From Social Apps to Enterprise Systems: The Evolution of Cannabis Service Providers


When a technology platform exceeds a million users, the next step for cannabis companies like MassRoots becomes enterprise  services.

Cannabis once served as the flashpoint of America’s culture wars, with the reproachful establishment on one side and rebellious, pot-smoking hippies on the other. Now, cannabis is big business, legal, and investors are eager to cash  in.

The legalization of cannabis is a huge, unstoppable trend that’s giving rise to a multi-billion-dollar “canna-businesses” throughout the United States. Attorney General Jeff Sessions was an arch-conservative intent on stopping the spread of legal cannabis, but his efforts are falling on deaf ears in  Congress.

Sessions’ efforts are likely to fail, just as surely as Trumpcare failed. One reason: Capitol Hill fully realizes that state governments are increasingly dependent on tax revenue from  cannabis.

Combine one trend (the spread of legal cannabis) with another trend (the power of social media) and you come up with one company that has tapped into both trends: MassRoots (OTC:  MSRT).

MassRoots used to be referred to as the “Facebook” of the cannabis business, but its success has allowed it to expand its suite of offerings into the enterprise side of the industry. Founded in 2013 and headquartered in cannabis-friendly Denver, Colorado, MassRoots operates a technology platform that allows users to share cannabis-related content, monitor the activities of dispensaries, and stay in touch with legalization  activists.

MassRoots also provides mobile apps that allow consumers to tap into community-driven reviews concerning cannabis — perhaps think of it as Yelp! for pot. The company also operates MassRoots for Business, an online portal that sells cannabis merchandise and paraphernalia and allows cannabis entrepreneurs to access analytics. MassRoots also recently acquired Odava for several million dollars, which provides payment processing services, as well as legal and compliance, to cannabis  dispensaries.

The Green  Rush

The normalization of cannabis laws sought by activists since the 1960s is becoming a reality among an increasing number of states, generating a giant industry that’s attracting entrepreneurs, venture capitalists and individual  investors.

The use, possession, sale, cultivation, and transportation of cannabis is illegal under federal law, but the federal government announced that if a state wants to pass a law to decriminalize cannabis for recreational or medical use they can do so. As of this writing, 26 states and the District of Columbia currently have laws legalizing cannabis in some  form.

According to New Frontier Data, a cannabis market research firm, the legal cannabis market in the U.S. was worth an estimated $6.6 billion in 2016, and is projected to grow at a compound annual growth rate of 16% to reach more than $24 billion by  2025.

These figures don’t include assumptions for additional states that may yet pass legalization measures before  2025.

MassRoots is among the small-cap players that have been proliferating in the growing canna-business realm. However, unlike many of its thinly capitalized and heavily indebted peers, MassRoots boasts solid financial wherewithal, reasonable debt levels and proven products and  services.

MassRoots’ total cash on hand as of its most recent reporting quarter is $2.23 million, and quarterly revenue growth on a year-over-year basis has come in at 44.3%. And MassRoots is putting its financial resources to good use. On July 14, the company announced that it had closed the acquisition of Odava, a popular compliance and point-of-sale (POS) system for the cannabis  industry.

Through the Odava acquisition, MassRoots will be able to create diverse sources of revenue with a greater geographical footprint, especially in the western United States. Odava designs and markets not only POS software but also management systems for inventories and supply chains that link cannabis dispensaries and  growers.

Enterprise service provider Odava will make it easier for MassRoots to create vertically integrated synergies and to monetize its growing social media audience. Odava’s systems are integrated with state regulators in California, bringing a vast potential market to the parent company. MassRoots’ eventual goal is to forge an interconnected structure for cannabis tracking, sales and  marketing.

In April, MassRoots also announced a partnership with Whoopi & Maya, a medical cannabis product company co-founded by Whoopi Goldberg. MassRoots will assist Whoppi & Maya in its expansion  plans.

Many of cannabis companies are poorly managed, suffering from meager cash flow and ill-conceived business models. When the cannabis industry’s shakeout inevitably occurs, many of these weak players will go up in smoke. However, MassRoots is different. With verifiable business success, diversified revenue streams, and plenty of cash on hand, this small company could become a major player in this fast-growing  industry.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.