💀 The Day of Reckoning Cometh

The evolution of tech companies in cannabis is entertaining as hell; companies were born of necessity, as larger corporations were unwilling or unable to service a gray market. We have watched the awkward transition of our industry, from completely illicit, to a medical environment with murky regulations and enforcement, to an adult-use powerhouse (in some states). Eventually, this lil plant will be federally legal, and we will reflect on the ridiculousness of this journey.

That journey is reflected in the digital technologies that cannabis operators have leveraged over the years to market and sell their goods. We have experienced a series of step changes, always moving toward a sophisticated retail technology stack, but reinventing the wheel at each corner. To boot, this has occurred in a hyper-condensed timeline, at least relative to the long, winding evolution of traditional retail eCommerce.

Cannabis technology providers have had to gain parity with offerings in traditional verticals as quickly as possible, working from scratch.

And now, I humbly present: where we come from, where we’re going, and who is going to die.

👶 Birth, aka “We need something”

Okay, let’s start in the gray market in California, because that’s where a lot of this industry was born. The birth phase was long; I’m talking the full 20 years from 1996 to 2016.

I’ll speak anecdotally: I used to use Google in 2008 to find dispensaries, and Google would often send me to Weedmaps. Know why? It was the only damn thing out there.

Weedmaps offered a not-entirely-novel value proposition, but in a very-novel industry: list your storefront, licensed or not, and we will function as a two-sided marketplace. We’ll market the site so end users use it, and we’ll promote your store so they can find you.

And we’ll charge you for it.

This was peachy with operators, because there was literally no other way to promote your business online; couldn’t buy ads, could barely have a website.

The underlying tech was very simple. You’d manually update a menu environment, and that’s what people would see. Everything occurred on Weedmaps, and you usually didn’t know who your customer was.

🧒 Kindergarten, aka “Integrations are here”

Cannabis Kindergarten occurred from ~2016 to 2019; this timeframe witnessed the successful passing of adult-use legislation in many different markets, which set guidelines around how a cannabis retailer should manage and track their inventory.

Because there was a required source of truth (a point of sale system), this period also witnessed the advent of integrated eCommerce (e.g. menus that would sync, to varying degrees of success, with your point of sale / inventory management system).

That ^ means participating in marketplace listings (Weedmaps, Leafly, then Eaze, Lantern) to pack the top of funnel, but also owning the bottom part of the funnel by curating a better website, and hosting a native eCommerce experience right there in their own ecosystem.

Baker, Simple Marijuana Menu, Olla, dutchie, and the Undisputed Champion of the World (Jane), were all born during this time.

Companies that have been successful during Kindergarten scaled quickly as the industry recognized sequentially better mousetraps. Integrations got better; the companies white labeled their Shopify-esque ordering engines for a better native experience; everyone raised money.

🧑‍🏫 High School, aka “Hey, we have an actual tech stack”

2019-2020 was High School. This is when the viable eCommerce companies secured significant market share, and customer profiles began to take shape. It’s also when the network of tech providers began to take form.

springbig, DataOwl, Sprout for loyalty;

CanPay, Hypur, Aeropay, Paytender for ACH payments;

OnFleet, Cannveya, Tookan for fleet management;

You get the picture. It’s a real damn tech stack!

In High School, the company that integrates best wins. Everything has to work together.

Retailers, during this time, expressed the need to retain their power of choice - in other words, they said (or yelled) that they do not want to be dictated to, nor do they want to be constrained to a closed loop ecosystem (e.g. a so-called ‘end to end’ solution, which is inherently limiting and only functional for one-off stores).

👩‍🏫 College, aka “We want custom experiences”

Ahhh, college. A time to explore a new look.

Now we’re talking about 2021; retailers are growing up. Cannabis is poaching top tier talent from traditional retail. Consolidation is happening quickly.

All of the accomplishments in cannatech so far - lead generation, sophisticated integrations, connective integrations into your chosen network of technology providers - are table stakes. Now, the expectation is to move away from templates, iframes, subdomains - and to create a fully native environment.

Now we’re talking about headless commerce.

I won’t belabor the point, because I’ve been borderline annoying about it, but click below if you’re interested:

🏝 Retirement and golden years, aka “The large player takeover”

Next up (2022+), we should fully anticipate that large tech providers will enter cannabis. Amazon, yes. Uber, yes. Microsoft, yes. Oracle, yes.

Tech players in this space - the smart ones - know this is coming. The goal is to be enabled, and not limited, by the entrance of these companies.

Heads up. Companies will be acquired, and others will compete with the big dogs.

☠️ Death, aka “We could fail anytime”

Death!

Surviving through all of the life cycles described above is incredibly difficult - some of the names I mentioned above have sold or gone out of business - some of the ones I mentioned will not be around in 12 months.

The nimblest companies survive. The smartest companies with the most talent and the best culture survive.

Stay vigilant, my friends.

📚 tl;dr

• Canna tech (particularly lead gen and eComm) evolved hyper quickly

• Birth = lead gen listings

• Kindergarten = integrations

• High School = a connected tech stack

• College = headless commerce

• Retirement = big players enter

• Death = always a possibility; heads up

• Today is Thursday