Cannabiz Media Software Stack Summer 2021 Report

Introduction

Last summer, Cannabiz Media published its first Cannabis Software Stack Report where we juxtaposed state license counts against all the companies that connect to METRC and Leaf Data Services in WA. Since compiling this data, we published an update last November with 43 additional companies.‍ Our latest review in July identified 39 more companies in the space. A portion of the incumbent 386 companies continued to enter new markets with 47 of the incumbents adding 88 states to their tally.

Key Findings

• 66% of the new entrants are located in Colorado, California, Oklahoma and Massachusetts. Colorado led the way with nine companies (23%).
• 33% of these new entrants are connecting to Colorado while 26% connect to California and/or Oklahoma.
• 12% (47) of the existing vendors entered new states since our last review.

Sectors

We grouped all the companies we found into four sectors as shown in the market map below:

Before we look at the newcomers, the existing vendors were also busy during Covid and many entered new states. All totaled, these incumbents entered 88 states with Distru adding 11 and Seed and Beyond nine. The following chart shows the number of new states added in light green over the total states in dark green.

The 386 incumbents we researched this summer did not stand still. In total, 47 have moved into additional states since late last year. In total, we found 88 “moves” from these companies. By move we mean a company is certified by Leaf Data Systems or METRC in that state. 

The most moved to state is Oklahoma where 27 companies set up shop. They may have to wait to connect as a lawsuit has been filed which is holding up the implementation of the METRC rollout. 

Back Office

This sector includes solutions designed for complex operations that could be used by different types of license holders. Applications may include ERP, seed-to-sale, compliance, and supply chain/logistics. 

We found seven new companies in this space bringing the total to 111 vendors:

Four of the firms are in the Seed 2 Sale category while three others are ERP systems.  The most popular state for Back Office companies is Oklahoma, where four are operating.

Activity (79)

These companies offer solutions designed for cultivators, manufacturers, retailers, etc. Applications would be point-of-sale, grow software, delivery, and lab information management systems. 

There are 13 new ones that we discovered with five entering the Point of Sale category and four joining the Grow Software space. Appspensary went big and has entered 12 states. Terrayn is in three states, and everyone else is a “one state wonder.”

We are surprised to see companies still entering the Point of Sale space.  It is ridiculously competitive, and we are seeing some consolidation with companies like Dutchie and Akerna buying other providers. Also in our 2020 Point of Sale Report, we found that three firms control 50% of the market.  

Transactional (39)

These solutions revolve around the B2B and B2C transactions and include financial institutions, financial compliance, marketplaces, and payment processing. 

There are five new ones here which brings the total to 39. The interesting take away is that two of the firms are CPAs and both connect in Michigan only.  

Advisory (81)

This group is comprised of consultants who may advise businesses on how to technically integrate as well as data analytics firms that provide insights to a license holder and use METRC/LDS data as an input. Six new firms came online:

Miscellaneous (100)

We added only eight firms since our last review. Two are license holders, and six are miscellaneous/unknown. If anyone can share their insights on these companies drop me a line.

‍Conclusion

The number of companies in the cannabis software stack continued to grow during Covid. The 39 new companies are based in Colorado (9), California (6), Oklahoma (6), and Massachusetts (5).  Mirroring their headquarters, many of these firms connected in Colorado (13), California (10), Oklahoma (10) and Massachusetts (5).  

The onslaught of new companies supports the general economic observation that a lot of entrepreneurs started a company during the pandemic.

Cannabiz Media is finishing up our calling to gather data for our 2021 Point of Sale Report. We’ll have updated market share in the coming months along with some insights into the CRM systems that dispensaries and retailers are using.  

Cannacurio is a weekly column from Cannabiz Media featuring insights from the most comprehensive license data platform. Catch up on Cannacurio posts and podcasts for the latest updates and intel.