services”. He stresses that the legislative changes that are yet to be made (but will be made), make investing now, especially in smaller firms, an even greater opportunity.
Whilst the legalised cannabis industry is still in its infancy, CannaTech firms provide investors with the chance to invest in a disruptive sub-sector that will revolutionise how we perceive the industry as a whole. And as these perceptions change, so too will regulation, only further unlocking the industry's potential.