After years of illicit transactions and black market purchases, the growth of legal marijuana is now leading to an influx of new tech ventures targeting the roughly 2.5 million legal pot users in the United States.
According to a report from the Wall Street Journal, hesitation from established companies to enter the marijuana market has left the door wide open for startups, and they are indeed rushing in.
“Part of the allure is the scope of growth for legal cannabis,” WSJ reported. “This year, the size of the market for legal cannabis in the U.S. is expected to expand by nearly 86%, on top of a 74% jump to $2.7 billion in 2014, according to marijuana investment and research firm The ArcView Group.”
Startups are providing a myriad of service to the legal marijuana industry—from Eaze, which connects dispensaries with customers, and Flowhub, which helps optimize growing factors for cultivators, to PotBiotics, a resource for doctors looking for medical research, and Leafly, which gathers customer reviews of dispensaries.
This new technology is providing insights and statistics, which until very recently were impossible to find.
“You couldn’t collect this information [previously] because all the transactions and purchases were conducted in the shadows via an illicit market,” Brendan Kennedy, the CEO of a private-equity firm that owns three pot businesses, told WSJ.
According to the Pew Research Center, investors began dabbling in the marijuana industry in 2013, when public support for pot legalization began to exceed 50 percent of the population. However, it still remains a risky business, with the federal government still classifying marijuana as a Schedule I drug.
But so far, that only seems to be stopping larger corporations from getting in on the game.
“Those larger, stodgier companies aren’t always the most innovative,” Keith McCarty, who created the Eaze app, explained. “With startups, we can get in earlier, be agile, and define the industry before the incumbents step in.”