They are a seemingly unlikely pair, but the more you think about it, the more it makes perfect sense — tech startups and marijuana. It may have been a pipe dream just a few years ago, but now companies are sprouting up left and right, providing an infrastructure and support system for the blossoming cannabis industry.
Prior to the legalization of marijuana for recreational use in Colorado and Washington, most people opted to steer clear of the industry because of its dubious legal status. While there are fairly robust medical marijuana industries in many states, the industry still lacked many of the everyday luxuries other industries take for granted, like access to banking and other financial services.
But a new breed of entrepreneurs and free market idealists are growing up in a world in which marijuana is not seen as a horribly destructive drug, but rather the next big commodity, and possibly a panacea to America’s economic woes. The fear associated with working in the cannabis industry has been shed in large part, and both state and federal governments are sitting back and watching what happens.
This has left open opportunity — big opportunity — for those with the capital and the willingness to take the risk of jumping on board. Without an infrastructure for banking, sharing information, finding storefronts, and many other aspects of business, the marijuana industry is loaded with opportunity for entrepreneurship to bloom.
Recently, Newsweek touched on the subject of tech startups invading the cannabis industry, and the trend appears to be catching on. Several businesses models — from mobile phone applications to merchant services companies — are finding a niche in the expanding cannabis market. Since most traditional businesses, many of which operate nationally and internationally, are afraid of violating federal law, they won’t come near marijuana.
Thus, there’s an open niche for these startups to climb into, and get in on the ground floor before cannabis becomes inundated with similar companies, like most other industries. Marijuana has a vast number of uses, and thus a huge number of ways to get involved. There are companies like Leafly and Weedmaps, both that offer product reviews and store listings.
Then there are more scientific and data-centric companies that are starting to pop up, serving customers looking for chemical analysis and improved cultivation techniques.
Not only do these startups and entrepreneurs have the opportunity to jump in and make some money, but they also have the chance to help shape the industry and markets themselves. Just like so many young, talented people jumped on board social media a decade or so ago, the cannabis revolution is coming. By taking different approaches to the idea of social media, be it through Facebook’s (NASDAQ:FB) interpretation, or Twitter (NASDAQ:TWTR), or even LinkedIn (NYSE:LNKD) and Pinterest, entrepreneurs will be able to find a niche and shape the market as things progress.
The big difference is that cannabis startups and entrepreneurs will be able to tap into an already existing market as well, which has simply been operating in the shadows and under cover for decades. By bringing new technology and exposure to the products themselves that are being traded, the industry will get a shot in the arm and see even more organic growth.
Silicon Valley has already taken on a myriad of the world’s problems, and cannabis is simply the next product that is tapped for industrialization and cultivation. Being a brand new legal market also helps, as there are a ton of potential customers who probably never thought about giving cannabis a chance before now.
As for venture capitalists, it doesn’t get much more adventurous than investing in the marijuana industry. The thing is, it’s not even all that outlandish or risky to get into. There’s little doubt that the market demand for marijuana is sky-high, as shortages have stymied the legal retail markets of both Colorado and Washington. Just imagine how high demand would be in even more populous states — say California, Texas, or New York. There’s potential for immense growth and profit, and the startup revolution is just itching for the chance to jump in at full force.
For now, a few startups and entrepreneurs are dipping their toes in the green pool that is the legal and medical marijuana markets. As public opinion continues to shift, laws pass in favor of decriminalization and legalization in more and more states, these startups are placing themselves in a prime position to shoot for the moon.
Cannabis may not be the first place tech entrepreneurs and venture capitalists think of when developing ideas or looking at industries to invest in, but that trend will change. Green is becoming the new gold.