As Legalization Spreads, The Marijuana Tech Industry is Booming

Marijuana tech, you say? What is this marijuana tech of which you speak? Can't you make a bong out of an apple or something?
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Publish date:
November 16, 2015
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marijuana, weed, capitalism, silicon valley

With Oregon, Washington, and Colorado adopting highly liberalized marijuana policy and raking in tax income as a result, more and more states are reconsidering their stance on America's favorite recreational drug. California, which many might have expected to be the first to go all-out balls-to-the-wall for legalization, is definitely poised to vote on the matter in 2016 — and that means that Silicon Valley's angels are already circling. There's huge money to be made in jostling to the front of the marijuana tech boom, and that capitalist push might be what brings California over the edge and firmly into the camp of legalization, pulling other states in its wake.

Marijuana tech, you say? What is this marijuana tech of which you speak? Can't you make a bong out of an apple or something?

Well, yes. But in fact, there's a vast industry for pipes, bongs, vaporizers, and other equipment (sorry, DEA, "drug paraphernalia") and that's not counting, of course, the thousands of strains under active cultivation and the dispensaries that sell them in smokeable and edible form. All that requires a vast infrastructure, and it's also ripe for, as the Silicon Valley kids like to say, "disruption."

Why go into a "crummy doctor's office" for a dubious medical marijuana prescription when you can have an Internet consultation? Why use a pipe when you can have a vaporizer that purports to precisely control dosage? Why not have sleek, shiny, gorgeous marijuana accessories that don't "look like they came out of a head shop," as venture capitalists — those angel investors that half of Silicon Valley wants to woo — would put it? A growing number of marijuana startups are giving Mary Jane a facelift and they're hoping to sweep Silicon Valley up in reefer madness.

Residents of San Francisco and environs aren't exactly famous for their ascetic lifestyles, and it's not just the Haight-Ashbury that greets visitors with a certain skunky aroma day and night. In a region undergoing a rapid economic bubble, it's not surprising to see innovators attempting to leverage any and all sources of possible revenue, but developers working on marijuana-related products are facing an awkward barrier: They're handling a substance that's illegal, and they're well aware that the gadgets they're working on are also illegal.

Thus, marijuana developers and VCs brave enough to dabble in the industry are taking a big gamble, hoping to get in on the ground floor of legalization, because if they have the framework in place to roll out quickly, they'll be ahead of competitors scrabbling to take advantage of the opening market.

If rule 34 tells us that if something exists, there's porn of it, we need a subsection: If it exists, there's a startup for it. Artist Stephanie Pakrul helpfully developed a detailed chart of delivery-related startups in San Francisco to illustrate that it is in fact possible to never leave your house in San Francisco — something that suits a lot of techies just fine, because most startup developers are working out of their homes in a quest to come up with the next big thing. (And yes, if you're wondering, there's a startup offering home marijuana delivery: Eaze.)

Mocking the "like Uber, but for..." shorthand often used to describe startups, Buzzfeed has a handy chart to help users determine if their startup ideas were already taken. Notably, weed versions of Uber, Tindr, Birchbox, and Airbnb already exist. And yes, before you ask, there's a marijuana accelerator, Canopy Boulder — working in Colorado, where its investment in budding startups is a little less likely to get it into trouble. If you have an idea, they'll mentor you through development and into scaleability, a considerable concern for VCs who want to see a return on their investment. In other words, they want proof that you have something after baggies behind the bleachers.

If you want evidence that marijuana startups are popping up like mushrooms, check out angel.co, which compiles listings for startup jobs across Silicon Valley, many of which illustrate how deeply Silicon Valley has become a parody of itself. KanaVape ("disrupting the hemp industry"), EMRLD ("California's Connoisseur Cannabis Brand"), Leafcart (addressing "inefficiencies in the glass industry"), Baker ("loyalty and rewards for cannabis consumers"), and Jane (no relation, since we're not a "cannabis platform connecting consumers to products and services") are all hiring, among many, many others.

While many VCs shy away from marijuana, one firm definitely doesn't. Salveo Capital is taking a chance and explicitly investing in the future of marijuana, banking on the tantalizingly huge profits represented by the possibility of both recreational and medical markets opening up across the country. Notably, the group has a highly lateral investment strategy — they're not going to be caught in traps like Ohio's aborted Issue 3, which would have created an effective marijuana monopoly in the state. The firm recognizes that if you smoke, eat, or vaporize it, you'll want all the shiny goodies to go with it, and that modern consumers are getting more discriminating in their tastes.

Sure, swirly glass bongs will always have a place in the grand pantheon of marijuana-related products, but many users are looking for sleek, discreet vaporizers, home delivery of goodie boxes (yes really), eco-conscious packaging, and much, much more.

Potbox, for example, advertises "premium" weed, and they don't mean in the dank sense. They're offering a product they claim is ethical — though of course the word is meaningless since it's not like the FDA or USDA offers certification — and they have some nice phrasing about sustainability and scaleability on their sleek, smoothly designed website, which is quite transparently aimed at millennials.

The target market isn't a big surprise: Millennials are fond of their weed, they experience moral qualms now and then about whether they're ethical consumers, they sneer at amateurish websites, and they like things made extremely convenient. A subscription marijuana box signed, sealed, and delivered with a wrapping of eco-consciousness is basically millennial catnip. The only thing the site is missing is saccharine profiles about their farmers. For an obvious reason.

Silicon Valley's potrepreneurs (ugh, sorry) are banking on the belief that legalization isn't a flash in the pan, but they're also clearly aiming to elevate the weed market, which is the only way to meet the demand for scaleability. They're not just thinking products and services, but also markets, because the true path to success is expansion — look at, say, Uber, which savvily continues to grow the services it offers while simultaneously sprawling octopus-like across the landscape. The firm's success comes not just from name recognition, but from products to meet a range of needs, and from ready availability. The weed startup positioned to go live the minute legalization hits in any given state is the one that's likely to appeal most to VCs, driving further competition in the industry.

The growth of marijuana tech is driving a strange sort of synergy, as the industry itself is being forced to straighten up, put on some clean clothes, and talk business strategy as well as marijuana itself. Meanwhile, the developers who have historically relied on the industry to supply a recreational substance are realizing its capital potential, and between hits they're hoping to crest the wave of the future — which means packaging themselves seductively enough to land themselves a hefty payout.

Money talks in America, and it's not just VCs who are perking up their ears at the financial implications of the growing integration of marijuana and tech. Regardless of moral qualms, money is money, and it's what drives lobbyists, elections, and policy. There's a cyclical effect underway as Silicon Valley tries to leverage weed, thereby conferring a growing legitimacy, thereby pushing for legalization across the country. Not too far from now, the United States could be looking at a change in classification for cannabis.

Look out for a marijuana unicorn — even if its horn is ultimately what pops the tech bubble. Oddly enough, the marijuana industry itself has warned that legalization could cause the bottom to fall out of the market, making horizontal integration with marijuana-related products and services an extremely intelligent business move. Meanwhile, the herd in Silicon Valley is restless in the face of several concerning devaluations and stock dips, fearing that the Bay Area may be in for an extremely rocky fall.

Hey, at least they'll have some tastefully-packaged bud to blaze while the city burns.

Photos: Kathleen Ann, Dank Depot ( Flickr/CC)