(LAWeekly) Next month, California will begin accepting proposals from the companies that want to sell California a platform for tracking pot throughout the state. It’s a way to ensure that “businesses will be run like
a regular business as opposed to operating like drug dealers,” says David Dinenberg, CEO of L.A.-based Kind Financial, one of the companies planning to bid on the state contract.
Kind made news last June when software giant Microsoft said it would market the company’s Agrisoft software to state governments. The partnership with Microsoft was a major credibility boost for Kind. It also was one of the highest-profile confirmations of the widely suspected belief that big mainstream companies are eager to wade into the green rush once they feel comfortable with the legal climate.
Within the industry, software is considered an ancillary business, meaning that it doesn’t require companies to directly grow, process or sell marijuana. Offering an ancillary product or service is generally considered less legally risky than businesses that “touch the plant.” Still, it suggests something about the lingering risk that Microsoft will offer Kind’s software only to government regulators and not directly to the pot companies that need it.
The budget Gov. Jerry Brown unveiled last week allocates more than $50 million for cannabis regulation, a substantial chunk of which is expected to fund the tracking system. Whatever company wins California’s contract will have a strong foundation to pursue similar opportunities in other newly legal states, and perhaps eventually the federal government.
Yet earlier this month, dispensary owners nationwide got a taste of what can happen when this software goes down. Starting Jan. 8, MJFreeway, a Colorado company that makes cannabis tracking software for businesses, suffered a major outage. More than 1,000 businesses in 23 states reportedly saw their software go down.