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What does the Activity sector of the cannabis software market look like, and which company is the market leader in 2020? Cannabiz Media dove into the data in the Cannabiz Media License Database and shared the answers to those questions and more in the Cannabis Software Stack report last month.
Last week, I launched a new series of articles where I’m sharing more of the details from that report and diving into what the cannabis software stack and license opportunity based on 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 of the data from the report and see what the Cannabiz Media research team learned about the Activity sector.
Defining the License Opportunity in Each State
The Cannabiz Media team found 332 unique companies that connect to METRC or Leaf Data Services in Washington, and using the Cannabiz Media License Database, we determined how many licenses they can connect to in those states (i.e., the “license opportunity” or potential addressable market in a state).
To determine this license opportunity, we added Active, Pending, and Applied licenses for the appropriate activity. For example, to come up with the license opportunity for point-of-sale software, we included Active, Pending, and Applied dispensaries and retailers.
The Activity Software Sector is comprised of 68 companies. These are characterized as solutions designed for specific license holders like point-of-sale, grow software, delivery, and lab information management systems. They are referenced in the market map below in between the Transaction and Advisory Sectors.
The Cannabiz Media License Database organizes licenses by activities that cover the supply chain for both hemp and cannabis. The six categories in this Activity sector are focused on solutions for cultivation, manufacturing, laboratories, retail, delivery, and consumer. These 68 vendors are responsible for 226 integrations nationwide.
- We 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 is comprised of the following categories:
The Cannabiz Media team has spent a lot of time analyzing the point-of-sale (POS) via the market share studies we published in 2018 and 2019. This is a very crowded space with many vendors chasing a limited number of license holders. As we saw in past reports, many companies are pursuing the California market.
There is a whole cohort of companies that offer a broader suite of seed-to-sale offerings that often includes 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 dispensaries is delivery. This service offers convenience and safety for both patients and consumers. In states like Florida, a license holder often gets permission to cultivate, then to deliver, and finally to dispense. We found very few delivery software companies that connected to METRC, and the six on the list only connected to California (5) and Oregon (2).
Consumer is not a standard “activity” that we track at Cannabiz Media. However, consumers are at the end of the seed-to-sale continuum, and that is where the transaction happens. We identified six vendors that fit into this category, and they all give consumers insight into products, data, and opinions.
This category is so important as these providers strive to help growers be both more efficient and effective. Often, they allow the cultivation team to remotely monitor a variety of key inputs and metrics from any internet connected device. These solutions often connect to METRC and other systems to fulfill seed-to-sale compliance requirements.
Laboratory Information Management Systems
We found 11 Lab Information Management Systems that were connected to 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 while also streamlining overall processes and activities within a lab.
Since this software is geared toward a particular type of activity, it raises the question as to whether some of these companies are a feature, a product or a business. Will well-funded Back Office companies do tuck in acquisitions to make their suite more robust? Similarly, can a popular POS company backward integrate into a full blown seed-to-sale offering?
Why This Information Matters
The information in our report is useful for a variety of stakeholders in the cannabis economy:
- Regulators can gain insight into the size and scope of the software landscape and learn about many of the companies they may be working with.
- Existing vendors can use the information for both competitive and business intelligence – and to find future partners and acquisition candidates.
- Investors can use it as a roster of potential acquisitions or partners for their portfolio companies.
- Existing license holders can use it to gauge the footprint of software vendors. With this data, they can see which companies are one-state-wonders.
In the coming weeks I’ll share the Sector 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 newsletters, alerts, and reports modules. Subscribe to our newsletter to receive these weekly reports delivered to your inbox. Or you can schedule a demo for more information on how to access the Cannabiz Media License Database yourself to dive further into this data.