Cannabis software stack: who is a leader in transactional software?

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What is the transactional 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.

Two weeks ago I published a new series of articles sharing more details from this report and delving into 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 while we were reviewing the activity sector last week.

This week we’ll take another look at the reporting data and see what the Cannabiz Media research team has learned about the transactional 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 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 transaction sector consists of 28 companies. All companies in this sector are involved in moving money down the value chain when buying goods. They are listed in the market map below between the back office and activity sectors.


We have included several key transaction categories including financial institutions, payment processors, financial compliance firms, and marketplaces. All companies in this sector have a stake in money moving through the value chain.

  • We have identified 28 active companies in the transaction sector
  • They make 56 connections to 12 states
  • 14 out of 28 (50%) connect in California
  • The transactional sector includes the following categories:

• Financial Institutions

• Payment Processor

• Financial compliance

• Marketplaces

An interesting observation is that the companies in this sector are not affiliated with many states. However, since each state has its own “sovereign” market, a penetration strategy is likely the way to go. Since trade cannot cross state lines, the most effective approach is to choose your states wisely and then work diligently to build market share and critical mass.

Transaction Sector Ranking for Cannabis Software

Financial institutions

We identified two financial institutions – one based in Massachusetts and the other based in Michigan. Each is only associated with the state in which it is located. Flagstar Bank is affiliated with 552 potential licenses in Michigan, while Bristol County Savings Bank is affiliated with METRC in Massachusetts with 917 potential licenses.

Payment processing

Six companies were identified as payment processors. was the only company affiliated with multiple states: California, Colorado, Nevada, and Oregon.

Financial compliance

To help industry stakeholders comply with regulations, we’ve identified 10 companies in this area, even though only five are in more than one state. California, Oregon, and Colorado account for 13 of the 22 connections (59%) for this category:


The largest transaction category is the marketplace. Many companies have tried and failed to succeed in this area because bringing buyers and sellers together is such a compelling value proposition. However, building critical mass and market share is time consuming and expensive. We identified 10 companies, but also had to exclude some that no longer seem to be in business.

The 10 marketplace providers have 23 connections to 10 states. None of the 10 connect in Maine, Maryland, Missouri, or Louisiana, but six connect in California and four with Oregon.

This is important for businesses looking to bring buyers and sellers together. Every vendor wants to enroll as many licensees as possible, but each license holder may only have that much bandwidth to implement and learn new systems.

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 purposes and to search for 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.

What’s next?

Next week I’ll share my observations on the consulting sector, which includes analytics firms and consultants. 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 straight to your inbox. You can also schedule a demo to learn more about how to access the Cannabiz Media License Database and delve further into this data yourself.

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