Cannabis and FinTech: New Friendship at an Opportune Time

The cannabis or marijuana industry caught our attention when Greenbits, a marijuana POS company, won the runner-up position at TechCrunch Disrupt 2015 Startup Battlefield. The marijuana industry in the US is emerging out of it’s illegal or gray area into a legitimate one, given the incremental legalization at the state level, one by one. It is still a niche industry that has caught the attention of many entrepreneurs. According to a report by Greenwave Advisors, U.S. retail marijuana sales revenues could reach $35 billion/year by 2020, if full legalization occurs in all 50 States and D.C. Not only FinTech, but the tech industry in general has started looking at this space. A few companies are bringing up solutions for retailers while others are targeting the end consumers of cannabis. At TCDisrupt 2015, Snoop Dogg launched Merry Jane, an online media platform exclusively for marijuana consumers. The media platform will be the central hub for pot consumers (marijuana smokers). Snoop Dogg talked about featuring both editorial and video content on the website around celebrity stories about first-time marijuana consumption, marijuana recipes and many other things. Let’s Talk Payments was there and we were fascinated to see the presence of such targeted solutions for the cannabis industry at TCDisrupt 2015.

We had the pleasure of discussing this emerging trend with Ben Curren, the CEO of Greenbits. When we asked about his experience at the Startup Battlefield, he said, The main reason to enter the TCDisrupt Startup Battlefield was to get in front of venture capitalists and make them understand that the industry we work in is legal and bring them to invest in this market.

He also explained to us a bit more about Greenbits and its product offering. Honing in on what problem Greenbits is solving, he said, Most people already know about the cannabis legalization but they just don't know how fast it is happening. Currently there are 4 states in the US where marijuana is legalized. By 2016, 6 other states including California are expected to legalize marijuana. Because it has been illegal for so many years, the regulations and compliances around it have been stringent. The government requires every retail store to manage and report all of the marijuana inventory to the state every single day including the plant which their inventory is coming from. It is an humongous burden on retailers. Marijuana regulations are one of the most difficult regulatory controls on small businesses. There is no POS available which can do this. That’s what created an opportunity for us.

Greenbits works with government agencies like Liquor Control Board and Marijuana Enforcement Division, Colorado. Greenbits is a bridge between government and store owners. While talking about the problems associated with the cannabis industry, Ben added, The risk that most companies are worried about is their name being associated with marijuana because it comes from the black market. Lot of venture capitalists are nervous about the cannabis vertical. We wanted to get in front of major venture capitalists but we wanted to prove our credibility. Even at TCDisrupt when I started saying cannabis, the judges were being skeptical, but when I talked about what we are doing at GreenBits, they probably started changing their perception about the industry.

Greenbits, headquartered in California, deployed their first marijuana POS in July 2014. By end of 2014, they had only 15 POS installations. By 2015, they will have 45% of Washington’s marijuana market.

Other FinTech solutions offered in the marijuana industry include online ordering, POS, inventory management and loyalty programs from WebJoint, a PyroTree Inc. company launched recently in 2015. Founded in 2010, MJFreeway is a company that offers solutions like payment terminal hardware and an inventory management platform for marijuana retailers. Jane is another financial services technology company focused on standardizing the transparency & compliance requirements of marijuana retailers. It offers a physical kiosk that enables simpler cash management for marijuana retailers. It also offer POS integrations, dashboard reports and analytics to the retailers. DispenseFirst is a POS solution for the Medical Cannabis industry that fully integrates POS, inventory control, employee and patient management, and back office accounting across one application.