Marijuana Software: A High Margin Play on the Industry
Ryan Allway
October 20th, 2015
News, Top News
The software industry has become extremely popular among investors due to its ability to rapidly scale and generate high margin revenue. When it comes to the burgeoning cannabis industry, these same dynamics could translate to the most interesting opportunities in the space, especially since the technologies don’t involve any direct handling of the drug.
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MassRoots Targets a Million Consumers
[stockchart symbol=MSRT]
MassRoots Inc. [stockquote symbol=MSRT] has become the premier social media network for cannabis users, with over 500,000 consumers and 1,000 businesses signed up. By management’s estimate, the company expects to double that number to a million users by the end of the year as legalization continues to advance across U.S. states. The upcoming year could see even faster growth as nationwide legalization is explored.
The company plans to monetize its user base by enabling participating dispensaries to advertise to consumers in targeted campaigns. In many ways, the approach mirrors that of companies like Twitter Inc. (NYSE: TWTR) or Facebook Inc. (NASDAQ: FB) that have generated hundreds of millions of dollars per year in revenue. There’s little doubt that dispensaries – unable to advertise on traditional social media – will utilize the technology to reach a growing audience.
Over time, the company could also leverage the users it signs up through the app in other apps targeting the burgeoning cannabis industry. Third-party developers may also be able to leverage the MassRoots API to integrate new or existing apps with its data, which offers ground-level data on cannabis consumer preferences. In the end, the “big data” approach could end up paying big dividends for early-stage investors in the stock.
BreedIT Helps Marijuana Growers
[stockchart symbol=BRDT]
BreedIT Corp. [stockquote symbol=BRDT] aims to become a leading software solution for plant breeders and researchers looking to grow strains of marijuana with specific cannabinoid profiles. Through its cloud-based service and newly launched BreedIT Mobile™ application, breeders can view and analyze collected and historical information on plots, as well as record new observations, such as plant traits and images, while in the field.
In addition to providing software to breeders, the company’s researchers have leveraged the software to patent its own strains of marijuana. Management partnered with KanaboSeed last year to register two new cannabis strains with the Israeli Ministry of Agriculture & Rural Development Plant Breeders’ Rights Council. The registrations mark the first of many anticipated registrations to gain an IP foothold in the industry.
The company’s long-term plan is to integrate its BreedIT software solution with a number of growing systems, while partnering to register new IP in Israel and around the world. In the end, these efforts could generate big results for long-term investors as the company generates recurring revenue from software and sizable IP assets on its balance sheet. The presence in Israel also makes it a key way for investors to diversify away from just the U.S.
Agritek Helps Dispensaries Sell
[stockchart symbol=AGTK]
Agritek Holdings Inc. [stockquote symbol=AGTK] has become a leader in the cannabis technology space with a diversified array of products and services. While it’s not a pure-play in the software portion of the industry, the company announced a new eWallet solution in February that combines e-commerce with a cashless alternative for dispensaries looking to avoid the many problems associated with banking in the industry.
According to the press release, the company executed a revenue participation agreement with Genie Gateway for the resale and use of a customized virtual wallet and ecommerce platform to provide cashless merchant and payment services to the industry. Clients registered on its MediSwipe platform as merchants, agents or customers have access to the unique technology that’s compatible with any internet-connected device.
The company’s MediSwipe Patient Management system has also become a popular option for medicinal dispensaries around the country. As cloud-based solution, the technology provides a HIPPA compliant, web-secure document repository and collaboration system complete with patient registration, digital records management, and the tracking of all caregiver transactions, including log-in time, date-stamp, and product-related data.
Risks & Takeaway Points
The cannabis software industry is well-positioned to benefit from both the rapid growth of the cannabis industry and the lucrative business models afforded by technology.
Investors should remember that the cannabis industry remains in an early stage and many of these companies are pre-revenue and will require additional capital to grow. While these are large risks to assume, investors looking to get in on the trends early on may deem them acceptable risks to incur and may want to consider a closer look at the space.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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