Barely Legalized: Canada’s Frenzied CannaTech Growth

Growth is high, but expectations remain hazy.

Maybe that’s the best way to describe the explosive trajectory of the cannabis industry over the past year. Companies in the industry dealing with production, maintenance, distribution, and even media have raised huge funding rounds and pioneered breakthrough technologies, all preparing for the drug’s legalization in Canada on July 1. But it can be difficult to envision what sorts of companies will stick around when the smoke, er, dust settles.

Regardless, tech-centered around cannabis has been powered by innovation and fuelled by the thought of tapping into an industry worth over $10 billion a year. The companies and stories below show just how fast companies can adapt and scale when it comes to what many have called the next gold-rush of technology.

E-Commerce, Meet Cannabis

Maybe the biggest tech and cannabis story broke in February when Shopify and the Ontario government revealed they would be working together to manage the online sale of cannabis. This was a sign of the government getting it right, partnering with one of Canada’s leading tech companies to do what they do best, all in a new environment.

Shopify will use their massive e-commerce platform to conduct online sales, as well as set up a merchant portal in brick and mortar stores to aid with checkout. The Ottawa-based Shopify has immense experience when it comes to security and privacy and knows how to help the Ontario government wade into a brand new shopping channel.

“This is a home run for Shopify, the government, and consumers,” said Matt Gray, founder and CEO of the cannabis media platform Herb. “These are exciting times in the cannabis industry and this is a landmark partnership that is great for Canadians.”

Setting Records Ablaze

Cannabis companies in Canada managed to find their way into some record-setting storylines as well. The first quarter of 2018 saw the highest total amount of VC funding in the country since the dot-com era, and Nanaimo’s own Tilray landed in the top 10 in terms of deal size.

The company cultivates and processes medical cannabis and picked up a $60 million funding deal, good enough for seventh biggest in Q1 2018 and enough to put them among tech giants like Hootsuite, Rubikloud and Wattpad.

Aside from the private equity deals, cannabis companies had a lot of love in the public eye as well. The TSX unveiled their annual 2018 Venture 50 list, showing off the top performers of their venture exchange over the last year.

Emerald health technologies sat atop the Clean Technology and Life Sciences list, pulling in a 2017 trading volume of $186.2 million. Emerald produces medical cannabis and is a vertically-integrated seed-to-sale enterprise.

When New Meets New

If there’s anything that grew just as quickly as cannabis companies over the past year, it was the advent and adoption of blockchain technology. Naturally, when two new industries experience incredible growth, they cross paths.

IBM made headlines with a unique story, sending out a proposal to the B.C. government to help them with legalization via a blockchain network. Each province was tasked to deal with legalization in their own way, and as a leader in blockchain tech, IBM thought their systems could help B.C. out.

“IBM suggests Blockchain is an ideal mechanism in which B.C. can transparently capture the history of cannabis through the entire supply chain, ultimately ensuring consumer safety while exerting regulatory control–from seed to sale,” reads the proposal.

Blockchain integration with the supply chain would help producers control inventory and project analytics, while retailers can gather insights and create better selling strategies, all while the sourcing and pricing remain transparent. There has been no indication that the B.C. government accepted the proposal, but it was an interesting look into how one emerging technology could help an equally emerging field.

On the other side, Montreal’s Greenstream Technology joined Hyperledger, the open source collaborative community created to advance cross-industry blockchain integration. Greenstream was the first Quebec company to join and is looking to use the technology to focus on the legal cannabis world.

Where There’s Cannabis, There’s Money

The VC world was introduced to cannabis in a big way over the last year, and several Canadian companies took advantage of the new relationships. Toronto’s Herb picked up $4.1 million from Lerer Hippeau Ventures and a slew of angel investors, including Shopify’s Tobi Lutke and Harley Finkelstein. Herb is a media company dealing with cannabis-relating stories with over 200 million video views and nine million Facebook likes.

Snoop Dogg’s VC fund, Casa Verde Capital, took a particular interest in Canadian companies. Toronto’s Trellis raised $2 million USD to build out their streamlined seed-to-sale management compliant software that tracks plant growing process while ensuring ease-of-use and strong security.

Casa Verde also helped invest in Green Tank Technologies to the tune of $4.3 million. Green Tank manufactures high-end vaporizers, and the new money will help them grow with WeCannect, a B2B discovery platform for the cannabis industry.

Braingrid picked up a $2.5 million private placement to help produce their versatile sensor platforms that can capture real-time data for cannabis growers and help them increase revenues, while also reducing costs and risk. The Toronto company was one more example of how well many cannabis stocks have performed on both the TSX and other exchanges.

Cannabis has been all around the news lately, and the tech world is no exception. Companies have found room to grow and prosper, all without the drug even being legalized yet. If you’re sick of hearing about cannabis news though, the worst is yet to come—when July 1 and widespread legalization hits Canada, expect to see (and smell) a lot more.