New Cannabis Ventures:
One of the big surprises over the past few years has been the relative dearth of publicly-traded cannabis companies with a technology focus. The few that exist haven't been particularly successful in the stock market, and most investors have been more focused on companies that are involved in the cultivation, processing or selling of cannabis.
We think now is the time for investors and operators to pay particular attention to technology as an investment or as a point of differentiation among cannabis companies. This week, Flowhub, a cannabis retail management platform, announced a $23 million capital raise, so clearly there is interest in private companies involved in helping the cannabis industry scale.
In addition to retail, there are many different problems companies are trying to address, including compliance, data analytics and process improvement. Other areas of technology include physical solutions to improving yields, through lighting, genetics and nutrients, as well as better extraction methods and techniques. Additionally, especially in light of the current health crisis, technology can help produce safer extracts and hardware for vaping.
In particular, an area ripe for innovation is beverages. As Canada 2.0 kicks in, several businesses, some with backing from leading beverage companies globally, are focused on a market segment that has disappointed to date in state-legal American markets, but innovations in this area can help improve the demand, through more rapid onset and consistent dosing along with taste-masking and other attributes. We have heard a lot of promise, and we look forward to learning about new beverages as they are released in the next few months.
For investors, pure-play cannabis technology investments may be worth pursuing, but we think the importance of this theme extends to the analysis of direct cannabis operators, as we expect companies who invest in or acquire proprietary technologies will differentiate themselves in a crowded field of competitors.
