Cannabis-related products and services that “don’t touch the plant,” are subject to less risk from federal anti-cannabis prosecution, and have fewer rules and regulations to abide by. They may just be the pick axes and blue jeans of the new Green Rush.
While Attorney General Jeff Session has been speaking out against cannabis, entrepreneurs in every part of the industry have been trying to build trustworthy companies along the entire value chain. A critical part of the growing infrastructure is the market of products and services being developed to help farmers, edible-makers and dispensary owners. The creators of these new offerings aren’t just slapping a leaf motif on an existing app, piece of software, or physical product. They are building from the ground up with the complexities of this particular market in mind.
While cannabis products need to be tracked from seed-to-sale, require video surveillance, and operate under a long list of other rules and regulations, cannabis-related products and services that “don’t touch the plant” operate without these restrictions. A popular cannabis-adjacent area for entrepreneurs is creating physical and digital ways to connect customers with cannabis producers within the restrictive framework of the industry. Eyechronic is a company that installs video screens inside cannabis dispensaries to provide product and marketing information. Kannatopia is a social media platform that connects marijuana users with each other and with businesses in the industry. The product aims to help entrepreneurs whose companies have had “their social media presence shut down, deleted or suspended” on more mainstream social media platforms, according to the company. Mass Roots provides maps of local dispensaries, product descriptions and reviews, and educational content.
Direct marketing services are also growing quickly. Cannabis products that enter the legal market while it is still nascent, have a chance to establish their brand name before competitors crowd in. CEOs are hiring firms like Social Media Unicorn, a canna-brand marketing and sales agency based in Nevada. Krista Whitley, chief executive, says her company has taken an active strategic and tactical approach in the Nevada market. “Our team is in Nevada’s dispensary locations 5-6 times each week giving out free branded shirts, stickers, and swag.” Whitley’s company is also adapting trends like monthly variety box subscriptions and spa products.
Staying in compliance with local and state laws can require a great deal of time and focus from a CEO who’s trying to grow a new business. It’s also one of the most critical functions for any cannabis-related company that wants to stay in business, and an area for entrepreneurs to add value. Services like Scott Kveton’s Odava, offer a regulatory compliance platform for the cannabis industry. FinTech companies like Hypur offer help with banking and bookkeeping compliance. LeafLink offers a technology platform that connects brands with retailers in the cannabis industry.
Lawyers are developing practice expertise in cannabis regulations and compliance, including keeping a close eye on frequent rule changes. Dorsey and Whitney LLP based in Seattle offers advice to cannabis companies in both Canada and the US.
Jim Pakulis, President of Lifestyle Delivery Systems, a vertically integrated cannabis company, anticipates that over the next three years, the industry will see an increase in uniformity as it relates to marketing, distribution, fulfillment, and logistics, so there are big opportunities for early entrants that can establish those norms. One company, C4 Distro, launched by Eric Spitz and former California Attorney General Bill Lockyer is offering a distribution system to serve the cannabis supply chain from grower to retail stores in California. It is modeled on the one used in the alcohol industry, and the founders hope to take the model national.
As each state comes online, and establishes rules they see have worked for other states, the road will get smoother for entrepreneurs. California, for example, is using some of the same rules that Colorado and Washington state established, such as limiting THC to 10 mg per individual serving for recreational edibles. The growing adoption of best practices and uniformity will make it easier for the services and product companies serving the cannabis industry to expand.
