Big tech has finally entered the cannabis industry. Welcome, Microsoft!
For years, cannabis has been dominated only by small businesses and budding entrepreneurs. Companies with money and prestige haven’t wanted to enter the space due to big risks, unknown rewards and fear of reprisal.
“[My company] has stayed away from investing in the cannabis industry because it’s like investing in the porn industry,” Zach Bogue, a venture capital investor, said in the Washington Post. “I’m sure there’s a lot of money to be made, but it’s just not something we want to invest in.”
This thinking is changing.
Thursday, Microsoft announced a partnership with Kind Financial—a company that provides seed-to-sale software services for the cannabis industry—making it the first tech giant to attach its name to legal cannabis. The partnership will fall under the Azure Government cloud platform, which offers security and compliance protocols focused on organizations that interact with federal agencies. It’s the ideal fit for Kind Financial, which is focused on gaining contracts for state cannabis compliance solutions.
Microsoft’s involvement is a telling move that spells out the changes in the cannabis industry over recent years.
Cannabis is booming. Five states have legalized it for recreational and medical use; 23 states have already approved some form of legal cannabis; and 14 states could be putting cannabis legislation on the 2016 ballot. With so much potential in the cannabis industry, it’s no wonder that cannabis is starting to draw the attention of major corporations.
The good news is that Microsoft’s association could have a positive effect on the legalization effort. It adds legitimacy to an otherwise murky industry that is still federally illegal and has been attached, historically, to negative connotations. Microsoft is based out of Redmond, Washington so it makes sense for them to make this move as Washington is a fully legalized state.
Microsoft isn’t diving in head first—they’re just getting their toes wet. Their partner, Kind Financial, is not directly involved in growing, testing or selling cannabis. Instead, their software, Agrisoft, is used to collect and monitor the data required for compliance with state rules and laws. Thus far, Kind Financial has no state contracts though they’ve submitted a proposal to Puerto Rico.
It’s a smart move for Microsoft. With states like California and others looking to fully legalize in 2016, it’s the perfect time to get involved before the industry blows wide open. Not only could Microsoft’s involvement help to push the industry forward, but it could also change how it’s run. With $25 billion potentially on the line, there’s a lot at stake.
“We do think there will be significant growth,” Kimberly Nelson, the executive director of state and local government solutions at Microsoft, told the New York Times. “As the industry is regulated, there will be more transactions, and we believe there will be more sophisticated requirements and tools down the road.”