Most large companies interested in profiting from the legal marijuana sector are sitting on the sidelines, waiting for the industry to mature. Microsoft is not one of those companies.
The tech giant announced that it is entering the thriving cannabis sector with Kind Financial, a Los Angeles-based seed-to-sale software provider, as a partner. Together, the duo will help ease compliance related issues on both state and local levels. Microsoft will also leverage infrastructure from Azure Government cloud to fuel its green platform. If all goes according to plan, the group could dethrone BioTrackTHC as the leading service provider in the space. The company recently pivoted into legal marijuana from the prescription opioid industry.
Interestingly, Bill Gates, founder of Microsoft, confirmed his progressive stance on marijuana when he voted “yes” for legalization in Washington- his home state. During a BuzzFeed interview in 2014, the veteran philanthropist casually cited his concerns about the growth of the nascent industry.
How did Microsoft end up in the legal pot industry? Tight competition in the cloud services arena and pressure from Amazon (through Amazon Web Services) and Google, forced the company to look into “untapped” markets with dominant potential. The legal weed sector is exactly what the business was looking for, with analysts predicting exponential growth across the country from cannabis retail and cultivation services in the next five to seven years. Some see the move into the unrelated niche as extremely risky, which is why the group is working closely with Kind Financial.
The team’s platform will provide a wide range of seed-to-sale services, including inventory tracking for retail transactions and sales analytics for reporting. Compliance features will likely be baked into the system- designed to help businesses keep up with changes related to laws, transaction limits and bans. Growers will also be able to keep tabs of their plants using digital tags with updates in real-time.
Reactions from the Community
Legal weed companies are thrilled about Microsoft’s decision to get involved in the sector. Flowhub CEO Kyle Sherman views the move as smart and inspiring for other businesses in the space. “This announcement starts to legitimize the legal cannabis industry among mainstream companies who were afraid to participate in the past. It opens up the gates for more opportunities,” said Sherman. Flowhub is a flourishing, Colorado-based seed-to-sale startup that is in the process of expanding its services to Oregon and Alaska.
Robert Hunt, founding partner of Tuatara Capital, an investment management firm that focuses on the legal cannabis industry, sees the announcement as a bold commitment that defies the stance of other businesses in the tech space. “Cannabis brands and companies have a history of being shut down by Facebook, Google, and larger tech companies, so this is the first time you’ve seen a company of this size come out and say ‘we’re for this,’” explained Hunt.
This post was originally published on June 20, 2016, it was updated on March 15, 2017.