Cannabis software stack: who is a leader in activity software?
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What is the activity sector of the cannabis software market like and which company will be the leader in 2020? Cannabiz Media looked at the data in the Cannabiz Media License Database and published the answers to these and other questions in the Cannabis Software Stack report last month.
Last week I published a new series of articles sharing more details from this report and looking at the cannabis software stack and licensing options for each software sector. In the first article in this series, I shared details about the back office sector.
This week, let’s take a closer look at some data from the report and see what the Cannabiz Media research team has learned about the activity sector.
Define the licensing option in each state
The Cannabiz Media team has found 332 unique Washington companies that connect to METRC or Leaf Data Services. Using the Cannabiz Media license database, we determined how many licenses they can link to in those states (i.e., the “licensing opportunity” or the potential addressability market in a state).
To determine this license opportunity, we’ve added active, pending, and applied licenses for the corresponding activity. For example, to develop the license option for point-of-sale software, we involved active, pending and applied pharmacies and retailers.
The activity software division consists of 68 companies. These are characterized as solutions designed for specific license holders such as point-of-sale, grow software, delivery and laboratory information management systems. They are listed in the market map below between the transaction and advisory sectors.
The Cannabiz Media License Database organizes licenses by activities that cover the hemp and cannabis supply chain. The six categories in this area of activity focus on solutions for cultivation, manufacturing, laboratory, retail, delivery and consumer. These 68 providers are responsible for 226 integrations nationwide.
- We have identified 68 companies in the activity sector
- They make 226 connections to the 15 states
- 48 of the 68 (71%) connect in California
- The activity sector includes the following categories:
The Cannabiz Media team has spent a lot of time analyzing the point of sale (POS) based on the market share studies we published in 2018 and 2019. This is a very crowded area with many vendors chasing after a limited number of licensees. As we’ve seen in previous reports, there are many companies following the California market.
There is a whole cohort of companies offering a wider range of seed-to-sale offerings, often with POS functionality. These companies can be found in the Seed-to-Sale section of the full Cannabis Software Stack report.
A related service for many pharmacies is delivery. This service provides convenience and security for patients and consumers. In states like Florida, a license holder is often given permission to cultivate, then deliver, and finally distribute. We found very few delivery software vendors connected to METRC, and the six on the list only connect to California (5) and Oregon (2).
Consumers are not a standard activity that we follow at Cannabiz Media. However, consumers are at the end of the seed-to-sale continuum and that is where the transaction takes place. We’ve identified six vendors that fit into this category, and all of them give consumers insight into products, data, and opinions.
This category is so important that these providers are keen to help growers be both more efficient and more effective. Often times, it allows the cultivation team to remotely monitor a variety of key inputs and metrics from any Internet-connected device. These solutions are often linked to METRC and other systems to meet compliance requirements for selling seeds.
Laboratory information management systems
We found 11 Lab Information Management Systems associated with 12 states. This type of software can be used by a variety of license types, including cultivators, manufacturers, and testing laboratories. According to G2, a LIMS manages and tracks samples and associated laboratory data and at the same time optimizes all processes and activities within a laboratory.
Since this software is geared towards a specific type of activity, the question that arises is whether some of these companies are a feature, product, or company. Will well-funded back office companies make acquisitions to make their suite more robust? Can a popular POS company integrate backwards into a full-fledged seed-to-sale offer?
Why this information is important
The information in our report is useful to a wide variety of stakeholders in the cannabis industry:
- Regulators They can gain insight into the size and scope of the software landscape and learn about many of the companies they may work with.
- Existing providers can use the information for both competitive and business intelligence – and to find future partners and acquisition candidates.
- Investors can use it as a list of potential acquisitions or partners for their portfolio companies.
- Existing license holders can use it to measure software vendor footprint. With this data, they can see which companies are one-state wonders.
In the coming weeks I will be releasing the industry leaderboards for the remaining two sectors (Transactional and Advisory). So stay tuned to the Cannabiz Media blog.
Cannabiz Media customers can stay up to date on these suppliers and other new licenses through our newsletter, alert and reporting modules. Subscribe to our newsletter to receive these weekly reports in your inbox. You can also schedule a demo for more information on how to access the Cannabiz Media License Database yourself to delve further into this data.