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Investing in Cannabis

Investing In Cannabis: Growers Part 1

In regard to investing in the cannabis industry, much of the mainstream news is focused on medical marijuana. That’s likely the case because medical marijuana is legal in 24 states, and the companies in the space are generally at more advanced stages than other areas of the cannabis business.

However, as I mentioned before, marijuana companies can be broadly separated into medical and growers. By lumping all non-medical marijuana companies into the “growers” category, I’m doing something of a disservice to the industry. It’s quite a bit more diverse than just those two categories.

The growing of marijuana is just the start of a much more involved “seed to sale” process. It involves distribution, tracking, accounting, marketing, and everything else you’d expect in a farm to table industry. That also means a variety of companies are popping up which are related to one or several facets of the business.

I’ve been using the term “growers” because it’s commonly used in the cannabis industry. But what I really mean when I say growers, is any company on the production side of marijuana. Because of the legality issues with marijuana (which I’ll discuss more in detail in a future article), the tracking and bookkeeping on the production side of the business is highly important.

Of course, what better way to accurately track and manage distribution of cannabis than with specialized software. That’s right, there is cannabis industry-specific software out there, and companies which specialize in developing it. In fact, I’m going to talk about one in particular called Kind.

So you may be asking, why would I start talking about growers and get right into software instead of the growers themselves? There’s a very good reason… it’s because Kind has made a big splash in the industry that could reverberate throughout the entire cannabis landscape.

What could one little software company do to make such a big difference? Simple enough, the company just entered into a partnership with Microsoft (NASDAQ: MSFT). Yes, that same Microsoft who makes the operating software for something like 90% of computers in the world.   The same Microsoft who recently bought LinkedIn (NYSE: LNKD) for $26 billion.

That one of the biggest companies in the world would get publicly involved with the marijuana business is a huge deal. Microsoft is the first major company to do so. And it certainly means more major players will follow suit.

Generally speaking, Kind offers “seed to sale” software for cannabis tracking, compliance, and operation management. The company also offers financial services because not many banks will deal with the industry at this point. Finally, Kind provides government solutions, to help state and local governments track the cannabis business.

It’s the government business that Microsoft is currently interested in. Microsoft will offer Kind software as part of its government solutions unit. Basically, the company is focused on the regulatory and compliance aspects of the industry. However, as legalization of cannabis spreads, you can be sure companies such as Microsoft will take even more direct roles.

Most importantly, MSFT could be the first of many dominoes to fall regarding more corporate and institutional interest in the rapidly expanding cannabis industry. It’s just another reason why it makes sense for savvy investors to get into the space before the general public does.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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